Dogecoin is a peer-to-peer cryptocurrency based on a popular Internet meme. The token started off as a joke, but it’s become a serious proposition.
What happens when a joke gets taken seriously? In 2013, Dogecoin (DOGE) was created as a way to poke fun at the crypto industry; now it’s one of the world’s biggest cryptocurrencies. How did it get to this point?
What is Dogecoin?
Dogecoin is a cryptocurrency that takes its name from the “doge” Internet meme. It started as a way to mock the industry, but quickly built up a lively community of enthusiasts.
It has come a long way since 2013, hitting a market cap of nearly $2 billion at its peak in the January 2018 crypto craze.
Who created it?
Jackson Palmer, an Adobe employee, couldn’t believe the huge number of altcoins that were popping up in 2013. As a joke, he sent out a tweet saying he was investing in Dogecoin—a fake coin based on a popular meme featuring a Shiba Inu dog.
Even though he tweeted in jest, several people thought he was on to something. They said the industry really needed a light-hearted token that could counter the more controversial coins on offer. So Palmer teamed up with Billy Markus, a programmer, to make Dogecoin a reality.
“It was always like a hobby project, like a side project thing,” Palmer told Decrypt in 2018. But a community quickly formed around the cryptocurrency, and took it much further than Palmer had anticipated.
A brief history
- Dec 2013 – Dogecoin was founded by Jackson Palmer.
- March 2014 – The Dogecoin community raises $55,000 in DOGE to sponsor NASCAR driver Josh Wise.
- June 2014 – The Dogecoin Foundation is established to preside over the currency’s code.
- April 2015 – Co-founder Jackson Palmer leaves Dogecoin.
- January 2018 – Dogecoin briefly surpasses a $2 billion market cap.
- July 2020 – A viral TikTok challenge sends Dogecoin volumes soaring, pushing the price up by 96%. The flurry of price action swiftly passes.
- January 2021 – Dogecoin surges to a market cap of over $1 billion, its highest value since 2018.
What’s so special about it?
- Speed and cost – Dogecoin offers fast transactions and low transaction fees—both essential for wide adoption.
- Unlimited supply – Originally the coin was capped at 100 billion coins, but it was later changed to an unlimited supply. That keeps the price relatively stable.
- Community – The heart of Dogecoin is its active community. The more than 100,000 members on Reddit are renowned for being a friendly and welcoming bunch.
- Philanthropy – That same community has been known to rally around good causes. They raised more than $25,000 in Dogecoin to help send the cash-strapped Jamaican bobsled team to the 2014 Olympics. They also teamed up with a water charity to raise thousands to improve clean water access in Kenya through the Doge4Water initiative.
How does Dogecoin work?
The upside of Dogecoin’s never-ending supply of tokens is that the price stays relatively stable. The downside is that the price usually remains very low. Most people get into the crypto world as an investment. They hope that if they hang onto certain tokens long enough, they can sell for a profit.
Not so with Dogecoin. Since the token supply is high and the price is low, it’s not attractive to investors looking to hold onto their currency. The result is a highly liquid, free-flowing peer-to-peer digital currency.
What can you do with Dogecoin?
A key use of Dogecoin is as an online tipping system. If you like what someone posted in the Dogecoin Reddit community, throw them some Dogecoin. It’s part of what gives the community its friendly reputation.
You can also trade it for other cryptocurrencies on several exchanges, which has made the currency an unlikely medium by which people hop from exchange to another.
How to Buy Dogecoin
Dogecoin is available to purchase from some cryptocurrency exchanges, but not all; for example, in the United States, you can buy it from Binance.US but not Coinbase.
Buying Dogecoin from an exchange is a very straightforward affair. In this example, we bought Dogecoin from Binance.US using a bank account at the minimum order amount of US $20.
Under the exchange rate at the time, that $20—less a small fee of $0.10—netted us 2,430 Dogecoin, which was deposited into our exchange wallet once completed. The Dogecoin can then be transferred to another wallet, if you please.
How to Mine Dogecoin
Like a lot of cryptocurrencies, Dogecoin can be mined (see more on mining, here). It was built using the proof-of-work hashing algorithm Scrypt (based on Litecoin), so it takes a lot less computing power than Bitcoin mining.
Mining Dogecoin is considered to be much, much easier than something like Bitcoin, given the immense amount of competition for the latter.
On the other hand, considering the vast price differential between the coins, the reward is also much smaller for Dogecoin. In fact, as of this writing, the cryptocurrency mining profitability calculator at CoinWarz suggests that mining Dogecoin is potentially unprofitable, given the rewards versus electricity costs.
Still, if you want to get started, this primer from CoinCentral provides a helpful overview of the technical needs and potential rewards. You can use a Windows, Mac, or Linux PC to get started, and there are different mining applications available for varying setups.
You might want to consider signing up for a mining pool rather than mining solo. As part of a mining pool, you will combine your resources with those of other users. The rewards are smaller, but potentially steadier compared to mining on your own.
From meme coin to Elon Musk’s favorite crypto
For something that started out as a joke, Dogecoin has established a legitimate reputation. The community’s philanthropic endeavors quickly caught the attention of the media; Dogecoin fans sponsored NASCAR driver Josh Wise in 2014, funded the Jamaican bobsled team at the 2014 Winter Olympics and later raised thousands for a Kenyan water charity.
Co-founder Jackson Palmer isn’t a fan of how seriously people take Dogecoin; he left in 2015, after scammers fleeced the fun-loving members of the Dogecoin community. At the time, he said too many people were jumping in with a ‘get rich quick’ mentality, missing the token’s purpose.
When Dogecoin briefly hit a $2 billion market cap in January 2018, Palmer remained critical. He stated, “I think it says a lot about the state of the cryptocurrency space in general that a currency with a dog on it which hasn’t released a software update in over 2 years has a $1B+ market cap.”
Dogecoin picked up steam once again in 2020; partly thanks to the emergence of a new social media platform that traffics in memes. In July 2020, a viral TikTok challenge encouraged users of the app to invest in the cryptocurrency, briefly causing the price to soar—to the point where the official Dogecoin account had to weigh in, cautioning people to “Stay safe. Be smart.”
At the same time, Dogecoin picked up a celebrity fan in Elon Musk (now the richest person in the world), who began tweeting about the cryptocurrency—mostly, it must be said, in jest. After one tweet in December 2020, the price of Dogecoin shot up by 17%, from $0.0039 to $0.0046.
It’s inevitable pic.twitter.com/eBKnQm6QyF
— Elon Musk (@elonmusk) July 18, 2020
The cryptocurrency has continued to rise alongside Bitcoin’s 2020 bull run; in January 2021 its price went up by 121% in 24 hours. At one point, it reached a market cap of $1.3 billion, its highest since the heady days of 2018.
Whether that means Dogecoin is here to stay, as Elon Musk seems to think—or whether it’s destined to flame out as it did after its 2018 peak—is open to debate. But, as the Dogecoin community says, in the end one thing is immutable: 1 DOGE = 1 DOGE.
Throughout its lifespan, the Dogecoin community remains active and loyal. With the ease of acquiring Dogecoin, the low trading cost, and the relatively stable price, it could very well stick around long into the future. Wow.
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