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Dogecoin is the original meme-coin and is well known to cryptocurrency veterans. This guide focuses on Dogecoin’s role in the cryptocurrency ecosystem, its origins, and Dogecoin’s key price drivers.
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We also explain how Dogecoin’s design is closely related to Litecoin, and the unique drivers behind its success that make it one of the top cryptocurrencies to watch in 2022.
What Is Dogecoin?
Dogecoin was created as a joke but eventually found a purpose as a more friendly, approachable alternative to Bitcoin. The Dogecoin community has catapulted DOGE to cult status. Less technical speculators who value a cryptocurrency’s alternative-pop status may find it an entry point into the crypto world.
Dogecoin is a cryptocoin based on Luckycoin (which is, in turn, based on Litecoin). Dogecoin was originally designed to be a more approachable alternative to Bitcoin, Litecoin, and other cryptocurrencies.
As such, there aren’t any groundbreaking technicalities that set Dogecoin apart from the pack.
The cryptocurrency hasn’t seen any major updates since 2015 (although it is able to benefit from improvements to the Litecoin code). The true value of Dogecoin lies in the strong and vibrant community that sprung up around it.
Eight Interesting Facts About Dogecoin
- Dogecoin was originally founded as the result of a joke made by Jackson Palmer in November 2013. When he was contacted by programmer Billy Markus, they decided to turn Dogecoin into a reality.
- Dogecoin turned out to be a light-hearted and approachable form of cryptocurrency that reaches users put off by the cold complexity of Bitcoin and other cryptocurrencies considered more sophisticated. Even its name is taken from a popular Internet meme.
- Dogecoin has one of the largest and most active communities in the cryptocurrency world. This community has come together to fund a number of charitable efforts and other projects. They even managed to sponsor a NASCAR.
- One of the most common uses for Dogecoin today is as a tipping service. Users will tip other users for posts or contributions that they believe deserve recognition. It’s similar to a “like” but with more impact.
- For some years, Dogecoin didn’t see much development while Jackson Palmer left the project by declaring that he was going on an “extended leave of absence”.
- Dogecoin’s highest all-time market capitalization according to CoinMarketCap.com was over $88 billion in May 2021.
- Also in 2021, the Ren project allowed DOGE to be accessible on the Ethereum network as a ‘wrapped’ coin named renDOGE. renDOGE is an exact representation of Dogecoin on the Ethereum blockchain — Ren has been designed to enable such cross-change operability to increase collective crypto asset liquidity.
- In 2021 Dogecoin saw a major price surge, partially thanks to an influx of users chasing GME style highs. This run was given a further boost when Elon Musk began tweeting about Dogecoin, calling it the “cryptocurrency of the people”.
What’s Different About Dogecoin?
The main thing that separates Dogecoin from most other cryptocurrencies is that it is an inflationary, rather than deflationary, cryptocurrency.
When a cryptocurrency, like Dogecoin, is inflationary, it means that there is no maximum limit to the number of coins in circulation.
Bitcoin, Cardano, Ethereum, and many other cryptocurrencies are designed with a hard supply cap of coins. The potential problem with this is that once the cap is reached it may no longer be profitable for miners to continue to sustain the system.
This would either lead to unacceptably high fees in order to encourage miners or very long transaction times as there would be no incentive to process network transactions. Transaction fees and blockchain efficacy are also greatly dependent on whether the coins are mined, minted, or transactions are verified via staking the native coin.
Miners Are Rewarded With Dogecoin
Dogecoin’s creator sought to solve this problem by ensuring that miners would always be rewarded with new Dogecoin and so there would always be an incentive to mine more coins.
An inflation-based approach was also designed to replace lost coins and keep Dogecoin at a stable 100 billion coins.
The Dogecoin Community
The main asset of Dogecoin isn’t the technology behind it but the community that has built up around it.
Many of the community members prefer to think of Dogecoin as a currency in its own right, often repeating the refrain “1 Doge = 1 Doge”.
Much of the community, particularly older members, are skeptical of speculation about Doge’s potential prices. Although this skepticism doesn’t stop users from hoping that Dogecoin goes to the moon!
