In the cryptocurrency space, a world that revolves around internet culture, it’s fitting that one of the market’s rising stars would be inspired by a meme. Dogecoin is a cryptocurrency created as a joke, but it’s been taking the crypto world by storm for the past few months.
Over a 48-hour period in early May, the market cap of DOGE increased $16 billion, making it the fourth-largest crypto by market cap at the time. Ultimately, it reached a high of nearly 70 cents before falling. At its peak on May 5, DOGE reached a market capitalization of $85,314,347,523.
Many believe Dogecoin is over-hyped, and they predict that the frenzy surrounding the coin will likely lead to its doom. Although, others are more confident about the coin’s longevity. Since its creation, Dogecoin has joined the list of NASCAR sponsors. It has garnered the support of famed entrepreneur Elon Musk whose tweets about DOGE have correlated with price jumps. And it allegedly crashed the servers of commission-free stock trading and investing app Robinhood due to unprecedented demand.
Let’s take a look at this exciting altcoin, its benefits and downsides and where it could be headed next.
The Origins of Dogecoin
DOGE was created by IBM software engineer Billy Markus and Adobe software engineer Jackson Palmer in response to wild speculation in the crypto market. Its logo is an image of the Shiba Inu dog from the “Doge” meme. It was introduced on December 6, 2013.
However, the coin was more than a joke. Markus and Palmer wanted to create a peer-to-peer digital currency that would appeal to a broader audience than Bitcoin. The insular crypto market can be daunting to newbies, and the pair wanted to create a coin with a lower barrier to entry. Within 30 days of Dogecoin’s introduction, there were more than a million visitors to Dogecoin.com.
Dogecoin uses the same protocol as Luckycoin, which forked from Litecoin and used a Scrypt algorithm. In using this proof-of-work algorithm, Dogecoin’s creators have prevented miners from using SHA-256 bitcoin mining equipment. Instead, miners must use the more complex FPGA and ASIC devices. This protocol makes mining Dogecoin at a profit difficult.
Right from the beginning, DOGE got off to an exciting start. Shortly after its creation, in mid-December, its price jumped nearly 300 percent in 72 hours, increasing from $0.00026 to $0.00095. At that point, the market was seeing a volume of billions of Dogecoins per day. However, the increased value did not last. Three days later, Dogecoin suffered its first major crash by dropping by 80%. Some attribute this crash to large mining pools which were exploiting the fact that, at the time, mining Dogecoin took a minimal amount of computing power.
That same month, DOGE took another hit when its wallet platform was hacked. On December 25, 2013, millions of coins were stolen after a hacker gained access to the platform’s filesystem and modified its send/receive page to send almost all coins to a static address. While this predicament was somewhat of a blow to the DOGE brand, it actually led to increased mentions on Twitter. This occurrence led to Dogecoin being the most mentioned altcoin on the platform at the time.
Modern Day DOGE
Since the coin’s rocky beginnings, Dogecoin has stabilized somewhat in subsequent years. (Well, stabilized as much as any coin in the crypto market can.)
In January 2014, its trading volume briefly surpassed that of Bitcoin and all other cryptocurrencies combined. On January 7, 2018, the price of Dogecoin briefly reached a peak of $0.017 and a total market capitalization of almost $2 billion. And in July 2020, the price spiked after a TikTok campaign pushed for the coin to reach $1.
However, in recent months, the coin has continued its wayward trajectory. Things kicked off for DOGE in January 2021 when its price went up more than 800% in 24 hours. That month, it reached a peak of $0.07. Many attribute this rise to DOGE’s increased presence on social media (thanks in part to those Elon Musk tweets) and discussion board sites like Reddit. However, the rise of DOGE also coincided with the January 2021 GameStop short squeeze.
For the uninitiated, the GameStop short squeeze occurred when a large group of retail investors on Reddit invested in the gaming retailer in response to the short-selling of GameStop shares by hedge fund managers. This caused the retailer's stock price to reach a pre-market value of more than $500 per share, a major increase from its $17.25 valuation earlier that month.
Users of the subreddit r/wallstreetbets led the GameStop campaign. And that same group then set its sights on Dogecoin. As a result of this attention, in February 2021, Dogecoin hit a new high price of $0.08.
Dogecoin has continued to gain attention from the likes of musicians Snoop Dogg and Gene Simmons, and in March 2021, the coin made it to primetime. That month, Dallas Mavericks owner Mark Cuban announced his NBA team would allow people to use Dogecoin to purchase tickets and other team products. In just two days, following the announcement, the Mavericks had allowed more than 20,000 transactions, making it the top Dogecoin merchant at the time.
The following month, the cryptocurrency market as a whole was given a boost after the cryptocurrency exchange platform Coinbase went public. And DOGE rode the wave. On April 14, its price reached $0.10 April 14, before hitting $0.45 just two days later. At the time, Dogecoin’s market capitalization was nearly $50 billion, making it the fifth-highest-valued cryptocurrency.
