Dogecoin: The rising fame of the meme currency

In the early years of cryptocurrency, a digital coin named Dogecoin that had the famous Shiba Inu meme as its mascot surfaced on the internet. Originally created as a joke currency, the meme-based altcoin recently gained traction in the market and now holds a market capitalization of around US$5.7 billion.

Dogecoin started as a satire directed at the growing popularity of cryptocurrencies such as Bitcoin. It was created in December 2013 by software engineers Jackson Palmer and Billy Markus using the Litecoin protocol as its blueprint, enabling peer-to-peer transactions through its own decentralized network.

It became one of the first generation altcoins designed with a friendlier and more accessible approach to cryptocurrency. The meme currency attracted lighthearted traders from online platforms such as Reddit who were interested in using the digital currency to crack jokes online or donate to charitable causes.

Dogecoin’s humble beginnings

As a known sceptic of emerging digital currencies, Jackson Palmer often tweeted tongue-in-cheek statements about creating Dogecoin. However, the meme-currency instead gained positive feedback in social media that led him to buy the domain Dogecoin.com.

Soon after, Billy Markus, a software developer at International Business Machines (IBM) Corporation in Portland, Oregon, discovered the Dogecoin buzz. He saw it as an opportunity to create his own digital currency and reached out to Palmer for permission to reconfigure the software for the satiric altcoin.

The code used for Dogecoin was based on Luckycoin that was also derived from Litecoin. Markus used Litecoin’s Scrypt technology that made it possible for users to easily access and mine new coins. Moreover, Dogecoin also implemented proof-of-work to verify crypto transactions.

Dogecoin features

Although originally meant as a joke, Dogecoin still has the following features that set it apart from other digital currencies:

Censorship Resistant

Similar to Bitcoin, the Dogecoin Scrypt ensures a secure peer-to-peer network and a real-time consensus with blockchain technology. This means that hackers would need to control 51% of the network’s hashing power to manipulate or hack the blockchain—something that is proven to be virtually impossible.

No hard capital

Unlike Bitcoin that only has a limited supply of 21 million, Dogecoin has an unlimited supply. Initially, there were only 100 billion Dogecoins in circulation that were all already mined by 2015 because of the altcoin’s 1 minute block times. Due to this, the developers decided to release another 5 billion coins in circulation and scheduled to do so annually because of the demand.

Digging

Instead of miners, the Dogecoin community has diggers that mine the cryptocurrency. It functions similar to mining in Bitcoin where new transactions are validated by nodes then stored on the blockchain.

The first few months of Dogecoin

Just two weeks after the digital currency went live, the Dogecoin website had over a million visitors, alongside the altcoin’s value rising over 300%. However, this rally was short-lived since its price also retracted by 80% three days later.

However, even though Dogecoin isn’t as widely used as other cryptocurrencies such as Bitcoin, Litecoin, and Ripple, it already formed a loyal community of users.

Most Dogecoin enthusiasts use the altcoin as a tipping currency for entertaining content in social media, while some use it to donate to various activities. In January 2014, 27 million Dogecoins amounting to US$300,000 was donated to fund the Jamaican bobsled team on their trip to the Sochi Winter Olympics game.

In March of the same year, the community was able to raise US$11,000 worth of Dogecoins to build a well in Kenya. Another US$55,000 worth of Dogecoin was also raised in the same month to sponsor NASCAR driver Josh Wise in his upcoming race at Aaron’s 499 at Talladega Superspeedway.

Moolah controversy

In 2014, a Redditor and crypto enthusiast by the name of Alex Green created Moolah, a cryptocurrency exchange that traded Dogecoins. He became famous after going on tipping sprees wherein he would give thousands worth of Dogecoins to strangers.

Green convinced fellow Dogecoin enthusiasts over at Reddit to donate large amounts of money to jumpstart Moolah. Many Reddit investors were convinced to donate, however, a few months later, the Moolah CEO used the donations to invest around US$1.5 billion in Bitcoin instead.

Elon Musk and his ‘fav cryptocurrency’

In the first few months of 2021, Dogecoin along with Bitcoin experienced a surge in prices when cryptocurrencies caught the attention of billionaire and Tesla CEO Elon Musk, as well as Reddit investors in r/SatoshiStreetBets and r/WallStreetBets forums.

In January, Dogecoin increased seven times its value in a span of 24 hours and reached a market cap of US$7 billion. This rally over the meme currency was sparked by a tweet of Elon Musk featuring a photo of the Shiba Inu meme and mentioning that it was his ‘fav cryptocurrency.’

The Reddit investors from the abovementioned forums caught wind of Musk’s tweets, which led to Dogecoin’s price increase in January and February.

Musk made several tweets about Dogecoin over the last months which helped boost the value of the digital currency. In February, he posted another tweet referencing Lion King wherein Musk was edited holding the famous Shiba Inu meme. On the same day, Dogecoin increased by over 59%.

He also urged major Dogecoin holders to sell some of their coins to further increase the digital currency’s value. To further cement his interest in the meme currency, he even offered to pay actual money for these investors to sell their Dogecoins.

The altcoin that started out as a joke has now caught the attention of big-time investors such as Musk and regular traders on Reddit boards. With their influence, many people are starting to recognize Dogecoin’s potential and it might not be long before it becomes one of the top cryptocurrencies on the market.