Dogecoin Review: The Original Meme Cryptocurrency
Referred to by its creator as “the spare change you throw in the jar when you get home”, Dogecoin is one of the most unique cryptocurrencies in existence.
It recently made the news when TikTok user James Galante posted a video on July 7th explaining that if people invested 25$USD in Dogecoin, they could make over 10 000$USD if the price reached 1$ per DOGE (it was worth a quarter of a cent at the time). This led to a sudden bull run that saw the price of DOGE increase over 2x to a whopping half cent over a 2-day period.
Dogecoin has been in and out of the news ever since its creation. Prior to the recent TikTok hype, it was revealed to be Tesla CEO Elon Musk’s favorite cryptocurrency. This subsequently made him the top pick for the fictious role of Dogecoin’s CEO by its active community.
Jay Hao, CEO of cryptocurrency exchange OKEx also recently stated that he believes Dogecoin to be quite a serious asset and “not a joke”, citing impressive marketing and understanding of user psychology by the Dogecoin community. This begs the question: is there more to Dogecoin that meets the eye? The answer is yes, and the details might surprise you!
Origin Story of Dogecoin
Dogecoin began as a joke started by Australian marketer and software developer Jackson Palmer. On November 27th of 2013, he had two tabs open side-by-side on his computer screen. One was CoinMarketCap and the other was a news article about the best meme of 2013, Doge.
For those unfamiliar, the original Doge meme features an image of a Japanese Shiba Inu dog named Kabosu (and there are of course variations of these memes which feature different Shiba Inu dogs). Doge memes often contain broken English in comic sans text.
When switching between the two tabs, Palmer had the funny idea of putting the two elements together and sent out a spontaneous tweet about a hot new cryptocurrency called Dogecoin. Palmer, who is also an avid purchaser of website domains, purchased dogecoin.com which featured the Doge meme superimposed on a gold coin.
Shortly afterwards, an IBM developer from Portland, Oregon named Billy Markus reached out to Palmer via Twitter asking him if he would be willing to create an actual Dogecoin cryptocurrency. By December 6th, 2013, Dogecoin was officially launched and available for virtually anyone to mine.
On December 25th, multiple Dogecoin wallets were hacked. The Dogecoin community responded by coming together and refunding all affected users. This marked the first of many large-scale initiatives by the Dogecoin community. Although Dogecoin was founded by Palmer and Markus, the project has been almost entirely community driven since its inception.
Palmer claims to have never held any Dogecoin (though he does hold Bitcoin). Markus mined roughly 1 million Dogecoin within the first 24 hours of launch, after which the mining difficulty rose so quickly that it not profitable and nearly impossible to mine using a regular computer. A few months later, Markus left Dogecoin and handed all development duties over to Palmer.
Palmer left Dogecoin in 2015 after an incident involving a now-defunct “cryptocurrency exchange” called Moolah. While it is an epic tale in itself, the short of it is that Alex Green, the CEO of Moolah became famous within the Dogecoin community for randomly tipping users thousands of dollars worth of DOGE.
He was also heavily involved in the community funding of NASCAR driver Josh Wise, who sported the Dogecoin icon on his car and jacket at the 2014 Talladega All-Star race. Green began promising dividends to those who willingly gave him their DOGE which he claimed would be used to fund projects such as a Dogecoin ATM.
Palmer was skeptical of Moolah from the outset which landed him scrutiny from the Dogecoin community. A few months later, Alex Green stepped down as CEO of Moolah and ran off with millions of dollars worth of cryptocurrency. He was eventually arrested after it was revealed that his real name was Ryan Kennedy and had a long history of run-ins with the law related to scams.
Fed up, Palmer took an “extended leave of absence” from cryptocurrency. He continued to make YouTube videos about cryptocurrency until 2018 and continued doing interviews. In 2019 he quit all social media entirely, leaving only his website which features nothing more than a black screen with his email.
The Dogecoin Foundation
The Dogecoin Foundation is a non-profit corporation registered in Colorado, USA. It was created by the Dogecoin community to facilitate the philanthropic initiatives of the community, of which there are many. The two most notable involved the funding of the Jamaican bobsled team so it could afford to compete at the Sochi winter Olympics in 2014, and Doge4Water, a project which successfully funded the creation of a clean water well in Kenya.
Interestingly enough, the Dogecoin Foundation was apparently led by Eric Nakagawa (at least during the Doge4Water campaign). Nakagawa is a best-selling author, public speaker, and the head of open-source for Libra, Facebook’s cryptocurrency project. There has been no visible activity from the Dogecoin Foundation since 2015.
What is Dogecoin?
Dogecoin is a cryptocurrency that is primarily used for tipping users on Reddit and Twitter. It is also accepted as a method of payment by a few dozen merchants around the world. You can use Dogecoin to buy food, household supplies, and even website domains. Dogecoin was created as an attempt to break the stigma surrounding cryptocurrency, which carried negative connotations at the time.
It was also introduced as a response to the opportunistic greed Palmer saw in much of the cryptocurrency community. As such, Dogecoin was intentionally designed to be unattractive to investors by keeping a permanently low value due to its mining algorithm.
