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Dogecoins: The Secret Of Its Foundation, 07/2021
CRYPTO CURRENCY

Dogecoins: The Secret Of Its Foundation, 07/2021

What is Dogecoin?

Dogecoins (DOGE) is a cryptocurrency designed as a fun and parody of Bitcoin. The fun quickly turned serious and a billion-dollar project – mainly thanks to social media, Elon Musk, a lot of hype, and wild speculation. Technically, Dogecoin is a split (so-called “fork”) from Bitcoin and Litecoin.

Dogecoin is a classic peer-to-peer cryptocurrency based on the blockchain, published at the end of 2013. Dogecoin, developed by the two programmers Billy Markus and Jackson Palmer, should only serve one purpose: to be fun and that bitcoins can parody the Bitcoin clones sprouting up from the ground.

Based on the popular one at the time of publication Doge memes, Dogecoin can find on the Dogecoin logo. The DOGE logo shows a dog of the Japanese breed “Shiba” and makes Dogecoin unmistakable.

Once released, DOGE quickly gained huge popularity in online communities like Reddit. Not only were memes shared there, but there were also tipbots with which you could reward creative or funny contributions with a few Dogecoins. It quickly developed into a community that helped Dogecoin to certain popularity.

Dogecoin at a glance

Cryptocurrency DOGE

Founder: Jackson Palmer, Billy Markus

Publication: December 2013

Use case: Payment, meme

Consensus algorithm: Proof of work

Forks: Litecoin, Bitcoin, Luckycoin

Development: Open source

In January 2014, the community raised enough money for Jamaica’s bobsleigh team to participate in the Olympics, which had qualified but had problems financing the trip. In the USA, a race car finance by DOGE got launched in the NASCAR series – including the matching paintwork and the Dogecoin logo on the car. The Doge4Water initiative raised the equivalent of more than 30,000 US dollars to drill wells in Kenya.

Doge – the meme behind the cryptocurrency

Dogecoin meme

Dogecoin is based on the Doge meme, which was very popular globally, especially in 2013. The original meme consists of a picture with a Shiba, a Japanese breed of dog. The picture framed by text in “Doge Speak,” a rudimentary English: “Much sad.”, “Such fun.”, “Wow.” – as colorful as possible and always in the often ridiculed Comic Sans MS font.

After the publication of Dogecoin with the famous Shiba in the logo, the meme got adopted and adapted. Doge Speak, like “Much coins” and “very Blockchain,” adorned the Dogecoin logo and, of course, the almost famous “Dogecoin to the moon! “Read in online communities like Reddit and social networks like Twitter.

How does Dogecoin work?

From the beginning, Dogecoin’s only intention was as a fun currency and parody. The cryptocurrency, therefore, did not bring technical innovations that would have made Dogecoin unique or particularly practical from the start. Dogecoin is from Litecoin(LTC) and is technically very similar to the early crypto pioneers Bitcoin and Litecoin. Like BTC and LTC, DOGE, based on blockchain technology, is a decentralized and globally distributed database in which all transactions are practically forgery-proof. Thanks to the decentralized structure, there is no mediator. Neither a bank nor a government agency regulating transactions nor directly influencing the price.

Dogecoin is a fork (fork) from Luckycoin, Litecoin, and Bitcoin.

The Dogecoin blockchain is like Bitcoin, Litecoin, and many others Cryptocurrenciesupdated based on the proof-of-work algorithm. Accordingly, an important component is mining, in which complex tasks get solved and a consensus, achieved in the Dogecoin network. The miners confirm transactions. And receive newly created or freshly mined Dogecoins in return for the computing power they make available to the network. As a fork of Litecoin, Dogecoin has the mining algorithms “Scrypt” inherited from classical computers and, particularly with normal graphics cardsprofitable mining made possible. In the meantime, however, the Scrypt algorithm has also been mastered by professional miners who use specialized hardware and operate in countries with, particularly low electricity prices.

