What is Dogecoin? The first-ever meme token

Dogecoin merged internet culture with cryptocurrencies, pioneering a new era for tokens

The dogecoin logo on a silver coin                                 
The Dogecoin Foundation announced in 2021 that the meme token is transitioning to Proof-of-Stake – Photo: Shutterstock
                                

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Dogecoin (DOGE) has become one of the most well-known cryptocurrencies. It enjoys a bustling community and one of the top market caps.

Yet DOGE was not intended to be taken seriously. Instead it was designed as a joke inspired by a viral internet meme. After praise from Elon Musk, Dogecoin has become one of the few household names in the crypto industry.

The cryptocurrency was the first-ever meme token and has been around for more than eight years. While some are sceptical about its future, others think it will continue to be triumphant.

What is Dogecoin (DOGE)?

Back in 2013, the cryptocurrency market was completely different, with most coins being serious investments. Then along came Dogecoin (DOGE), which pioneered the meme token; one that is defined by humour and social media chatter.

DOGE was created as a joke, intended as a light-hearted alternative to the likes of bitcoin. It was developed by the Adobe project manager Jackson Palmer and IBM engineer Billy Markus. They took inspiration from the Doge meme of a Shiba Inu breed of dog (‘inu’ is the Japanese for ‘dog’) with the classic Comic Sans text font.

Dogecoin
The Doge meme went viral in 2013 – Photo: Shutterstock

The coin started out as a hard fork from the Litecoin blockchain in 2013. Since then, it has created a devoted community that has driven the price and developments of the project. If anything, Dogecoin has shown how important communities are to the cryptocurrency industry, rather than the usual traditional investor.

How does Dogecoin work?

The mining protocol behind Dogecoin varies slightly from Bitcoin. Dogecoin uses scrypt, a secure and efficient mining algorithm that was designed to exclude bitcoin miners. It has also given the meme token a block time of roughly one minute.

There is no supply cap for DOGE so an infinite number of tokens can be minted, making Dogecoin an inflationary currency. The circulating supply is currently way above 100bn DOGE. According to Coinbase, 10,000 new coins are mined every minute.

This has correlated with a much lower price than some of the other top cryptocurrencies. At the time of writing, it is sitting below $1, roughly at the $0.10 mark. DOGE will struggle to ever hit $1 because its supply is so vast.

What is Dogecoin coin used for?

Utility is becoming an increasingly important factor for cryptocurrencies, but Dogecoin was designed with none in mind. Instead, it was developed to be a store of value that had mass appeal.

There are some uses for the Dogecoin cryptocurrency, however. It is mainly used as a tipping system on Reddit and Twitter for users to gift money to posts they enjoy. DOGE is also being used as a means of payment. Tesla has recently jumped on this trend, allowing customers to purchase accessories with the meme token.

Dogecoin has been criticised for its lack of utility and for only taking advantage of the virality of memes. This has not stopped the meme token from enjoying a successful year in 2021.

DOGE in 2021

After its 2013 inception, the price of Dogecoin stayed below the $0.01 level, until 2021, where it saw unprecedented success for a meme token. This surge was mainly driven by Dogecoin’s most influential advocate, Elon Musk.

In February that year, he tweeted that “Dogecoin is the people’s crypto” and kickstarted its first substantial rally. This was ignited even further as Musk was announced to be hosting Saturday Night Live (SNL) in May, which he tweeted with reference to cryptocurrency.

DOGE hit its all-time high of $0.73 just before SNL went live. Yet the meme token was sent spiralling afterwards as Musk described it on the show as a “hustle”.

Musk was not the only entrepreneur to have an influence on Dogecoin. The American billionaire Mark Cuban tweeted about the meme token in August 2021, saying that DOGE is a popular option for crypto payments.

The cryptocurrency saw a rally that month which peaked on the day of the tweet, 15 August. But like most cryptocurrencies, Dogecoin is proving vulnerable to the crypto winter.

