Coin Insights: What Is Dogecoin?

doge-logo

Heard about Dogecoin (DOGE), but want to learn more? Have you seen that cute little dog logo or icon, and have wondered “What in the world does this have to do with crypto?” In this article, we’re going to explain the basics of Dogecoin and give you the foundational insights.

What is Dogecoin?

Dogecoin was founded in 2013 by Jackson Palmer, an Adobe software engineer, and Billy Markus, an IBM software engineer. 

According to the creators, Dogecoin was initially made as a joke. They wanted to build a cryptocurrency that was more lighthearted than the others that were around at the time, namely Bitcoin and Litecoin. To represent the joke, they choose the trademark feature you are most likely familiar with, the Shiba Inu dog with the funny “shocked” expression.

But all jokes aside, Doge coin hasn’t turned out to be a joke in the least. It has the largest social media following on Twitter, and is second to only Bitcoin in this regard. It is a community powerhouse, pulling millions of users, celebrities, and generating news coverage unlike any other cryptocurrency in the space. 

How was it built?

Jackson Palmer conceptualized the original vision for Dogecoin and bought the domain name Dogecoin.com. The iconic Dogecoin graphic was immediately put up on the website, but there was no development on the cryptocurrency itself. Not even a hint of development was given.

It was only later, when Billy Markus stumbled on Dogecoin’s website that development was started. He was in love with the concept of a lighthearted cryptocurrency and reached out to Palmer to help develop it. 

Though the core concept of Dogecoin was initially conceptualized as a joke, Markus designed Dogecoin’s protocol to be similar to other cryptocurrencies such as Bitcoin and Litecoin. He actually put legitimate, well thought out code behind the Dogecoin idea.

For example, in similar fashion to Bitcoin, Dogecoin’s blockchain platform uses a proof-of-work algorithm to ensure that all transactions are secure. But Dogecoin uses the same data processing function as Litecoin called Scrypt, which is more efficient than Bitcoin’s algorithm. The result is that Dogecoin can be mined on machines that are much more affordable and accessible than Bitcoin, but at the same time Dogecoin has the same security and functionality as Bitcoin and Litecoin.

Aside from great code development and a legitimate backend, what else did Palmer and Markus do to help set Dogecoin apart?

How is Dogecoin different than other cryptocurrencies?

Dogecoin differs from Bitcoin and Litecoin in that it’s much faster than Bitcoin when it comes to transaction processing speed (TPS). For example, Dogecoin’s block time (the time it takes to process transactions in a block) is 1-minute, as opposed to Litecoin’s 2.5-minutes, and Bitcoin’s 10-minutes.

And while you may be thinking, “OK, why should I care? Dogecoin isn’t really going to be used for real world transactions”, you’d be surprised to learn that it actually can be. Again, there is legitimate development and blockchain technology behind this cryptocurrency.

The Dallas Mavericks (an NBA team) started accepting payments in Dogecoin earlier this year. Owned by Marc Cuban, who’s notably been a supporter of Dogecoin, it was adopted by the Mavericks as a payment form over Bitcoin because of it’s faster transaction processing speed (TPS).

But faster transactions isn’t the only thing separating this cute dog coin from others in the market. Dogecoin has single-handedly sparked a new category of cryptocurrencies called ‘memecoins’, and the brand consistently influences crypto-culture.

Dogecoin’s community of followers have also accomplished a number of remarkable feats for a cryptocurrency. For example, in 2013 a hack occurred where millions of Dogecoin were stolen amongst a small number of Dogecoin holders. With some community members losing vast sums of Dogecoin, and others losing nothing at all, the Dogecoin community came together and figured out how to make everyone who lost funds get their funds back.

Transaction speeds, efficiency, and community help set Doge apart. But it’s the inflationary aspect of Doge that just might make it a viable solution for payments. 

How Dogecoin inflation could make DOGE a viable payment platform

Unlike Bitcoin and many other cryptocurrencies in the market, Dogecoin now has an unlimited supply of tokens. 

Initially a token supply cap of 100-billion was set in the early days (a limit of the amount of tokens that would be produced), but the Doge developers decided to remove the cap and make DOGE an inflationary asset.

Similar to how banks print fiat currencies, new Dogecoin is minted/added to the supply of Dogecoin annually. 

5-billion tokens are introduced into Dogecoin’s supply every year. But while many people worry that the cause for inflation is an area to be afraid of, in the long run, it seems this may not be the case.

Inflation is important here because it encourages spending. One of the problems of using Bitcoin as a payment method for example, is that Bitcoin may be considered a deflationary asset. With a limited supply of only 21-million Bitcoin, over time the asset becomes scarce – leading to higher and higher prices. 

Thus using Bitcoin to pay for things now could really cost significant sums of money in the future, as was illustrated by “The Bitcoin Pizza Guy ” who paid 10,000 BTC (nearly $540-million in today’s value) for one pizza years ago.

Dogecoin on the other hand, has an unlimited supply, with new DOGE being introduced every year. This combats the deflationary aspect of price going up over time, and encourages spending and transactions to take place.

As the Nasdaq recently published in article about Dogecoin:

“Inflation will also become a minor issue over time. By 2040, Dogecoin’s inflation rate would have dropped to just 2.4%, or roughly the same as U.S. dollars today. By 2060, it would be 1.6%, making it deflationary relative to dollars.”

If Dogecoin could have approximately the same inflation rates as the by 2040, could it be a better payment method than fiat currencies?

No one knows for sure, but this could be a good reason to keep paying attention to Dogecoin.

Dogecoin Today

With a raving fan base, and celebrities like Elon Musk tweeting about DOGE on a regular basis, the future looks bright for this growing cryptocurrency.

Today Dogecoin has a market cap of around $30 billion, and a price per token of approximately 24 cents. However, this can easily change on an hourly/daily basis, depending on the celebrities that tweet about DOGE or news in the market. 

There are 132-trillion tokens available in the market now, and development continues to push this project forward. Updates were recently made to the network which allow for faster payments and lower transaction fees.

Dogecoin is really a fascinating story of how a joke turned into one of the largest and most powerful cryptocurrencies in the world to date. As such, it may be something you want to continue researching and learning about.

Coinberry users have the option to quickly buy or sell DOGE on our platform if they so choose, and can learn more about the coin and community with the resources below.

Dogecoin (DOGE) Resources

If you’re interested in learning more about Dogecoin (DOGE) you can continue to read our educational series. We’ll be releasing more articles on this cryptocurrency, and covering various aspects of it. 

Dogecoin Foundation

Dogecoin.com

Dogecoin Price

Coinberry.com

Dogecoin (DOGE) References

The websites, articles, and content that was used to make this article:

A History of Dogecoin

Ssrn.com

Nasdaq.ccom

Inflation and Influencers