Dogecoin vs. Bitcoin: Comparison and Differences

Bitcoin vs. Dogecoin – Comparison of the two cryptocurrencies

Although DOGE is strongly reminiscent of Bitcoin, Litecoin, Ethereum, and many other cryptocurrencies, there are still some differences on the technical side with which Dogecoin draws attention. One of the characteristics of DOGE is a fast block time. The Dogecoin network creates a new block every minute, while it takes 2.5 minutes for Litecoin and 10 minutes for Bitcoin. The short time it takes to create a new block enables quick transaction confirmations and, with it, quick payments. It is particularly advantageous for small and frequent payments. For example, when “typing,” that is, as a reward for posts in social networks or online communities with a small amount.

An enormous amount of Dogecoin in circulation

One of the biggest differences (and disadvantages) compared to Bitcoin and Litecoin is the huge number of coins. While there will be a maximum of 21 million Bitcoins and a maximum of 84 million Litecoins, Dogecoin was designed for 100 billion coins when released in 2013. Transactions of thousands and tens of thousands of coins were therefore not uncommon from the start. In the meantime, the limit of 100 billion coins has even got removed without replacement. And the mining of new coins is unlimited. It makes Dogecoin a highly inflationary currency.

Since the beginning of 2015, 5.256 billion new Dogecoins added every year. Halving like Bitcoin or Litecoin, in which the number of newly mined coins per block regularly turns into half, does not exist with Dogecoin. The constant increase in the amount initially leads to an above-average rate of inflation, which is continuously falling but will only reach a level known from traditional currencies in many years.

Dogecoin inflation rate:

  • 2015: 5.3%
  • 2025: 3.4%
  • 2035: 2.5%
  • 2050: 1.9%

Dogecoins Hype: How did the rapid price development come about?

Dogecoins should be a joke and parody cryptocurrencies like Bitcoin. For years, many people online had fun with memes, small donations, and charity projects like Doge4Water. In the years after its publication, Dogecoins repeatedly attracted attention with price increases and even briefly reached a market capitalization of more than one billion US dollars during the first real crypto hype around the year from 2017 to 2018 – quite impressive for fun- Cryptocurrency.

By 2021 at the latest, the fun turned serious. Dogecoins developed into a mass phenomenon, trumped cryptocurrencies such as Litecoin, XRP, Cardano, and Binance Coin. It was, meanwhile, worth more than established big banks and internationally successful corporations. There was a lot of speculative hype, and even the joke phrase “Dogecoin to the Moon” actually became a reality.

Dogecoin price development 2021, source: coinmarketcap.com

Social media as a driver of the dogecoins hype

Social networks – especially TikTok – have played a large part in the growing awareness and popularity of Dogecoin. In mid-2020, a video triggered the first hype in the video-sharing network. More and more users called for investing in Dogecoin to “get rich quick.” Combined with the easy availability of Dogecoin and trading apps like Robinhood, the TikTok hype led to a price increase of more than 100 percent. The TikTok hype was, of course, not sustainable. The Dogecoin price fell as quickly as it had risen.

Elon Musk drives Dogecoins price to unimagined heights.

The “TikTok-Pump” was only a harbinger of what was to come, namely an unprecedented price development. Elon Musk has played a large part in this. The entrepreneur is not only one of the co-founders of PayPal and the CEO of Tesla and SpaceX. He is also one of the most important technical thought leaders and has more than 50 million followers on the short message service Twitter alone.

In 2019, Elon Musk publicly referred to Dogecoin as his favorite or preferred cryptocurrency. He was unceremoniously named “CEO of Dogecoin” following a survey of Dogecoin developers. In the following months, Elon Musk fueled the Dogecoin course again and again with benevolent tweets and comments – and thus ensured that more and more people got to know Dogecoin, and many also invested. Elon Musk certainly lays one of the cornerstones and contributed significantly to the fact that Dogecoin became a real price rocket from the beginning of 2021.

