Introduction
The creation of bitcoin in 2009 was the first step towards the development of the digital currency market.
Being one of the early coins, Dogecoin is a truly unique project that has been attracting the attention of crypto enthusiasts since 2014.
Founding and launch
As the name suggests, it is based on an Internet meme Doge that was quite popular in 2013. It is dedicated to the Shiba Inu dog, whose funny lines are written in Comic Sans font.
Billy Marcus, a programmer from Oregon, originally planned to create a joke cryptocurrency. He suggested that a less serious project would be more likely to attract attention than bitcoin. Around the same time, Adobe’s Jackson Palmer posted a tweet (which was subsequently deleted) stating that he was going to invest in Dogecoin and believed in the potential of this cryptocurrency.
With public support, Palmer created the dogecoin.com website. Having stumbled upon it shortly after launch, Markus contacted Palmer to bring the idea to life and start working on the Dogecoin project.
Since its launch, the cryptocurrency has gained immense popularity on social media. Within a few months, the project reached a multi-million dollar market capitalization.
Public initiatives
The Dogecoin community has developed a reputation for being philanthropists. Initially, Dogecoins were used for tips on sites such as Reddit, where users sent each other small amounts in gratitude for creating content.
The philanthropic nature of the project has also manifested itself in more ambitious actions: in 2014, the community raised more than $30,000 in Dogecoin so that the Jamaican bobsleigh team could participate in the Sochi Winter Olympics.
The Doge4Water project raised over $30,000 to drill wells in Kenya, and later Dogecoin enthusiasts sponsored NASCAR driver Josh Wise by giving him over $50,000 in cryptocurrency.
As a result of the poll, the community jokingly proclaimed him the CEO of this coin.
Pump on TikTok
The user urged others to buy Dogecoin, convincing them that they would “all get rich” once the price reached $1. The excitement around the project grew, as a result of which the price of Dogecoin increased by 2.5 times compared to previous weeks. However, this growth was short-lived, and subsequently the price began to fall sharply.
This phenomenon is called the pump and dump scheme. It is considered illegal in traditional markets because it poses risks to investors. Its essence is as follows: promoters acquire large volumes of an asset and create hype around it, causing other investors to fear to miss out (FOMO). The promoters then sell their assets, resulting in a dump: due to selling pressure, the price drops and late investors suffer huge losses.
As always, we recommend doing your own project research before investing. Let’s look at them in more detail.
Blockchain
Network members install open source software on their devices to act as full-fledged nodes.Instead, users exchange information directly with each other and rely on cryptography to keep network participants honest.
For a complete understanding of this system, check out the Blockchain Technology article. Beginner’s Guide.
Mining and supply
Participants must prove to the networks that they have done their job, that is, they have found the answer to a difficult puzzle.
This puzzle is solved by hashing the information until the user can provide the correct result to the network. It cannot be found manually, so users spend electricity and computing power to calculate it.
Theoretically, this could increase the decentralization of the mining space. However, shortly thereafter, application-specific integrated circuits (ASICs) for Scrypt appeared.
Since Dogecoin is based on the Litecoin project, the meme coin inherited the Scrypt algorithm. To avoid competition and reduce security risks, Dogecoin developers switched to a merged mining model, allowing Litecoin miners to simultaneously earn Dogecoin. For a more in-depth analysis, check out Binance Research’s Dogecoin and Litecoin merged mining.
This cryptocurrency does not have a maximum supply and there are already over 130 billion DOGE in circulation. According to many enthusiasts, the lack of restrictions is an advantage of the project, as it encourages spending of the coin and prevents early investors from receiving disproportionately large profits.
How can you use Dogecoin
Dogecoin, like many other cryptocurrencies, can be purchased in several ways. However, the easiest way is to purchase it through a cryptocurrency exchange. As a rule, for this you first need to buy Bitcoin or another popular coin, and then exchange it for DOGE.
The received Dogecoins can be used just like any other cryptocurrency: stored in a hardware wallet, exchanged for other coins and goods, or sent to users as a tip.
Summary
Although the Dogecoin project is based on an internet meme, it has developed a dedicated user community.
It is impossible to say exactly how the market treats Dogecoin: as an unusual currency, a promising financial asset, or something in between. But only a few cryptocurrencies have managed to have such an impact as this one, even if it became famous for its status as a meme-coin.