How does Dogecoin work?
Dogecoin is a version of Luckycoin, which is itself a fork of Litecoin (and for those unfamiliar, Litecoin is a fork of Bitcoin). The Dogecoin blockchain can process roughly 30 transactions per second (TPS). Each DOGE transaction costs roughly 1 cent USD.
Shortly after Dogecoin’s launch, Dogecoin developers worked with Digibyte developers to implement Digishield, a protocol which modifies Dogecoin’s mining difficulty every block to prevent it from being taken over by a large mining pool. Dogecoin had no ICO and no pre-mine. In contrast to many other cryptocurrencies, Dogecoin’s function and design is quite simple and has remained so since it was created.
Dogecoin Consensus
Dogecoin uses a proof of work consensus algorithm called Auxiliary Proof of Work which allows those who mine other proof of work cryptocurrencies (primarily Litecoin) to simultaneously mine DOGE at no additional cost in a process known as merged mining.
This was integrated after Litecoin founder Charlie Lee approached Palmer and the Dogecoin community, suggesting that the feature be added to bolster the network and protect it from a 51% attack. Palmer has noted that Dogecoin is now “merged at the hip” with Litecoin – Dogecoin’s survival literally relies on Litecoin’s.
Like Luckycoin, Dogecoin’s initial block rewards were designed to be random and vary between 0 and 1 million DOGE. This continued until DOGE hit a supply of 100 billion (a reference to an Austin Power’s film), which occurred in February of 2018. Since then, each mined block yields a reward of 10 000 DOGE.
One block is mined every minute and Dogecoin has no supply cap. Palmer has stated that this was a mistake, and that the supply cap was supposed to be set at 100 billion. This was left “unfixed” on purpose as it keeps the cost of DOGE low. Like Litecoin, Dogecoin uses Scrypt technology.
DRC-20
This is a token standard that allows developers and users to create DApps and for developers to issue tokens that take network fees in the form of Dogecoin.
Following the standard's release, Dogecoin's daily transaction volume reached an all-time high of 645,000, according to BitInfoCharts, outpacing both Bitcoin and Litecoin transactions. However, the transaction count eased up a few days later.
How to mine DOGE
Dogecoin was designed to be mineable by basically anyone with a computer and can be done using a CPU or GPU. However, as noted earlier the Dogecoin mining difficulty increased substantially within the first day of the coin’s release. Mining with either a CPU or GPU is not recommended, especially not the former as it can cause your computer to overheat.
Mining alone using either a CPU or GPU would give you an average return of less than 1 DOGE per hour or even per day depending on what hardware you are using. As such, it is instead recommended to join a Dogecoin mining pool.
You can also mine DOGE using an application specific integrated circuit (ASIC) miner. This is essentially a fancy term for specialized hardware designed specifically for mining cryptocurrencies. ASIC miners come in all shapes, sizes, and price tags. You can use this handy Dogecoin mining calculator to get a sense of how much money you could make with the ASIC miner you have in mind (hint: make sure it is a Scrypt miner). You can also participate in Dogecoin mining pools with an ASIC miner.
Once you have decided what you are going to use to mine, you will have to find the appropriate software. If you want mine Dogecoin using your CPU (not recommended), you will need to download CPUMiner. If you want to mine Dogecoin using your GPU you can download either CGminer or EasyMiner.
These two softwares are also compatible with Scrypt ASIC miners. Now, you need to find a Dogecoin mining pool. You should be able to find one on Aikapool or Multipool. Besides that, all you need is a computer, an internet connection, and a Dogecoin wallet address on Dogecoin’s native wallet, DogeChain.
Dogecoin Roadmap
Dogecoin has no definitive roadmap and no whitepaper. The closest thing to a roadmap for Dogecoin appears to be this Reddit post from 2017, which outlined a series of minor fixes and improvements to Dogecoin. In truth, there have been virtually no major developments since Palmer left in 2015 and the Dogecoin Github confirms that most “developments” since then have been security patches and other network maintenance.
Palmer has noted that this is primarily because Dogecoin was only ever a fun side project for him and basically every other developer involved with Dogecoin. Most of Dogecoin’s goals have involved community-based charity or stunts, such as sending a Dogecoin-themed rover to the moon (for real).
One interesting thing to note is that Dogecoin almost became compatible with Ethereum in 2018. Someone (allegedly Ethereum founder Vitalik Buterin, who is pro-Dogecoin) offered a 372 Ethereum bounty (roughly 100 000$USD at the time) to developers who could successfully create a Dogecoin-Ethereum bridge.
This would see Dogecoin become an ERC-20 token on the Ethereum network and allow users to swap their DOGE for ERC-20 equivalents (and vice versa). The Dogecoin-Ethereum bridge was abandoned after the Dogecoin community noted that DOGE’s primary use case of tipping would not be feasible in an ERC-20 form given Ethereum’s high gas fees.
