Based on a meme, the digital currency Dogecoin suddenly captured our attention when the Tesla CEO Elon Musk tweeted “Dogecoin is the people’s crypto”. As a result, the coin’s price rose 59% on Thursday. But more interestingly is the fact that Reddit users helped to skyrocket the cryptocurrency, all the way up to 600%. This happened in January as a copycat rally to GameStock’s surge.
Dogecoin is the people’s crypto— Elon Musk (@elonmusk) February 4, 2021
What is Dogecoin?
The cryptocurrency started in 2013 as a joke between two engineers but eventually found a purpose as a more friendly, approachable alternative to Bitcoin. IBM software engineer Billy Markus and Adobe software engineer Jackson Palmer had never even met when they successfully combined two of 2013’s greatest phenomena: Bitcoin, and “doge.” As a result, the Dogecoin was born.
In the first month since the coin was released, almost one million people visited the website dogecoin.com. To the surprise of the creators, Dogecoin was a cryptocurrency that people started using as soon as it was launched.
Then, the doge meme happened. In 2013 the image of a Shiba Inu dog gained popularity all over the internet. People started using the meme for jokes about naps, early mornings, diets — even space exploration.
Since 2015, Dogecoin hasn’t seen any major technical updates or developments even though it could have benefited from improvements to the Litecoin code. This was due to the fact that Jackson Palmer left the project. He declared that he was going on an “extended leave of absence”
Dogecoin is different from most other altcoins and that’s because it’s an inflationary cryptocurrency. That means there is no maximum limit to the number of coins in circulation. You see, Bitcoin and many other deflationary cryptocurrencies have a hard supply cap of coins.
So, for example, Bitcoin has 21 million coins that can be mined in total. Once miners unlock this amount of bitcoins, the supply is going to be exhausted. This means it will be no longer profitable for the miners to continue to sustain the system.
But for Dogecoin the concept is different. The creators came up with a solution to the problem. As an incentive to mine more coins, each miner will always be rewarded with new Dogecoin.
What is Dogecoin used for?
The cryptocurrency has very low transaction fees, it’s easy to use and the transaction happens almost immediately. So, most fans use the coin as a currency. The most popular use is to tip people over the internet as “thank you” for providing interesting content.
But similar to other altcoins, you can hold Dogecoin as an investment, hoping that one day the price will go to the moon.
The community has frequently raised funds for charitable causes. For example, in January 2014, it launched a fundraiser to raise $50,000 for the Jamaican Bobsled Team, which could not afford to go to the Sochi Winter Olympics. Meanwhile, the Foundation managed to raise 40,000,000 coins to build a well in the Tana river basin in Kenya.
Update on Feb 7th, 2021
Yes, you heard it right, Snoop Dogg just joined Elon Musk’s ‘Dogecoin army’. After the American rapper shared on Twitter the photoshopped album cover, the price of meme cryptocurrency soared more than 45%.
Currently, Dogecoin is one of the most significant coins on the market (number 15 on CoinMarketCap). Even though it will never be taken as seriously as Bitcoin, probably is one of the best coins for crypto newcomers. Despite the small total funding, it has a loyal fanbase, fantastic support on Reddit, and fast transaction times. So who knows, maybe it’s also good for you.