Project Insight: Dogecoin Explained

Dogecoin is now a familiar name in the crypto market after starting as a meme. Even now, with a market cap of $6.1 billion, it is still called a joke. Today, cryptocurrency is the 12th largest in the world.

By
Utulu Hope
on
March 26, 2021
Category:
Project Insight

Introduction

Since the creation of Bitcoin, many now see the importance of cryptocurrencies. The trend of holding an asset with the hope that it could rise in the future is exceptional. Now, many have become accustomed to this strategy. Not just for Bitcoin but other cryptocurrencies at large. 

The use of cryptocurrencies is now formal in today's market, and the rise of Bitcoin, which is the powerhouse, has led to the creation of other cryptocurrencies. Today, we will be discussing one of several projects available in the crypto market, Dogecoin. 


What is Dogecoin?  

Dogecoin is a peer-to-peer, open-source cryptocurrency. Also considered as an altcoin, the cryptocurrency is seen as a meme or joke. The altcoin was created in December 2013 and has gained massive adoption since last year. Its logo is a Shiba Inu dog, the DOGE, as it is popularly called. However, the cryptocurrency's blockchain still has quality. It is modeled after Litecoin and has a lot of unique features. Two of which are its unlimited supply and low prices with the help of a scrypt algorithm. 

Even as it was created as a joke, it has surprisingly gained tremendous traction. Towards the end of 2017, Dogecoin was part of the list of cryptocurrencies that increased significantly due to market volatility. However, in 2018, its price suddenly dropped drastically. The cryptocurrency still didn't lose its supporters after this. Instead, traders used it to tip content on Twitter and Reddit. 

The cryptocurrency can be traded on several exchanges, and it can be either stored in an exchange or a Dogecoin wallet. 


Origin of Dogecoin 

Dogecoin was launched in 2013 by Jackson Palmer, a product manager at Australia's office of Adobe Inc in Sydney. He created the cryptocurrency to ridicule the interest in digital currencies. Jackson was perceived to be a skeptical analyst of cryptocurrencies as his initial tweets about his creation were ironic. This changed after the cryptocurrency gained many followers on social media and propelled him to purchase the dogecoin.com domain. 

Billy Markus, an IBM software developer in Portland, also had an idea of creating his digital currency. Due to lack of promotional backing, he sought ways to push his new project's popularity. In a bid to do this, he discovered the hype surrounding Dogecoin. To be a part of the ongoing hype, Markus contacted Jackson to seek permission to build the "software behind an actual Dogecoin." 

Dogecoin's code was similar to Luckycoin, derived from Litecoin. It started by rewarding users randomly for block mining. This changed in 2014 as rewards were made static. What more, Dogecoin is regarded as a proof-of-work coin and uses Litecoin's scrypt technology. 

The coin was launched on December 6th in 2013 by Palmer and Jackson, and Dogecoin plummeted. This was possibly due to China's regulation which restricted banks from investing in digital currencies. 


Significance of Dogecoin and its Comparison with Bitcoin 

Dogecoin was marketed as a fun version of Bitcoin. It uses a Japanese dog as its logo. However, this representation sparked a lot of interest in the crypto community. Comparisons were even made with Bitcoin due to its adaptability, faster transactions, scrypt technology, and unlimited supply. Both cryptocurrencies are different whatsoever. Dogecoin is considered inflationary, while Bitcoin boasts a supply cap. This is because of the ceiling of the number of coins that will be created. The amount of Bitcoin in circulation is halved every four years, and its rate of inflation is also halved simultaneously. 

The Dogecoin community has funded some organizations in the past. In 2014, the DOGE community-supported Jamaica's bobsled team in their trip to the Sochi Winter Olympic games by donating 27 million Dogecoins ($33,000). In the same year, precisely March, the community also funded a project in Africa. By donating $11,000 worth of Dogecoins, the community helped to build a well in Kenya. The community also sponsored a NASCAR driver with $55,000 worth of Dogecoin. 


The Growth of Dogecoin  

Towards the end of 2017, Dogecoin increased steadily, trading at $0.018 with a market cap of $2 billion. It then declined with the rest of other cryptocurrencies in 2018, as the result of a market bubble. In 2019, the crypto asset increased again after another bump in the crypto market. That same year, it got listed on Binance exchange, and crypto enthusiasts gained immense interest in Dogecoin. Many even thought that billionaire CEO Elon Musk endorsed the altcoin. 

In January 2021, Dogecoin was in the history books as the cryptocurrency became the most tweeted asset in a single day. This shattered the previous tweet for a single-day record held by Bitcoin on the 2nd of January in the same year. The tweets happened as a result of hype from Elon Musk. The Tesla CEO tweeted about the cryptocurrency, which sparked its growth. The tweet read, "Dogecoin is the people's crypto." 

Before this, the CEO had been in the news promoting Dogecoin. In 2019, he tweeted about DOGE in April. He said that Dogecoin might be his favorite currency. 


Conclusion 

As of this writing, DOGE is trading at $0.05. Although it has failed to reach the $0.1 mark in recent times, it is considered one of the largest in the market. Elon's hype has contributed to its steady interest coupled with its listings on several exchanges, including the most prominent — Binance Exchange. With its adaptability, transaction speed, and unlimited supply, crypto enthusiast remain optimistic that DOGE could well be a good store of value.

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Utulu Hope

UC Hope is a passionate fan of crypto who could weave the latest event into sparks of inspiration and information. He leaves no stone unturned to get to the core of a story. Aside from writing, he spends his hours poring over algorithms and protocols, preparing for a future career as a computer programmer.