Dogecoin is a peer-to-peer cryptocurrency originally created as a joke but has since become one of the most recognizable cryptos thanks to its dedicated community.
In 2013, two software engineers created a new cryptocurrency based on the popular Doge meme. Everything from the depictions of Dogecoin (with the face of a Shiba Inu), to the grammar of online forums discussing it (such doge!), to the project’s official documentation (written in Comic Sans font) call back to the original Doge meme.
Although it was created in jest, Dogecoin has attracted a huge following. It is referred to as a “memecoin” because of its inspiration, and also because it has become a meme itself. Other memecoins have followed in its footsteps, many of them dog-themed, like the Shiba Inu coin (SHIB). The community around Dogecoin has embraced its humble (and comedic) beginnings and is one of the most active communities of any cryptocurrency project.
Dogecoin’s development focuses on its function as a currency. Dogecoin’s coding is based on Bitcoin, and thus many of its characteristics are similar to Satoshi Nakamoto’s original creation. DOGE is traded between individuals on the network, and it can be used for purposes like merchant payments or charitable donations, just like any fiat currency.
How was Dogecoin developed?
In late 2013, cryptocurrencies were garnering more attention than ever before. The total market capitalization of Bitcoin was reaching new highs, and the concept of “crypto” was entering the broad public’s awareness for the first time.
On November 28, 2013, a software engineer named Jackson Palmer tweeted: “Investing in Dogecoin, pretty sure it’s the next big thing.” It was a joke, playing on the soaring price of Bitcoin, but it accidentally inspired what would become a brand-new cryptocurrency.
Less than one month later, Palmer and fellow software engineer Billy Markus launched Dogecoin. The two believed that some were approaching the cryptocurrency space too seriously, and they intended for Dogecoin to hold up a humorous mirror to that sentiment.
Markus said that by using open-source code from a pre-existing cryptocurrency called Luckycoin, it took around 3 hours to create Dogecoin—and most of this time was spent customizing the look of the client to include aspects such as Comic Sans font. In 2015, the developers chose to re-fork Dogecoin directly off of Bitcoin in order to make it more similar to Litecoin.
In its first month, over 1 million people visited Dogecoin.com, and the broader internet became fascinated with the newly minted memecoin. Buzzfeed published an article called “13 Reasons Dogecoin Is Going to The Moon.” One Reddit user even bought a car for 1.5 million DOGE within weeks of its launch.
When Palmer left the project in 2015, Markus adopted the moniker Shibetoshi Nakamoto and serves as an advisor to the non-profit Dogecoin Foundation. The Foundation helps guide the community’s charitable missions such as raising money for clean water efforts in Kenya and removing trash from the world’s oceans, implementing Dogecoin’s unofficial tagline: “Do Only Good Everyday” (or DOGE).
Dogecoin price and popularity
Dogecoin’s popularity has waxed and waned but in 2019, mentions from billionaire and Tesla CEO Elon Musk put DOGE in the spotlight. Perhaps most famous was his appearance on Saturday Night Live in May 2021, when he called Dogecoin “the future of currency” and “an unstoppable financial vehicle that’s going to take over the world.”
Since then, he made DOGE an acceptable payment option for certain merchandise on Tesla’s online store. He also caused DOGE’s price to more than double in October 2022 when he tweeted a picture of a Shiba Inu dog wearing a Twitter-branded t-shirt shortly after his purchase of the social media company.
How does Dogecoin work?
Dogecoin’s technology is borrowed from other blockchain-based cryptocurrencies and was created through a series of forks, or updates to blockchains that split one chain into two or more chains.
Dogecoin originated from the Luckycoin blockchain which was a fork of Litecoin, itself a fork of Bitcoin, thus we can track its lineage—indirectly—all the way back to Bitcoin. However, its original model was abandoned in 2015 when Dogecoin re-forked its blockchain directly off Bitcoin.
Dogecoin still shares many characteristics with Litecoin. There are a few differences, including a shorter block time (the time it takes to mine one block) of 1 minute versus 2.5 minutes. By comparison, Bitcoin’s block time is 10 minutes. This change was made to Dogecoin’s programming in order to optimize its use as a currency.
Like its relatives, Dogecoin’s blockchain uses a Proof of Work (PoW) consensus mechanism to process transactions and secure its network. In 2014, Dogecoin enabled merged mining, which allows Litecoin miners to simultaneously mine Dogecoin, adding their computing power to the Dogecoin blockchain and lending it additional security.
How is the DOGE token used?
Dogecoin has been developed primarily as a currency. Every change to its programming since its inception has been to help make peer-to-peer transactions smoother.
One of the first uses for DOGE was for tipping on the internet. Reddit’s dogetipbot was a popular way to do this until it was discontinued in 2017. This tool let users register for a special Dogecoin account through the bot, deposit some DOGE, and then reply to other users with a simple code (like “+/u/dogetipbot 100 DOGE”) to send them crypto.
Online transactions have continued to be popular ways to use DOGE. A number of payment gateways and merchants also accept Dogecoin in exchange for goods and services. This includes some items in the Tesla online shop, the Ledger online store, and small independent businesses across the globe.
Further, DOGE is distributed to miners to reward them for securing the network, a common practice in PoW systems.
Tokenomics
Whereas most of the top cryptocurrencies have a maximum total supply (including Bitcoin at 21 million), Dogecoin has an indefinite supply. The system rewarded miners with pseudo-random amounts of DOGE, as determined by a computer algorithm. However, this changed after the total supply reached 100 billion DOGE, with each block now yielding 10,000 DOGE to miners.
Like Bitcoin, there was no “pre-mine” (token allocation to early investors of the project), so all DOGE tokens are distributed to the community through mining on the network. However, there have been criticisms that DOGE’s top holders (or whales) control large portions of the total supply, which may represent a failure of true decentralization.
Dogecoin essentials
- Dogecoin is a cryptocurrency focused on peer-to-peer transactions that originated as a joke based on the popular Doge meme.
- The technology behind Dogecoin is closely related to both Bitcoin and Litecoin, except it has shorter block times that allow for faster transactions; this makes it more functional as a currency.
- DOGE can be sent between users or used in payment systems for goods and services, and there is no maximum supply.