What is Dogecoin? What you need to know about DOGE, the world’s biggest meme coin
With cryptocurrency markets having turned bearish in 2022, some of the lustre has come off popular meme coins, led by dogecoin (DOGE).
But now that Ethereum’s Merge upgrade was completed on 15 September, transitioning the blockchain from proof-of-work (PoW) to proof-of-stake (PoS), Dogecoin has become the second largest PoW blockchain after Bitcoin, based on market capitalisation.
What is Dogecoin? What are the project's latest developments, as well as the risks and opportunities investors should be aware of?
What is Dogecoin?
The dogecoin cryptocurrency was launched in 2013 by Billy Markus and Jackson Palmer, software engineers at IBM (IBM) and Adobe (ADBE), respectively. They launched the coin as a joke, making fun of the explosion in alternative coins (altcoins) attempting to become the next bitcoin (BTC). Dogecoin made use of the popular internet meme featuring a Shiba Inu dog.
Although DOGE started as a satire and was not intended to be used as a serious currency, the meme coin soon gained popularity on social media as its low value (the price was $0.000232 at launch) made it useful for small online transactions without incurring large fees.
How does Dogecoin work?
The Dogecoin blockchain protocol is based on the open-source coding of the luckycoin cryptocurrency, which is no longer in circulation. Luckycoin was a hard fork, or spin off, from the Litecoin blockchain, which was a hard fork from the Bitcoin chain.
How does Dogecoin work? As it uses a PoW consensus mechanism, dogecoin is mined in a similar way as bitcoin. Computers and servers act as nodes that mine coins by validating transactions and adding them to the blockchain ledger as new blocks, receiving coins as rewards. The reward for creating blocks is 10,000 DOGE, and a new block is created every minute.
What is DOGE? DOGE is the native coin on the Dogecoin blockchain. DOGE was created with a supply cap of 100 billion, but the cap on dogecoin circulation was later removed, in contrast to other coins that have a limit or introduced regular coin burning to reduce circulating supply and support prices.
Dogecoin’s meme status drives price volatility
Dogecoin price history shows that the coin was relatively stable from 2013 until cryptocurrency markets rallied sharply in 2021 as they gained popularity on social media. Dogecoin’s rapid price gains prompted other developers to launch Shiba Inu dog-themed meme coins, such as shiba inu (SHIB), floki inu (FLOKI) and dogelon mars (ELON).
Markus and Palmer had left the Dogecoin project after it took off and developed its own community, and there was no development on the protocol. But the Dogecoin Foundation relaunched in 2021 to provide development and governance support.
Tesla (TSLA) CEO Elon Musk, who has supported dogecoin as “the people’s crypto”, is represented in the leadership of the Dogecoin Foundation.
Dogecoin is the people’s crypto
— Elon Musk (@elonmusk) February 4, 2021
The dogecoin crypto price is highly volatile, as social media communities often drive large spikes and subsequent crashes.
DOGE soared from $0.004681 at the start of 2021 to its all-time high of $0.7376 on 8 May 2021, up by more than 15,650%, but it then quickly fell in response to Musk appearing on the Saturday Night Live TV show in the US. Musk referred to dogecoin as a “hustle”, after talking it up on social media in previous weeks.
DOGE fell to $0.30 by the end of May 2021 and reached $0.1607 on 20 July, when cryptocurrency markets bottomed out before a summer rally. The price moved up to $0.351 on 16 August but retreated to $0.1945 on 26 September. DOGE rebounded to $0.2819 on 24 October, but turned bearish heading into 2022 along with the broader markets, which have been under pressure for most of the year.
DOGE started 2022 at $0.1705 and moved up to $0.2032 on 14 January, but sold off to $0.1272 on 24 January. It failed to hold a rebound to $0.1716 on 7 February and dropped to $0.1107 on 13 March before moving up to the $0.17 level on 5 April.
DOGE fell to $0.07004 on 12 May as cryptocurrency markets responded to the collapse of the Terra Luna ecosystem and the US dollar reaching 20-year highs.
DOGE traded down to $0.04972 on 18 June, its lowest level since early 2021. The coin traded in a $0.06-0.07 range until a brief rally in meme stocks and coins led by retail investors on social media brought the price up to $0.08864 on 16 August. But DOGE quickly dropped back to trade around $0.06 again. The price fell below that level to trade at $0.05752 on 18 September and has since struggled to hold back above $0.06.
On 21 September, Markus, using the name Shibetoshi Nakamoto, tweeted that “things can always get worse”.
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— Elon Musk (@elonmusk) September 21, 2022
Dogecoin developments
What is dogecoin’s utility? DOGE is primarily used to pay for transactions with stores and services. DOGE is accepted by more than 2,000 retailers, including cinema chain AMC through its mobile app.
But unlike other blockchains, Dogecoin does not run smart contracts for decentralised applications (dApps). In August, an independent development community launched Dogechain, an Ethereum-compatible PoS blockchain layer on top of the Dogecoin blockchain that enables holders to use DOGE for non-fungible tokens (NFTs), games, and dApps. The project is not affiliated with the Dogecoin Foundation. Dogechain uses the Polygon Edge private label framework.
Dogechain users can use DOGE to pay for gas fees and will receive airdrops of the new DC token, which will enable holders to participate in governance.
On 7 September, ChainPort became the first cross-chain bridge to support Dogechain. “With ChainPort’s assistance, users can easily transfer tokens from several supported blockchain ecosystems to Dogechain,” said ChainPort. “Supported chains include Ethereum, BSC, Polygon, and Fantom, with additional native token support to be added soon.”
Meanwhile, in the latest dogecoin news on 12 September, the Dogecoin Foundation has joined the wDoge decentralised autonomous organisation (DAO) project being developed by startup Blue Pepper to build a bridge between Dogecoin and Ethereum.
What are the risks and opportunities of investing in DOGE?
There are several advantages to holding dogecoin as an investment:
High price volatility that can result in large gains
An active, growing community and open-source development of projects
Widespread exchange listings making it convenient to trade
Unique market positioning as the first meme coin
However, if you intend to invest in DOGE there are also disadvantages to be aware of:
High price volatility that can result in heavy losses
No supply cap, limiting how high the price can rise
Limited technical development and support
Limited uses beyond small digital payments
Investors can lose interest in meme coins and stocks
If you are considering investing in cryptocurrencies like dogecoin, we recommend that you always do your own research. Look at the latest market trends, news, technical and fundamental analysis, and expert opinion before making any investment decision. Keep in mind that past performance is no guarantee of future returns.
FAQs
What Dogecoin is used for?
Dogecoin is used to pay for transactions with low processing fees, known as gas fees. The Dogechain project, launched in August 2022, aims to enable DOGE holders to use DOGE for NFTs, blockchain games and decentralised apps.
How many Dogecoins are left?
There were 132,67 billion DOGE in circulation at the time of writing on 23 September, according to CoinMarketCap. There is no limit to dogecoin’s circulating supply and no coin burning mechanism.
Can Dogecoin hit $1?
Whether Dogecoin can rebound to the $1 level could depend on sentiment on the cryptocurrency markets and the meme coin’s popularity among investors on social media, among other factors.
It’s important to keep in mind that cryptocurrency prices are highly volatile and difficult to predict. Keep in mind that past performance is no guarantee of future returns. Always do your own research. And never invest what you cannot afford to lose.
How many Dogecoins are made a day?
There are 10,000 DOGE mined with each block created, so with a block created every minute, 1.44 million DOGE are created every day.
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