Dogecoin: one of the crown jewels of the internet
“Much wow,” the Shiba Inu dog must’ve thought when she realized her face is the official logo of a cryptocurrency worth billions of dollars. Dogecoin (DOGE) has made some absolutely crazy price swings in 2021, mainly due to hype and “Dogefather” Elon Musk. What is the story behind this peculiar cryptocurrency? Let’s find out!
The story behind Dogecoin
Dogecoin is a cryptocurrency based on the Doge meme that gained massive popularity on the internet in 2013. This meme consists of a Shiba Inu dog picture accompanied by text in the beautiful Comic Sans font saying words in broken English such as “so scare” and “much wow.” And the internet being as weird as it is this, of course, led to the creation of the cryptocurrency called Dogecoin (DOGE). Because why not!
The Doge meme became famous in 2013, and already in December of that year, Jackson Palmer and Billy Markus released the ‘meme coin’ into the wild world of the internet. The founders both had a background in software development. Jackson was a software engineer at IBM, and Palmer fulfilled the same position at Adobe. There were two main reasons for developing Dogecoin. Firstly, it was a joke in reaction to the enormous amount of altcoins popping into existence during that time. These altcoins, often copies of Bitcoin, all wanted to lift on Bitcoin’s success. As a joke, Palmer tweeted, “Investing in Dogecoin, pretty sure it’s the next big thing.”
The second reason, they wanted to draw some more positive attention to the crypto world. The Doge meme went viral, and thus, more people started to look into this meme crypto that was attached to it. “If all we’ve done with Dogecoin at the end of the day is grow awareness in a decentralized currency such as Bitcoin, then I think we’ve done a good job,” Palmer said in an interview with Vice.
A little under ten years later, it became clear that Dogecoin indeed amassed many people. Over the years, the cryptocurrency rose thousands of percent in value, Elon Musk crowned himself “the Dogefather,” and almost everyone that has heard of Bitcoin probably also heard of Dogecoin. So now, let’s take a look under the hood of Dogecoin. Is the cryptocurrency also unique when it comes to the underlying technology?
From Bitcoin to Dogecoin
Dogecoin is a cryptocurrency that runs on a Proof of Work (PoW) protocol, comparable to Bitcoin. The source code, however, wasn’t build from scratch by Palmer and Markus. Instead, Dogecoin is a so-called hard fork of Luckycoin. This means that the developers copied the code of Luckycoin, changed several parameters, gave it a different name, and launched it as their own cryptocurrency. While this may sound sketchy, it is a common thing in the world of crypto. By hard forking, you don’t have to reinvent the wheel. Forking is so common that Luckycoin itself is a fork of Litecoin, which is a fork of Bitcoin.
The development of Dogecoin died down in the past couple of years. In 2015, Palmer let the world know that he left the crypto world and Dogecoin due to its toxic community. However, due to its increasing popularity, Dogecoin seems to become more active again. Even Elon Musk is now looking to improve the cryptocurrency by proposing and supporting new ideas. Musk is, however, often criticized for his Dogecoin tweets. Many accuse him of manipulating the DOGE price. Either way, Dogecoin is far from a dead project at the time of writing.
DOGE and centralization
While Dogecoin can be directly linked back to the code of Bitcoin, the cryptocurrency itself is very different from BTC. First of all, bitcoin is a deflationary cryptocurrency. The amount of new bitcoins that enter the market is decreased over time until the 21 millionth bitcoin is mined. From then on, no further bitcoins will be mined ever again. Dogecoin has no such limit.
The supply of DOGE keeps increasing, meaning it is inflationary. The amount of new DOGE entering the market is slowed down over time, but there is no hard cap. This means that the DOGE supply is infinite.
Why would you want such a thing, you may wonder. Some Dogecoin supporters state that having an unlimited supply means that miners can be continually rewarded for their work while keeping the transaction costs low. Also, some say it prevents people from hoarding DOGE and encourages people to use it for payments.
Once a joke, Dogecoin has grown to become one of the crown jewels of the internet. Where people talk about Bitcoin, Doge is often right around the corner. Only time will tell if DOGE eventually will become a mainstream cryptocurrency we can use to pay for our cup of coffee with (it is already possible in some places).