Top Cryptocurrencies

What is Dogecoin? The Joke Cryptocurrency

Dogecoin is an open source peer to peer crypto coin which targets doge lovers. It features a logo with the likeness of the Shiba Inu, a dog that is popular for the “Doge internet meme.” It was initially introduced as a joke currency but quickly developed its own online community of users. The altcoin has a real purpose as it acts as a virtual currency that allows easy transfer of money online.

The Beginning

Dogecoin

Dogecoin was launched on 6 December 2013. It was created by Billy Markus, a programmer from Portland Oregon. He hoped to create a fun currency that would reach a broader demographic than Bitcoin. Initially, The Dogecoin network was intended to produce 100 billion coins, but later, it was announced that the blockchain would produce infinite coins.

Two weeks after launch Dogecoin jumped nearly 300 percent in value within 72 hours. Its price rose from $0.00026 to $0.00095. In January 2014, the trading volume of the altcoin briefly surpassed that of Bitcoin and all other crypto coins combined. As, of the time of writing, the altcoin has a market capitalization of $520 million.

The purpose of Dogecoin

Dogecoin

The altcoin was initially intended to have two main purposes, First, to act as a satirical commentary on the sudden explosion and ridiculous valuations of cryptocurrencies that were coming out at the time. Second, to be fun and more readily accessible to all than the dominant Bitcoin.

The altcoin has become a mainstay in the crypto world due to its fast transaction times, low transaction fees and relatively stable value. It means traders are using it as a means of exchange.

To get a sense of what makes Doge valuable, consider a person who wants to withdraw money from an exchange. If the currency of choice is Bitcoin, then this can be very expensive. However, a trader may prefer first to trade their Bitcoin for Dogecoin, withdraw and then convert it into something else.

Other traders use it purely for speculation which is possible because the price of each unit is so low. One can purchase millions of Doge without spending a fortune, and any slight price increase leads to reasonable gains.

The Dogecoin technology

Modeled after Litecoin, Doge also runs on Scrypt. Meaning all changes and updates made on Litecoin will also be applied on Dogecoin. Just like Litecoin, the time that is taken to process a Dogecoin transaction is much shorter than that of Bitcoin. Where the latter takes ten minutes to confirm blocks, Doge takes only one minute.

Inflationary Currency Model

Dogecoin

As opposed to bitcoin whose supply stands at 21 million coins, the number of coins on the Doge network is infinite. The blockchain employs an inflation model to ensure Dogecoin doesn’t deflate in time. Every year 5.256 billion coins are added on the network. And this pushes the value of Doge down and makes it suitable for making small payments.

It’s the same concept that is employed by most central banks in their national currencies. Most banks employ an inflation rate of 2 percent per year which isn’t far from that of Doge. Critics of the project argue that this type of model gives Doge a negative trait because it prevents the individual token value from rising.

Due to the low cost of individual tokens, transaction fees are also significantly lower than those of competitors. It usually takes less than a cent to send transactions across the network. The transactions are also fast and get confirmed quickly.

In conclusion, even though there has been little development activity since the coin was launched, it’s still achieving the goals it set out to accomplish in the beginning. It’s still a low-cost token that is easy to acquire. Also, its community is amiable and always willing to help new users.

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Basil has three years of freelance experience writing on disruptive technologies. He focuses on breaking news and education pieces; helping to spread the gospel of Blockchain. He hopes to have his own blockchain company one day; helping the world through its innovative ledger technology.

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