 

The preliminary highlight was Elon Musk’s appearance as host of the US comedy show “Saturday Night Live.

” Elon Musk played his cards beforehand with tweets in which he not only shared Dogecoin memes but also referred to himself as “The Dogefather” about the legendary Mafia film “The Godfather” and indicated that Dogecoin played an important role in the show will play. More and more media picked up on Elon Musk’s tweets, and the ball got rolling. The result was an unprecedented price development with an increase to 0.74 US dollars per Dogecoin, the DOGE meanwhile the third most valuable cryptocurrency behind the two top dogs, Bitcoin and Ethereum made. At that moment, at the latest, it was over with the pure fun cryptocurrency Dogecoin. DOGE became a serious object of speculation. Those who invested in advance could achieve a return of 20,000 percent within a few months.

The Price Fall

The price fall after Elon Musk’s appearance on Saturday Night Live was not long in coming – followed by a sharp correction of more than 30 percent, which is not unusual after such a hype. What has certainly remained is a much greater awareness of cryptocurrencies

An increased enthusiasm of people who first came into contact with the crypto world knew the technology behind it through a cryptocurrency developed as a fun and based on a meme.

Elon Musk, however, did not give up. Just one day after his TV appearance, the CEO of the space company SpaceX announced that “Dogecoins to the moon!” It will soon no longer be a joke. Elon Musk wants to bring Dogecoins to the moon. SpaceX is to launch the “DOGE-1” satellite into space – and that as part of a mission financed with Dogecoin. Incidentally, Elon Musk also had Twitter voted on whether the electric car pioneer Tesla should accept Dogecoins as a means of payment in addition to Bitcoin in the future, which was, of course, affirmed by a majority of his followers.

Dogecoins course development & milestones

The Dogecoin was launched as fun and parody but developed into a serious project with a market capitalization of almost 100 billion US dollars by early 2021 at the latest – more than the car manufacturer Daimler, the chip manufacturer AMD or the major bank HSBC.

How remarkable the price development of Dogecoins is becoming clear when you take a look at the historical milestones:

Dogecoin course – milestones (excerpt)

  • December 2013: $ 0.0002
  • Jan 2014: 0.001 US dollars
  • January 2018: $ 0.01
  • Jan 2021: $ 0.05
  • February 2021: $ 0.07
  • April 2021: $ 0.10
  • May 2021: $ 0.74

Conclusion and prognosis for Dogecoins

Dogecoin, found at the end of 2013 as a pure fun cryptocurrency and, over the years, has developed into a serious but high-risk speculative object. Unlike Bitcoin, Ethereum, Polkadot, and other cryptocurrencies, Dogecoin does not aim to serve as a means of payment or change the world. Dogecoin has no special skills and does not bring any technical innovation. Nevertheless, DOGE has its place in the crypto world and will not disappear for the foreseeable future.

Dogecoin no longer parodies Bitcoin and Co.; thanks to its meme character, it offers new users an easy entry into the world of cryptocurrencies. While Bitcoin and especially Ethereum are more for experienced users with certain technical background knowledge, Dogecoin invites you to take a closer look at cryptocurrencies and the principle behind them with the special dog logo.

Found in TikTok

Memes, platforms like TikTok, easily accessible trading apps like Robinhood. “The Dogefather” Elon Musk brings Dogecoin and thus the topic of cryptocurrencies into the world. How powerful the combination is was shown by the remarkable price development from January 2021, which catapulted the Dogecoin price and the associated DOGE market capitalization to unimagined heights. Nobody knows whether the US $ 0.74 per Dogecoin was the end of the flagpole or whether projects like SpaceX’s DOGE-1 mission and other PR stunts will even break the sound barrier of one US dollar per Dogecoin in the future can.

But even if DOGE settles down at a significantly lower price level, for the time being, many users will certainly continue to have fun with the memes and at the same time bring their contacts closer to the crypto world.

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