In the first three quarters of 2021, Dogecoins highs were around the $0.68 mark.
What Does The Creator Of Dogecoin Say?
Even Dogecoin’s own creator, Jackson Palmer, believes Dogecoin’s success demonstrates how far cryptocurrency has strayed from its original goals:
I have a lot of faith in the Dogecoin core development team to keep the software stable and secure, but 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.Jackson Palmer – Creator of Dogecoin
A Brief History Of Dogecoin
On November 27, 2013, Jackson Palmer made a joke that would lead to the birth of a new cryptocurrency he said: “Investing in Dogecoin – pretty sure it’s the next big thing.”
The joke caught the interest of many users, including the programmer Billy Marcus who contacted Palmer to discuss the possibility of turning his joke coin into reality.
Just over a week later, on December 6th, it was possible to mine and trade Dogecoin. What had begun as a joke about the state of cryptocurrency had become a serious project.
In late January and early February, 2021, Dogecoin found itself boosted by a sudden influx of users from the WallStreetBets subreddit. This led to a n equally sudden influx of retail cash that briefly pushed prices as high as 7.2¢, an all-time high for DOGE.
Dogecoin vs Bitcoin
How does Dogecoin compare to the leading cryptocurrency Bitcoin? What are the key differences?
See below for our head-to-head comparison:
|Dogecoin (DOGE)||Bitcoin (BTC)|
|Purpose||Started out as a joke but quickly became a community-based crypto||Decentralized digital currency|
|Founder||Jackson Palmer||Satoshi Nakamoto (alias)|
|Market Cap||Over $30 billion||Over $900 billion|
|All time High||$0.6848 (May 2021)||$63,109 (April 2021)|
|All Time Low||$0.000087 (May 2015)||$0.06 (July 2010)|
|How long did it take to hit $100?||N/A||51 months|
|Notable Supporters||Elon Musk||Jeff Currie (Goldman Sachs) |
Peter Theil (Venture capitalist)
Christine Lagarde (IMF)
Marc Andreessen (Early internet Pioneer)
|Supply Cap||None (Current Circulating Supply: 125bn+)||21,000,000|
|Network Hash Rate*||Up to 435 TH/s||Up to 200m TH/s|
|Difficulty||Close to 5 million||Over 20 trillion|
How Is Dogecoin Mined?
A government or bank is a centralized institution that is able to physically print its own money.
In contrast, cryptocurrencies, like Dogecoin, take a decentralized approach to produce new tokens, and DOGE is created by its community.
What Is Auxiliary Proof-of-Work (POW)?
The basic technology behind Dogecoin is based on Litecoin and LTC miners were previously able to mine Dogecoin using Auxiliary Proof-of-Work (aPOW).
The switch allowed Litecoin miners to process Dogecoin transactions by using their computing power in order to solve complicated equations.
Once the equation is solved, a new block is added to the Dogecoin network and the miner is rewarded with DOGE. This reward system serves two purposes.
The first is to encourage miners to devote computing power in order to complete transactions on the Dogecoin blockchain, while the second is to regulate the creation of new DOGE, which is then distributed by miners.
What Drives the Price of Dogecoin?
Dogecoin is a cryptocurrency, and like all cryptocurrencies, it is highly volatile and prone to large surges and big dips. Dogecoin, in particular, has experienced a fairly turbulent history and is prone to quite abrupt price changes.
The primary price driver for DOGE has been media attention, especially given it’s digital cultural influence.
The meme-based coin saw a surge in value in early 2018 as a number of media outlets began to pick up the story that Doge had hit a market cap of over $2.0 billion dollars.
Elon Musk also openly endorsed the coin in July 2020, which resulted in a 14% price hike. See more popular opinions on Dogecoin. Musk’s continues to tweet about Dogecoin and remains to be thought of as a huge DOGE influencer today.
Dogecoin got even more media attention in early 2021 on the back of the Wallstreetbets GameStop phenomenon. That’s the same year when DOGE’s market capitalization surged beyond $80 billion, with a new all-time-high reaching close to $0.70.
