Dogecoin's History & Place in the Cryptocurrency World
Lassie, Snoopy, Pluto, Ringo and Rin Tin Tin.
There are plenty of famous dogs all over the world, but you have never met one you can use to buy things. Meet Dogecoin, one of the friendliest cryptocurrencies to pet enthusiasts around the world.
The History of Dogecoin
Billy Markus, a programmer living in Oregon, and Jackson Palmer, an Australian marketer for Adobe, joined forces over the Internet to tackle the challenge of making the use cryptocurrency more appealing to a broader audience. They wanted to create an alternative to Bitcoin because that cryptocurrency had been associated with the illicit activities of the online marketplace Silk Road.
Markus and Palmer found the solution to market Dogecoin is to use the light-hearted meme doge as the cryptocurrency's mascost. Doge (pronounced "dohj") describes internal monologues from Shiba Inus, a Japanese breed of dog, whose most famous member is Maru Taro.
By positioning itself as a cryptocurrency that doesn't take itself too seriously, Dogecoin has become extremely popular. With a total market capitalization of more than $20 million US, it stands as the seventh most valuable virtual currency and the fourth most popular in daily volume, as of early July 2014.
How Dogecoin Works
Dogecoin is an altcoin, meaning it uses similar design concepts as Bitcoin. It has different parameters for certain features. The key differences between Bitcoin and Dogecoin are:
- A total of 100 billion Dogecoins are available for mining, in comparison to 21 million bitcoins. The higher supply of Dogecoins explains why the current market price of 1 Dogecoin is around $0.000476 versus $445 for 1 bitcoin.
- Dogecoins can be mined every minute. This has several implications. By the end of 2014, the Dogecoin community will reach the 100 billion Dogecoin limit. This forced the founders of Dogecoin to create a policy where the community will be allowed to create an additional 5 billion Dogecoins every year in perpetuity.
- Unlike Bitcoin, Dogecoin is not deflationary in nature. Dogecoin was designed for small transactions. Think of Bitcoin as trying to pay for a piece of gum with a $100 bill. Dogecoin is more like paying in quarters.
- The Dogecoin wallet address is a string of 34 characters starting with the letter D. By contrast, bitcoin addresses range between 27 and 33 characters.
Like other cryptocurrencies, Dogecoin requires the use of a desktop, smartphone, or browser-based wallet. There are wallets available for Windows, OS X, iOS, Android, and Linux operating systems.
The Dogecoin Community
Perhaps the most active owners of Dogecoin are Reddit users.
Reddit is an online portal for asking questions and finding interesting things around the Internet. In other words, the average Dogecoin user is a savvy Internet user that likes to read news in a timely, participatory, and interactive way and that doesn't take him or herself too seriously.
Some considerable milestones for the Dogecoin community are:
- In December 2013, there were about 500 Dogecoin miners. Also, for a brief second, Dogecoin was the most valuable cryptocurrency with a total market valuation of $2.8 trillion. This was due to an error in a transaction.
- By January 2014, Dogecoin community on Reddit raised more than $30,000 to support the Jamaican bobsled team to the Sochi Winter Olympics. In the same month, the community also raised close to $7,000 in donations so send athletes from India to the same games.
- In January 2014, a Spanish dog shelter started accepting donations in Dogecoin. A Colorado-based dog shelter followed suit in February.
- In February 2014, Internet entrepreneur Eric Nakagawa became one of the first people to do a physical purchase by trading 10,000 Dogecoins for pizza and beer.
- Starting April 2014, you can use Dogecoins and eGifter.com to buy gift cards to more than 200 retailers, such as CVS, Banana Republic, and Bath & Body Works.
- As of May 2014, there are more than 82,800 subscribers to the Reddit Dogecoin community.
Dogecoin: Standard Cryptocurrency Caveats Apply
Like other cryptocurrencies, the perceived value of Dogecoin depends on the market. Much of Dogecoin's value is due to an enthusiastic community that is responding to clever marketing. That is not necessarily a criticism of Dogecoin or its community. However, fame can be fleeting, and Dogecoin, like Bitcoin, could fail.
If you are considering using Dogecoin, keep in mind that:
- Dogecoin has all of the same risks as Bitcoin and other cryptocurrencies.
- For now, consider cryptocurrencies an expensive and risky hobby
- Cryptocurrencies and cryptocurrency exchanges are unregulated, and either could collapse without notice leaving the currency worthless
- As this was written in July 2014, Dogecoin enjoys support from an enthusiastic supporters. But fame can be fleeting.
Image Credit: Tuya Tamai, Pinguino K