What is Dogecoin?

Dogecoin as a cryptocurrency was created to mock the speculative nature of cryptocurrencies. But over the period of time, it gained unexpected traction from the whole crypto community.

Dogecoin Cryptocurrency

Dogecoin, better known as meme coin, is an open source peer-to-peer digital currency. It was launched on December 6, 2013 by software engineers Billy Markus and Jackson Palmer. Since it is decentralized in nature, Dogecoin is not ruled by any individual company or person. It just operates according consensus algorithm rather than following directions and decisions of any founding member.

Initially, Dogecoin as a cryptocurrency was created to mock the speculative nature of cryptocurrencies. But over the period of time, it gained unexpected traction from the whole crypto community. Today it takes the credit for grabbing a market capitalization of around 100 billion dollars.

In its early phase, Dogecoin was presented as a satire to cryptocoins like Bitcoin, when the Bitcoin community boasted of change the entire monetary system.Dogecoin.com promotes the currency as the “fun and friendly Internet currency”, referring to its origins as a “joke.” Dogecoin became a star currency overnight. Just after a fortnight of the launch, its market value had touched $8 million mark.

The native cryptocurrency of dogecoin is Doge, a satirical cryptocurrency based on the famous internet meme of a Shiba Inu dog. Shiba Inu is a Japanese breed of dog that went viral as an online meme. Even the logo of Dogecoin features Shiba Inu. The community of Dogecoin is referred to as Shibas.

Mining Of Dogecoin

Dogecoin is the seventh largest digital currency in the world. It is based on Scrypt algorithm, and the transaction process is almost ten times faster than Bitcoin. In order to verify new block of Bitcoin, the miners take 10 minutes but in case of Dogecoin it takes only 1 minute to confirm the newly minted block. Each confirmation on the blockchain adds 10,000 Dogecoins as a block reward.

But in the initial stages the things were different. Dogeoin, being a meme coin, was introduced as a copy of yet another cryptocurrency LuckyCoin (LuckyCoin is a fork of Litecoin which in turn is a fork of Bitcoin). It is also worth mentioning that earlier the reward for mining of Dogecoins was random but later on in March 2014, a static block reward of 10,000 Doge per block was introduced.

In the beginning, the reward for a newly mined block was not fixed and the miner could receive anything between 0 to 1 million Doge depending upon his luck.

Dogecoin uses proof-of-work (PoW) algorithmic consensus mechanism to verify and add a new block to the blockchain. Even Bitcoin uses proof of work mechanism for mining of a new block.

Supply Of Dogecoin

On its launch, Dogecoin began with a cap of 100 billion coins that can be mined on the blockchain though the currency didn’t come with a hard cap. This number was far ahead of the leading cryptocurrency at that time- Bitcoin has an upper limit of 21 million Bitcoins. The rate at which Dogecoin was mined was so fast that the total available supply of 100 billion coins was minted by 2015.

So in order to keep the interest high, it was decided that 5 billion coins will be added to circulating supply annually (after 2015) which would lead to doubling of supply of Doge coins in next 20 years.

The Dogecoin Hack

Dogecoin wallet platform, Dogewallet witnessed a major online hack on December 25, 2013 that was barely after 20 days of launch, and millions of coins were stolen in this theft. This incident brought immense negative popularity for the Dogecoin through the social media channel- Twitter. Twitter was flooded with messages about Doge coin and it became the most searched altcoin of that time.

It is said that all the money lost by the investors as a result of hack was restored within a month after the community initiated a donation by thame of “SaveDogemas”. Enough money was donated to cover all the losses incurred during the hack.

This event brought so much glory to the coin that in January 2014, just one month after its launch, Dogecoin left behind even Bitcoin in terms of market volume (But not in terms of market capitalization).

Dogecoin And Elon Musk

Elon Musk is not only well known as a business magnate or CEO of Tesla but also as an enthusiastic supporter of Dogecoin. Dogecoin has found special favors with Elon Musk, whose tweets about the coin bring substantial gains for the investors as the history of Dogecoin reveals that the prices have shot up after Elon Musk tweeted about it.

In January 2021, Dogecoin saw a price multiplication of 800% in 24 hours, and traded at $0.07, as a result of interest shown by Elon Musk, Reddit users and the GameStop short squeeze. This event also reflects the kind of volatility involved in the field of cryptocurrencies.

On December 14, 2021, Dogecoin gained more than 20% of its value after Elon Musk announced that his company- Tesla will now accept Dogecoin as a means of payment for Tesla merchandise.

Dogecoin witnessed a record hike of 9,884% between January and May 2021. By the end of the rally, doge had touched a new all-time high of $0.74.

Unlike other crypto coins, Dogecoin was designed as a parody to the cryptocurrency. Therefore, it had no utility base. It could just serve as a blockchain based payment system. But as the community of the Doge blockchain escalated, the new use cases for the blockchain were developed. Currently it is the leading tipping cryptocurrency on social media channel Reddit.

Disclaimer: The author has not made any monetary investment in any of cryptocurrencies or digital assets as of now, till the date of publishing this article. The views presented here are purely for educational and information purposes and not to be meant as financial or investment or technological or legal advice. Readers are advised to consult with their financial advisor and check legal provisions with regard to trade in cryptocurrencies as per their country jurisdiction. The author or our website shall not be responsible for any kind of loss caused to reader due to forming any decision on the basis of material presented here. Please read the complete Disclaimer here.