Dogecoin ( DOGE ) is a cryptocurrency that launched in 2013 based on comedic inspiration rather than fulfilling a particularly strong need for a use case. The cryptocurrency was inspired by the "Governor" meme, which shows a photo of a Shiba Inu, a Japanese dog breed, sitting with its paws crossed. The text covers a picture of a dog and features phrases touting nonsensical grammar.
Dogecoin was inspired by the humor and quirky culture of the entire cryptocurrency community, which first formed in 2009 with the launch of Bitcoin (BTC). Following Bitcoin – a blockchain-based asset capable of transferring and storing value – thousands of other crypto-assets have emerged, touting other benefits such as increased privacy.
Bitcoin's code is open source and has been used by other projects to create separate crypto assets and blockchains. After creating Litecoin (LTC) and subsequently Luckycoin (LKY) based on the Bitcoin code, software engineers Billy Markus and Jackson Palmer used Luckycoin's code to create Dogecoin, completed the task in just a few hours.
Palmer and Markus left the Dogecoin project a few years after founding it. Markus sold his Dogecoin holdings in 2015, when his holdings were worth about the same as a used Honda Civic.
Dogecoin use cases
Dogecoin has had an interested community for years, but the hype surrounding the asset pushed its price to 2021 highs. However, the coin itself does not particularly have many distinguishing characteristics that would suggest it could become a major world currency or store of value.
Why can’t Dogecoin become a mainstream currency? The supply of Dogecoin may be the main reason. The coin has no limit on its maximum token supply. An additional 14 million Dogecoins are mined every day, creating an inflationary effect on the asset’s value. By comparison, Bitcoin, for example, has a maximum supply fixed at 21 million coins and therefore has a clear scarcity.
However, Dogecoin could potentially serve as a form of currency for tipping or payments online or otherwise. Its unit price in USD is relatively much lower than that of other crypto-assets such as BTC, allowing users to trade in whole numbers rather than in fractions of BTC.
On the one hand, DOGE appears to be more viable as a trading asset than Bitcoin due to Dogecoin’s lower unit price, popularity, and transaction speed. The coin’s community also helped bring DOGE into the mainstream. However, it's also true that the asset could go the way of many previous trends - gaining widespread public attention for a while but failing to become a unique long-term solution to anything.
Dogecoin’s technical makeup does put the asset significantly ahead of Bitcoin in terms of transaction speed. Blocks are mined on the Bitcoin blockchain every 10 minutes. Blocks on the Dogecoin blockchain only take one minute per block. So while each block on Dogecoin and Bitcoin’s respective blockchains is 1 megabyte in size, Dogecoin’s blockchain generates many more blocks in the same amount of time. Bitcoin's lack of transaction speed has been noted in the past; though over the years, Bitcoin has been increasingly viewed as a store of value asset.
historical price
Since 2013, Dogecoin has typically traded for less than $0.01 per coin. In early 2018, the price of Dogecoin hit around $0.018 before falling back below 1 cent in the following months and years.
In early January 2021, the price of Dogecoin briefly recovered above $0.01. Additionally, the asset saw a significant price increase in late January, when Dogecoin surged to around $0.07 per coin within a two-candle-per-day, or 48-hour time window.
A few days later, the asset found itself trading as high as around $0.088 per coin. The coin’s price has been consolidating for several weeks after falling into the $0.04 range, causing its price to rise rapidly. In May 2021, Dogecoin was trading at just under $0.74. This sharp price increase appears to be driven primarily by the hype surrounding the asset and its community of interested players.
community and hype
In 2020, users of the social media platform TikTok paid a lot of attention to Dogecoin, trying to get people to buy the asset in the hope that the token's price would rise. Dogecoin has gained more attention in 2021, including from a member of the Reddit-based group WallStreetBets. (The group is known for its influence on Gamestop stock prices in early 2021). Around the time GameStop stock surged in January 2021, a Twitter user named "WSB Chairman" posted a tweet pondering whether Dogecoin had ever breached the $1 price point. Following the tweet, the price of Dogecoin rose to approximately $0.07.
Tesla CEO Elon Musk’s Dogecoin-related tweets likely also contributed to Dogecoin’s popularity in 2021. The tweets ranged from comments about the coin's development to photos of Rafiki holding up Simba (from the movie The Lion King), with Musk's head attached to Rafiki's body and the Governor Dog's head attached to Simba's body.
Several social media platforms have become hotbeds of Dogecoin discussion, including Reddit. During the boom of 2021, Dogecoin-related searches flooded Google, there was a lot of discussion related to the asset on Twitter, and mainstream media gave the digital asset airtime. Dogecoin’s single-day trading volume has also surpassed Bitcoin’s at least once in 2021, with transactions worth billions of dollars.
The years following Dogecoin’s birth have been eventful, with stories of hackers, Dogecoin-painted racing cars, and more. One such story is how donations via Dogecoin helped fund the Jamaican national bobsled team’s participation in the 2014 Sochi Olympics.
How to buy, sell and use DOGE
How to buy and sell Dogecoin
Buying and selling Dogecoin is no different than trading most other big-name crypto assets. The market offers a number of cryptocurrency exchanges where people can buy and sell dog-themed coins, including many U.S.-friendly exchanges. Purchasing DOGE on a crypto exchange requires transferring your fiat currency (USD, etc.), stablecoins, or other crypto assets to the crypto exchange and then using those funds to purchase the token. Users can also sell their DOGE and send cash or cryptocurrency from the exchange.
In addition, interested parties can also buy and sell DOGE in person. The process of buying and selling Dogecoin is similar to Bitcoin. There are a range of platforms available for parties to purchase DOGE, some of which allow purchase via payment card.
For more information on how to buy and sell Bitcoin, see: How to Buy Bitcoin: A Step-by-Step Guide and How to Sell Bitcoin.
How to store Dogecoin
Storing Dogecoin holdings is also worth mentioning. Users can hold DOGE on the cryptocurrency exchange where they purchased the asset, although this method provides owners with potential control over their funds.
Dogecoin holders can also store their coins in personal self-hosted wallets. These wallets offer greater security and accountability but offer users more functionality when it comes to storing funds. Hardware and local wallets are two potential options. However, the wallet chosen by the user must be able to hold Dogecoin. Storing DOGE outside a cryptocurrency exchange requires sending the tokens from the exchange to the required wallet.
Where to spend DOGE
How do holders spend their DOGE? One option is to send it to a cryptocurrency exchange, sell it, and then cash out or transfer the funds received from the sale. Users can also upload their DOGE to their cryptocard while selling their DOGE for fiat and spend the Dogecoin proceeds at some point. Additionally, the Dallas Mavericks of the National Basketball Association (NBA) opened the door to payment for merchandise and tickets via Dogecoin in 2021.
The rationale behind DOGE
On the technical side, Dogecoin has seen constant updates over the years, announced on the asset’s Github page.
Aside from its development, Dogecoin’s fees remain a selling point for the asset. At one point in May 2021, the average transaction fee for Dogecoin was around $2.52 — peaking both in terms of levels before and after. Such fees are considered low compared to transaction fees sometimes seen in other crypto assets.
However, a small number of DOGE owners could one day cause price volatility. Despite the large supply, Dogecoin claims that many wallets hold a significant portion of DOGE’s total coin supply. Approximately 50% of the total supply of the asset resides in approximately 20 Dogecoin wallet addresses.
In the case of Dogecoin mining, it is expected that large amounts of DOGE will continue to enter the ecosystem through mining, leading to inflation.