Dogecoin’s recent news

The Dogecoin cryptocurrency might not be performing at its peak, but there is plenty of news about the meme token.

A not-for-profit organisation called the Dogecoin Foundation was reformed in 2021 to support the community and ecosystem. The foundation includes the Ethereum co-founder Vitalik Buterin, the Dogecoin co-founder Markus, and an Elon Musk representative.

Recently, the Dogecoin core developer Ross Nicoll announced he was stepping down and handing his duties over to the foundation. He highlighted overwhelming stress and conflict of interest as reasons behind this move.

There is even bigger news stirring at Dogecoin. It revealed in 2021 that the cryptocurrency was migrating to Proof-of-Stake, a different method of mining. In its trailmap published in December, Dogecoin announced it was working with Buterin to implement community staking, a version of Proof-of-Stake. This is intended to allow all holders to participate and not just the big players.

The news follows Ethereum’s transition plans to Proof-of-Stake this year. However, Dogecoin’s migration seems to still be in the early stages as not many details have been released and investors are still awaiting a launch date.

Dogecoin vs Shiba Inu

Dogecoin has certainly inspired a whole wave of meme tokens and competitors. Shiba inu (SHIB) is often described as the cryptocurrency possible of taking on the originator. The comparisons between the two are similar to the battle between Bitcoin and Ethereum.

While DOGE was created as a light-hearted store of value, SHIB has much more utility attached to the project. It is aiming to create a whole ecosystem of decentralised finance products, including staking, liquidity providing and governance.

Shiba Inu has demonstrated before that it is capable of overtaking Dogecoin’s market cap. But at the time of writing, SHIB is much further away from DOGE; the former is placed 14th on CoinMarketCap while DOGE is ranked number 11.

Just like Bitcoin, Dogecoin’s first mover advantage seems to be coming in handy. However, its bustling community and mentions from entrepreneur influencers is helping as well.

Dogecoin review

Dogecoin’s humorous approach to cryptocurrencies has affected its reputation. While some appreciate the meme-based token, others are more sceptical.

CryptoWisser argues the culture and community of DOGE coin is integral to the project. However, it said: “If you are new to the world of virtual currencies, Dogecoin might be a fun thing. But if you are serious and want to invest in this environment for the solutions it offers, best look elsewhere.”

Even though Gadgets360 appreciates the team and foundation behind DOGE coin, it is not ambitious about the coin’s future. “It’s almost a surety that eventually Dogecoin will go bust. And many speculators are going to lose big time. And that’s going to give crypto-haters another chance to bash cryptocurrencies,” it wrote.

Dogecoin may just be a fun investment but it has certainly stood the test of time and proved to be resilient in the crypto market. DOGE is in the top 20 cryptocurrencies and boasts a respectable market cap above $18bn (£13.3bn).

CoinBureau has recognised this and said: “Dogecoin is one hell of a project. Its history, its community, and its oddly high ranking in CoinMarketCap reveals it to truly be the product of an unholy union between decentralized currency and internet culture.”

While other meme tokens might not be so lucky, it is looking hopeful for Dogecoin’s future. Its recent implementation with Tesla and the transition to Proof-of-Stake could mean greater success is in store. But there is a risk it could follow other meme tokens and continue to see its value plummet.

FAQs

Dogecoin was created back in 2013 by the Adobe project manager Jackson Palmer and IBM engineer Billy Markus. It was designed to be a light-hearted version of bitcoin and took inspiration from the Shiba Inu internet meme.

Dogecoin uses scrypt, a type of Proof-of-Work consensus protocol that has proved invulnerable against hackers. However, the Dogecoin Foundation has revealed plans to transition to a Proof-of-Stake mining method.

Dogecoin was the first-ever meme token, a cryptocurrency that is defined by humour and social media chatter. Its uniqueness comes from its light-hearted approach, dedicated community and fusion with internet culture.

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