Adobe product manager, Jackson Palmer, tweeted “investing in Dogecoin pretty sure it is the next best thing.” A cryptocurrency which didn’t yet exist on the 28th of November in 2013. A bit of context. This was in the mists of an ICO boom. All he intended was a joke, poking fun at the ICO explosion that was birthing useless coins.
Almost 5 years later, Dogecoin’s market cap has exceeded 2 billion. Doge’s blockchain is a tested technology that uses a scrypt algorithm to secure blocks and rewards miners for their work. Since Dogecoin has shorter block times and a less congested blockchain that Bitcoin it has a faster transaction throughput than Bitcoin and Ethereum.
What is Dogecoin (DOGE)?
How did a 58 character tweet become worth nearly 2 billion dollars? “After receiving several mentions on Twitter, Palmer purchased the domain dogecoin.com and added a splash screen, which featured the coin’s logo and scattered Comic Sans text. Billy Markus – a software developer at IBM-, saw the site linked in an IRC chat room, and started efforts to create the currency after reaching out to Palmer.” Wikipedia
Bill took this joke very seriously. Dogecoin is very similar to Litecoin but actually it’s a fork of another cryptocurrency Luckycoin. Like Luckycoin, Dogecoin used to rewards miners with a random amount of tokens for generating a block. In March 2014, this was changed to a static block reward. Another significant change that was made to the total coin supply on the network, after it was running, was that originally there was only going to be 100 billion coins. It was later announced that Dogecoin would produce infinite amounts of coins.
Dogecoin has 10x the capacity of Bitcoin. It can handle about 70 transactions a second. Like other proof of work blockchains, Dogecoin mightn’t be scalable to the 1000s of tps needed to compete with Visa or PayPal, but Doge has better technology than most other cryptocurrencies and a few worth billions more than Dogecoin’s value.
Dogecoin Use Case
Dogecoin’s first real use case was as a Bitcoin alternative. When investors were reeling from a decision to forbid Chinese banks from trading Bitcoin. This would include prohibiting customers from sending money to exchanges and all kinds of regulations that would make it difficult for investors to put money in crypto. Dogecoin pumped nearly 300% in 72 hours.
People use Dogecoin instead of Bitcoin because it is faster and a lot cheaper. Dogecoin has a fixed transaction fee of 1 Doge per 1k of data. Bitcoin is some 5000 times more expensive per transaction.
Dogecoin isn’t just a Bitcoin alternative. It is circulated around the forums of Reddit and other social media platforms. Tipping bots emerged in 2013 that let users send Dogecoin to other users by replying to the forum. If an especially dank Shiba inu meme is posted, you can tip a small amount of Doge. To claim your Dogecoin, you need to use the currency, so these tip didn’t just show appreciation for well thought out opinions and quality lols, they proliferated users of the coin.
The small transaction fees and smaller denomination of coins made Doge affordable and practical to tip with. It is easier to send 98 doge than it is to send 0.000052 Bitcoin. This is why there are infinite Dogecoin. It is optimised for circulation not holding.
Reasons to Buy Dogecoin?
Short term, I don’t think that the bubble is done with Dogecoin. People buy Dogecoin because they like it and because everything is going up. Dogecoin is better than most altcoins. It has an active community, and it is still being used to tip on social media platforms. When altcoins pump, Dogecoin will also pump. We are in a bubble and Shiba inu is adorable, so it seems like there is still a lot of potential for growth.
Dogecoin is as fast as the best proof of work blockchains, and it is really cheap to send transactions on their network.
Long term, once the markets have matured Dogecoin’s future is uncertain. It is still impeded by the same scaling problems that affect all proof of work blockchains. Maybe it’s use case is niche enough that it will never become a problem but if it does, Doge’s outlook is bleak.
Contributions to the Doge blockchain have slowed right down This could be because they aren’t needed. The network is sufficient for what it is used for, but I don’t think the Doge community has the backing and know how to fix scalability issues.
Ethereum is implementing POS to achieve scalable to millions of transactions. IOTA has implemented a DAG that allows transactions to verify themselves. It seems unlikely that doge could compete with these technologies long term.
But who knows, maybe Ethereum is going to somehow trick everyone, exit scam and Vitalik will get huge in prison.
Merchants Have Started Accepting Dogecoin
Listed on dogecoin.com/spend are 53 merchants where you can spend Dogecoin. These are just a few of the 100s of places you can spend Dogecoin online. For an altcoin, Dogecoin has impressed adoption. I think it is mostly a marketing stunt. Businesses are trying to cash in on the religious devotion that Dogecoin inspires in it’s followers.
Dogecoin doesn’t have to offer any additional features that aren’t offered by other cryptocurrencies. They don’t need to improve on the user’s experience, and they aren’t hindered by innovation. The community will go out of their way to spend Dogecoin and companies are always going to be interested in that kind of commitment.
It isn’t as adopted as Bitcoin, Litecoin, Monero Bitcoin Cash and other similar top 10 cryptocurrencies, but who knows? These are still the early days of cryptocurrency and Dogecoin can match Litecoin and Bitcoin Cash on transaction speeds, and it is much cheaper.
The early Dogecoin community was an altruistic bunch who wanted to be involved in cryptocurrency but weren’t super concerned with investing in a serious coin. Dogecoin promised nothing. It is entirely open source, so the people in the community made it what it is. The best example of this, I think, is Dogecoin’s fundraising efforts.
The Dogecoin community created a non-profit organisation called the Dogecoin Foundation.
“The Dogecoin Foundation is a non-profit organisation created by the Dogecoin community, for the Dogecoin community, to facilitate the use of Dogecoin through goodwill, promotional and charitable endeavours.
So whether there is a project that you would like to see happen or you just want to spread the love using the magic of doge, we invite you to work with us.” – Dogecoin Foundation
They have raised $50,00 to send the Jamaican Bobsled Team, which had qualified, but didn’t have the money to go to the Sochi Winter Olympics.
Inspired by this initial fundraising success the Dogecoin Foundation launched another effort to do something truly noble. In cooperation with Charity: water and before World Water Day, Dogecoin set out to raise $30,000 to build two wells in the Tana river basin in Kenya.
Not as charitable but still impressive, the Dogecoin community successfully raised $55,000 to sponsor a Josh Wise a NASCAR driver. A Reddit user named Unicorn_butt_sex noticed that an overperforming, underfunded racer wasn’t going to have his day on the track, and they made it happen. Dogecoin even pumped when the car placed well.