The Decentralized Dog Den: Explaining Dogecoin
Dogecoin (DOGE) wasn’t designed to be a serious virtual currency, but destiny had other plans. Since its start in 2013, this crazy canine has captured the hearts of countless crypto enthusiasts and cemented its legacy as the “top dog” in a new coin category: meme coins.
What began as a lighthearted prank has become one of the most popular crypto assets, with a market cap often surpassing the world’s largest multinational brands. Even traders unaffiliated with the Dogecoin community can’t get enough Shiba Inu and Comic Sans captions.
Dogecoin’s history
When co-founders Billy Markus and Jackson Palmer launched Dogecoin in 2013, they had no intentions of creating a top-10 cryptocurrency. Although Dogecoin has all the technical specifications to work as a peer-to-peer (P2P) virtual currency, Markus and Palmer were more interested in satire than building superior software.
Taking its image from the viral “DOGE” Shiba Inu meme (aka Kabosu), Dogecoin parodied the increased speculation entering the early cryptocurrency market. Even though Dogecoin made fun of price speculation in the crypto market, it ironically attracted a lot of price volatility post-launch. Dogecoin’s price grew rapidly in its initial months, reaching a market cap of $90 million by February 2014 before falling into multiyear lows with a market cap hovering around $20 million.
As more crypto traders learned about the meme coin Dogecoin, an online community began to form around this cryptocurrency. Members of the DOGE community even used this coin to help charitable ventures, most famously funding the Jamaican bobsled team’s journey to the 2014 Sochi Winter Olympics.
Although Dogecoin breached a $1 billion market cap during the 2018 crypto bull market, it wasn’t until 2021 that the Dogecoin coin price exploded. As Bitcoin (BTC) broke all-time highs, more traders became interested in the cryptocurrency market, and Dogecoin’s price chart stole the spotlight thanks to high-profile celebrity endorsements. Spurred on by tweets from Tesla’s CEO Elon Musk, Dogecoin reached a peak market cap of $75 billion in May 2021, and it continues to rank at or near the top-10 cryptocurrencies by market cap.
How does Dogecoin work?
Dogecoin uses the same Proof-of-Work (PoW) consensus algorithm on cryptocurrencies like Bitcoin and Litecoin (LTC). In this system, computers (aka nodes) use computational energy to solve advanced algorithms every few minutes to post the latest transaction data on a distributed payment ledger and receive cryptocurrency rewards.
In 2014, Litecoin founder Charlie Lee proposed moving Dogecoin’s standalone system onto Litecoin’s database for superior protection against hackers. To this day, Dogecoin is “merge-mined” on the Litecoin blockchain using an algorithm called “Scrypt,” which means anyone who confirms transactions on Litecoin’s blockchain also secures Dogecoin’s network.
Dogecoin FAQs
What is Dogecoin used for?
Dogecoin’s sole purpose is to exchange virtual value online via its P2P network. Historically, crypto traders used Dogecoin as a form of tipping on social media websites like Reddit, but it’s also a popular currency for crowd-funding and trading on crypto exchanges.
How fast is Dogecoin?
Transaction confirmation speeds on Dogecoin’s blockchain are approximately one minute, and it typically processes 33 transactions per second (TPS).
What is Dogecoin’s max supply?
Dogecoin is an inflationary cryptocurrency with no fixed cap on its max coin supply. Every minute, one Dogecoin miner earns 10,000 DOGE for validating a block of transactions, meaning 10,000 Dogecoins constantly enter the circulating supply.
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