DOGE Price Analysis
Dogecoin’s price history is as wild as its origin story. When it first debuted on the crypto market in December 2013, DOGE was worth around 0.0002 USD. By January of 2014, its value had risen almost 10x to a price of roughly 0.002 USD. In 2015, the price of DOGE dropped all the way down to 0.0001 USD.
During the historic cryptocurrency bull market of 2017-2018, the price of Dogecoin skyrocketed to almost 2 cents USD. Now, we know these valuations are quite low, but take a second to realize that this was a 100x gain from DOGE’s initial market price!
There is one more important thing to note about the price action of DOGE. It appears to follow a relatively predictable cycle that seems to be quite independent of other major cryptocurrencies such as Bitcoin. Some have speculated to be evidence of price manipulation by whales (pump and dump).
In any case, seasoned traders have taken advantage of this predictable cycle to make some serious profits. Although the recent price pump was fundamentally due to the TikTok hype, it was almost exactly in line with what was expected to happen based on Dogecoin’s previous price cycles.
Where to get DOGE
Dogecoin is extremely easy to get. Once upon a time, large airdrops were common within the Dogecoin community and users could even go to designated websites called “Dogecoin Faucets” to claim free Dogecoin. Although not as frequent, Dogecoin giveaways still occur from time to time. You can still receive tips in Dogecoin for actively participating in the Dogecoin subreddit. Admittedly, the amounts tipped and given away are not worth very much in USD.
If you want to buy Dogecoin there is no shortage of options. There are over 250 trading pairs listed on CoinMarketCap with at least 3 dozen exchanges supporting DOGE. These include the likes of Binance, OKEx, Huobi, and Kraken.
As of May of this year, you can even buy Dogecoin directly using popular crypto platform Bitpanda. If you decide to get your DOGE from an exchange, you will not have any issues doing so as there is plenty of volume to go around. That being said, Dogecoin’s 24-hour volume is suspiciously low compared to its total market cap, which may leave it susceptible to price manipulation.
DOGE Wallets
When it comes to storing your Dogecoin, you likewise have quite a few options. As far as hardware wallets go, Dogecoin is supported by both Ledger and Trezor. Digital wallets for DOGE include Coinomi (mobile), Exodus (desktop/mobile), Atomic Wallet (desktop/mobile), and of course Dogecoin’s very own Dogechain wallet.
If you want to learn more about Dogecoin cryptocurrency wallets or just want more details about the ones mentioned, you can check out our article about Dogecoin wallets.
Our stance on Dogecoin
Dogecoin is one hell of a project. Its history, its community, and its oddly high ranking in CoinMarketCap (36th at the time of writing) reveals it to truly be the product of an unholy union between decentralized currency and internet culture.
This is of course what it was always meant to be – a lighthearted icon to remind those both inside and outside of cryptocurrency not to take things too seriously. In this sense, Dogecoin has achieved practically everything it set out to do. Despite a concerning lack of development, DOGE continues to exist without any major issues and may even be around for many years to come.
The recent price spikes driven by TikTok were a nice laugh but anyone who took two seconds to do the math would realize that it is virtually impossible that DOGE could be pushed to reach a price of 1$. With a current supply of 125.5 billion, at 1$ per coin, Dogecoin would be a close second to Bitcoin in terms of market cap.
Not only that, but it would be worth more than the next top 10 cryptocurrencies combined. The likelihood that a cryptocurrency that has had next to no development and has an extremely weak use case and low TPS (by current standards) would outperform a cryptocurrency like Ethereum is zero.
There is one last thing we need to note and that’s price manipulation. Although Dogecoin’s native blockchain explorer does not make it possible to see a list of the wallets which hold the most Dogecoin, BitInfoCharts does. Not only that, but it also shows us how much Dogecoin has gone in or out of those wallets over the past week and over the past month.
As you can see, there are some accounts with billions of DOGE worth tens of millions in USD. The number of transactions going in and out are conveniently listed on the righthand side, which makes it easy to identify which of those addresses probably belong to cryptocurrency exchanges.
There appears to be a handful of accounts in that top 100 list that have been recently dumping large amounts of DOGE. Could one or all of them be responsible for DOGE’s price cycles?
While we may never know, one thing sticks out in this top 100 list: the majority of these top 100 accounts seem to have received their first transaction in 2019 or 2020. That is very strange and could be further evidence of price manipulation by various individuals or even an organization.
It is also possible that Dogecoin has been “compromised” from the start. All of its social media accounts were created spontaneously by its community and could therefore be used as a tool by the individuals who manage those accounts to create and/or facilitate pump and dump cycles.
Conclusion
All in all, Dogecoin was, and is, fun. It is questionable how long this memorable cryptocurrency will last, but it seems that so long as Litecoin continues to breathe, so too will the Shiba Inu of Dogecoin. It seems like a bit of a shame that Palmer stepped away from Dogecoin.
It would have been incredible to see just how far the cryptocurrency could have come and could go if its creator had directed its active and die-hard community.
Dogecoin could still be and hopefully will be a force in driving cryptocurrency adoption in the years to come. It has certainly done a good job of that so far!
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.