On May 4, 2021, the value of Dogecoin surpassed $0.50 and continued to rise in the following days until reaching a peak of more than $.7. However, this month DOGE also took a hit.
To date, Musk has been one of Dogecoin’s most vocal supporters, and his tweets have been tied to DOGE price increases. However, Musk’s appearance on the sketch comedy show Saturday Night Live caused the price of DOGE to drop 34 percent. The morning after the broadcast, the price of DOGE had dropped to $.40.
It’s unclear why Musk’s appearance hurt the coin’s value, but in the following days, Musk did his part to rebound the price of the coin. On May 9, 2021, Musk’s aerospace company SpaceX announced a rideshare mission to the Moon completely funded by Dogecoin. This vent would make DOGE the first cryptocurrency to fund a space mission.
DOGE has failed to rebound to its previous heights as of this writing, but the coin continues to be a darling in the crypto sphere.
More Than a Coin
Several online retailers accept DOGE for groceries, services and more. Like other cryptocurrencies, it cuts out the middleman in transactions so users can send funds anonymously. And its large supply and low price make it a great currency to use in micro-tipping content on social media, where the coin has become the stuff of legends.
Dogecoin touts itself as “the fun and friendly internet currency,” and that’s due in part to its online community. Dogecoin’s Reddit community boasts more than 2 million members, and there’s a separate 11,000 member community dedicated to educating newbies. The coin’s founders also established a non-profit foundation, and the DOGE community has launched several charitable giving campaigns.
Remember that hack in 2013? To help those who lost funds on the DOGE wallet platform, the Dogecoin community created the "SaveDogemas" campaign to raise funds for those who had been impacted. One month after the hack, everyone hit by the breach saw their funds restored.
Dogecoin also played a role in the 2014 Winter Olympics. The DOGE community launched a campaign to raise funds for the Jamaican Bobsled Team. Keeping the tone just like DOGE’s comedic beginnings, the campaign was inspired by the 1993 cult hit film Cool Runnings which follows a Jamaican bobsledding team gearing up for the Olympics. In real life, the 2014 team had qualified for the Olympics but could not afford to go. The DOGE community raised $36,000 worth of Dogecoin for the team.
Since then, the Dogecoin Foundation and community have taken on several other causes as well. In 2014, they raised $50,000 to provide clean water during the crisis in Kenya. This year, they raised more than $18,000 for a charity helping rescue dogs from overcrowded shelters. And the community has also donated computing power for the study of cancer.
Despite all of the previously mentioned benefits of Dogecoin, we wouldn’t also have to discuss the criticism surrounding this altcoin. The elephant in the room here is the fact that Dogecoin was inspired by a meme. This small blunder has prevented many investors in the crypto space and mainstream media from taking it seriously. But more serious concerns have emerged as well.
Akand Sitra of cryptocurrency risk management platform TRM Labs claims that Dogecoin is a scam.
“Dogecoin is a scam. A pump-and-dump juvenile scam which is a blot on the entire Crypto industry,” Sitra said in an April 2021 LinkedIn post. “The scam is simple – Hold on to Dogecoin till there is enough traction after it multiplies, dump all coins and cash out – Become instant billionaires.”
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According to Sitra, more than 65% of Dogecoins are held by the top 98 wallets in the world. He also claims that the largest wallet holds 28% of all Dogecoins, and the top five wallets control 40% of the coin’s entire supply.
“The Dogecoin bubble will burst by the end of this year, easily,” Sitra said.
How To Get Yourself Some Dogecoin
If the previous section didn’t scare you off, let’s look at how you can get your hands on some Dogecoin.
There are several ways to get started with DOGE, but first, let’s look at setting up a wallet on your Android phone as an example. You’ll need a wallet to hold your Dogecoins directly on your Computer/Smartphone.
1. Downloading your Wallet
First, you’ll need to visit the Google Play Store to download the Dogecoin Wallet. Once the application has been downloaded, install it and accept the app permission requests.
2. Using your Wallet
The app allows you to keep track of your Dogecoin transactions. It also comes with an address book to input contact info for your peers to enable easy transacting. From the app, you can “Request Coins,” “Send Coins,” or scan a QR code with your camera.
3. Getting Dogecoin
You can acquire Dogecoin through various methods such as mining or trading, but for the sake of this example, let’s discuss how to buy Dogecoin. To buy Dogecoin, you’ll likely have to go through a cryptocurrency exchange that sells it. To sign up with an exchange, you’ll have to enter your financial information before making a transaction. Once you’ve made your purchase, you can transfer the funds to your wallet.
Since the rise of DOGE, several competitors on the market are billing themselves as DOGE killers. However, other coins have recognized the power of the coin and are looking to capitalize on its success.
Enter MetaWhale DOGE. The MetaWhale protocol is deflationary. For every mwDOGE transaction, some of the coin’s supply is burned, another portion is used to buy additional DOGE, and a portion of the DOGE is stored in a virtual reserve for holders who can claim their share mwDOGE supply reaches 1. The other portion is burned.