These kinds of stories tend to lead to new traders pouring money into a currency, often due to the fear-of-missing-out (FOMO).
However, these surges are often followed by sharp crashes as large volume traders engage in profit-taking. It can be possible to try and predict those crashes but it is risky and it may result in you losing money, rather than making it.
Followig it’s bull run in May 2021, DOGE crashed by almost 74% within just over one month from around $0.68 in May to the $0.17s by June. View the full timeline of DOGE prices.
Updates To Dogecoin’s Features
Dogecoin has not seen any major updates since 2015, so any rumour of new features could well lead to an increase in prices.
You should keep your eye on the Dogecoin Reddit account in an attempt to anticipate any new features or services of Dogecoin that plan to utilize Dogecoin as a payment method.
These kinds of announcements tend to lead to an increase in a cryptocurrency’s value.
The most recent notable impact on DOGE has been the REN project’s cross-chain liquidity solution that allowed renDOGE to be accessed on the Ethereum blockchain. The heavy technological lifting was not done on Dogecoin’s side.
Still, a coin with such popularity can afford to remain static in development, or the lack of.
Dogecoin’s Active Subreddit Thread
With Dogecoin, in particular, it is worth keeping an eye on their active (and often hilarious) subreddit.
Dogecoin users have also been known to take marketing into their own hands. In 2021 a number of users from the community successfully advertised Dogecoin on billboards around the United States.
In between all of the memes and jokes, the community occasionally attempts to organize serious events such as fundraisers.
If Dogecoin users successfully complete a fundraiser, it will garner media attention which is likely to result in a positive price rise for DOGE.
What Is The Price Outlook For Dogecoin?
Even by cryptocurrency’s standards, Dogecoin has experienced particularly pronounced price shifts.
The cryptocurrency market is still relatively young, so you should expect an unstable market with lots of peaks and troughs.
On a medium-to-long-term basis, Dogecoin has been on a general upward trend, like many other cryptocurrencies. That said, 2021 has shown some cryptocurrencies to set more specified market paces of their own, including DOGE.
As more mainstream traders become involved in cryptocurrency trading you should expect to see prices broadly moving upward with some slightly rocky periods. See our full guide to Dogecoin’s price with historical charts & timeline.
How to Buy Dogecoin Directly
Dogecoin is now close to, if not as accessible to buy as Bitcoin or Ethereum. You can purchase Dogecoin on some of these popular crypto exchanges.
Note: Some exchanges like Binance also offer DOGE futures trading.
Brokers for Trading Dogecoin
If you are interested in trading crypto; meaning speculating on derivatives like options, forex and CFDs; see our reviews of regulated brokers available in .
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. <b>Between 74%-89% of retail investor accounts lose money when trading CFDs.</b> You should consider whether you can afford to take the high risk of losing your money.
Please Note: Availability subject to regulations. Cryptocurrency CFDs are not available to UK retail traders.
Or, see our full guide on trading Dogecoin.
Opinions on Dogecoin
How Does Jackson Palmer See The Future Of Dogecoin?
Despite the community’s broad optimism, experts are generally more bearish toward Dogecoin’s future prospects.
Even Dogecoin’s own creator, Jackson Palmer, has expressed his concern about the forces driving Dogecoin’s success.
John McAfee’s Comments On Dogecoin
Back in 2018, John McAfee seemed bullish about the prospects of Dogecoin in his coin of the week Tweet.
Elon Musk Affects the Dogecoin Market
Elon Musk has also been a long-time supporter of Dogecoin. His tweets have often caused a significant price lift and he has described Dogecoin as the cryptocurrency of the people.
Dogecoin is the people’s crypto— Elon Musk (@elonmusk) February 4, 2021
Other Popular Comments About Dogecoin
Others have argued that Dogecoin could be one of the few cryptocurrencies capable of being used as a practical currency rather than simply as a speculative asset.
The fact that Dogecoin is a fixed inflationary currency allows it to more closely mimic real-world currency.
This discourages users from holding onto the asset and encourages high liquidity as users actively trade and use their coins.
Curious to find out where you can trade Dogecoin? See our guide on Dogecoin Trading.