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What is Dogecoin? A Beginner’s Guide to DOGE Cryptocurrency

What is Dogecoin? A Beginner's Guide to DOGE Cryptocurrency

Dogecoin (DOGE) is a cryptocurrency that was created in 2013 based on comedic inspiration rather than a pressing need to solve a problem. The “Dog” meme, which depicts a Shiba Inuwaa Japanese dog breedassitting with its paws folded over each other, inspired the cryptocurrency. Text overlays the image of the dog with phrases promoting illogical grammar. 

Dogecoin was inspired by the overall cryptocurrency community’s humorous and eccentric culture, which first emerged in 2009 with the launch of Bitcoin (BTC). Following Bitcoin, a blockchain-based asset capable of transferring and storing value, thousands of other crypto assets emerged, touting additional benefits such as increased privacy.  

Bitcoin’s code is open source, and it has been used by other projects to create separate crypto assets and blockchains. Following the creation of Litecoin (LTC) and, later, Luckycoin (LKY) based on Bitcoin’s code, software engineers Billy Markus and Jackson Palmer used Luckycoin’s code to create Dogecoin in just hours. 

Palmer and Markus left the Dogecoin project in the years following its inception. Markus sold his Dogecoin holdings in 2015 when they were worth about the same as a pre-owned Honda Civic.

Dogecoin use cases

Dogecoin has had a devoted following for years, but the asset’s popularity propelled its price to dizzying heights in 2021. The coin itself, on the other hand, lacks many distinguishing features that would suggest it could replace the world’s dominant currency or store of value. 

Why is it so difficult for Dogecoin to become a mainstream currency? The main reason could be the scarcity of Dogecoin. The maximum coin supply of the coin is unlimited. On a daily basis, 14 million additional Dogecoins are mined, causing the asset’s value to rise. In contrast, Bitcoin, for example, has a fixed maximum supply of 21 million coins, giving it defined scarcity.

Dogecoin, on the other hand, has the potential to be used as a form of currency for tipping or payments, both online and offline. Its US dollar price per unit is much lower than that of other crypto assets, such as BTC, allowing users to work with whole numbers rather than fractions of BTC. 

On the one hand, DOGE appears to be more viable as a transactional asset than Bitcoin due to its lower unit price, popularity, and transaction speed. The coin’s community has also made DOGE more accessible to the general public. It is also true that the asset could follow in the footsteps of many previous fads, gaining significant public attention for a time but failing to stick as a unique long-term solution to anything.

In terms of transaction speeds, Dogecoin’s technical design places it significantly ahead of Bitcoin. Every 10 minutes, blocks are mined on the Bitcoin blockchain. Dogecoin’s blockchain only takes one minute per block. Because of this, the Dogecoin blockchain generates more blocks in the same amount of time, even though each block on the Bitcoin and Dogecoin blockchains is one megabyte in size. Bitcoin’s slow transaction speed has been noted in the past; however, over time, it has come to be viewed more as a store of value asset.

Price history

Dogecoin has typically traded for less than $0.01 per coin since 2013. Dogecoin’s price peaked at around $0.018 in early 2018 before falling back below a penny in the months and years that followed. 

For a brief period in early January 2021, the price of Dogecoin briefly surpassed $0.01. Furthermore, Dogecoin experienced a significant price increase in late January, rising to around $0.07 per coin in a matter of two daily candles, or a 48-hour window of time. 

A few days later, the asset had risen to around $0.088 per coin. The coin’s price consolidated for weeks after falling to the $0.04 range, leading up to its rapid upward price run. In May 2021, the price of Dogecoin was just under $0.74. This dramatic price increase appears to have been driven primarily by the asset’s hype as well as the asset’s community of interested participants.

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