Dogecoin is a parody cryptocurrency created by Australian entrepreneur,Jackson Palmer and software engineer Billy Markus in 2013. In an interview, Palmer said the idea for the project came from two internet tabs he had open on his computer at the time: one with a viral internet meme of a Japanese Shiba Inu “doge,” and the other with a list of the recently added cryptocurrency projects to the market.
Palmer jokingly coined the phrase “Dogecoin” to himself and took to his Twitter account to post the now-infamous line, “Investing in Dogecoin, pretty sure it’s the next big thing.” It immediately sparked interest from the meme-fuelled crypto community.
Dogecoin was initially designed to be “as ridiculous as possible,” in keeping with its parody theme and to prevent people from actually using it over the long term.
- The total supply of 100 billion dogecoins was one of the “wacky decisions” the co-founders implemented to “make [dogecoin] … undesirable as a cryptocurrency so that it [didn’t] become serious.” Ironically, Dogecoin would later become such a hit with the crypto community that the supply limit was removed to promote the use of the crypto token as a tipping coin and discourage hoarding, a behavior extolled in the bitcoin community.
- The Lucky Coin open-source code that Dogecoin was created from was purposefully chosen because of its highly unattractive mining system.
Dogecoin history :
On December 19, 2013, Dogecoin jumped nearly 300 percent in value in 72 hours, rising from US$0.00026 to $0.00095, with a volume of billions of Dogecoins per day. This growth occurred during a time when bitcoin and many other cryptocurrencies were reeling from China's decision to forbid Chinese banks from investing into the bitcoin economy. Three days later, Dogecoin experienced its first major crash by dropping by 80% due to this event and to large mining pools exploiting the small amount of computing power required at the time to mine Dogecoin.
On December 25, 2013, the first major theft of Dogecoin occurred when millions of coins were stolen during a hack on the online cryptocurrency wallet platform Dogewallet. The hacker gained access to the platform's filesystem and modified its send/receive page to send any and all coins to a static address. This hacking incident spiked tweets about Dogecoin, making it the most mentioned altcoin on Twitter at the time, although it was in reference to a negative event. To help those who lost funds on Dogewallet after its breach, the Dogecoin community started an initiative named "SaveDogemas" to help donate coins to those who had them stolen. Approximately one month later, enough money was donated to cover all of the coins that were stolen.
In January 2014, the trading volume of Dogecoin briefly surpassed that of Bitcoin and all other crypto-currencies combined. However, its market capitalization remained substantially behind that of Bitcoin. Initially, Dogecoin featured a randomized reward that is received for each mining block. However, in March 2014, this behaviour was later updated to a static block reward.
In April 2015, Jackson Palmer announced plans to take an "extended leave of absence" from the cryptocurrency community.
During 2017 to early 2018 cryptocurrency bubble, Dogecoin briefly reached a peak of $0.017/coin on January 7, 2018, putting its total market capitalization near USD 2 billion.
In July 2020, the price of Dogecoin spiked following a TikTok trend aiming to get the coin's price to $1.
In January 2021, Dogecoin went up over 800% in 24 hours, attaining a price of $0.07, as a result of attention from Reddit users, partially encouraged by Elon Musk and the GameStop short squeeze. In February 2021, Dogecoin hit a new high price of $0.08 following Twitter encouragement from Musk, Snoop Dogg and Gene Simmons.In March 2021, Dallas Mavericks owner Mark Cuban announced his NBA team would allow purchasing tickets and products with Dogecoin; within two days, Cuban had declared his franchise had become the top Dogecoin merchant, having carried out 20,000 transactions.
In April 2021, Dogecoin and other cryptocurrencies surged, stimulated in part by the direct listing for cryptocurrency exchange Coinbase on April 14, although that platform did not provide trading of Dogecoin. Its price first reached $0.10 on April 14, before hitting a new high of $0.45 on April 16 (up 400% that week), with a volume of nearly $70 billion traded in the preceding 24 hours. At the time, Dogecoin's market capitalization approached $50 billion, making it the fifth-highest-valued cryptocurrency; its value had increased more than 7,000% year-to-date. Interest in Dogecoin contributed to an outage in electronic trading platform Robinhood's cryptocurrency system on April 15, caused by "unprecedented demand", and prompted concerns from experts of a nearing speculative bubble in the cryptocurrency market.
On May 4, 2021, the value of Dogecoin first surpassed the symbolic hurdle of $0.50,a greater than 20,000% increase in one year.
On May 8, 2021, despite, or perhaps because of expectations of a surge in interest in Dogecoin resulting from Elon Musk's appearance on Saturday Night Live, Dogecoin dropped 34% from $0.711 at the opening of the show to below $0.470 45 minutes later. By the following morning Dogecoin hit a swing low of $0.401, a cumulative drop of 43.6% and lost value of $35 billion.
On May 9, 2021, SpaceX announced a rideshare mission to the Moon completely funded by Dogecoin, thus becoming the first space mission funded by a cryptocurrency. Elon Musk confirmed this news via Twitter. DOGE-1 will be a minor 40 kg rideshare payload on Intuitive Machines' IM-1 mission in Q1 2022.
Dogecoin mining:
Dogecoin’s mining code was initially copied from a project called LuckyCoin. LuckyCoin – a fork of Litecoin, which is a fork of Bitcoin – featured a completely random block reward schedule where miners could receive zero or potentially thousands of free coins for producing new blocks. Palmer and Markus believed the randomness would irritate dogecoin miners and prevent them from actually using the token long-term.
Palmer and Markus also decided to change this to a fixed block reward schedule similar to bitcoin’s in March 2014. Blocks created under the new schedule contained 10,000 dogecoin, meaning 5.2 billion dogecoins are mined each year.
Dogecoin’s mining difficulty adjustment (which controls how hard or easy it is to find a block) is tweaked every block, unlike Bitcoin, which adjusts every 2,016 blocks.
In 2014, Litecoin creator Charlie Lee proposed the idea of merge-mining Dogecoin and Litecoin. This idea of “merged mining” meant miners would mine both Dogecoin and Litecoin simultaneously, helping to boost the network security of Dogecoin. Palmer and Markus accepted Lee’s proposal four months later. This resulted in dogecoin producing faster blocks than Bitcoin (1 minute vs. 10 minutes), meaning doge transactions are significantly faster than Bitcoin transactions.
Use and exchanges:
Several online exchanges offer DOGE/BTC and DOGE/LTC trading.
Dogecoin is an altcoin with many users. Mainstream commercial applications of the currency have gained traction on internet, such as a tipping system, in which social media users tip others for providing interesting or noteworthy content.Trading physical, tangible items in exchange for DOGE takes place on online communities such as Reddit and Twitter, where users frequently share currency-related information.
Dogecoin has also been used to try to sell a house, and has been used in the pornographyand poker industries.
Dogetipbot was a cryptocurrency transaction service used on popular sites like Reddit and Twitch. It allowed users to send Dogecoins to other users through commands via Reddit comments. In May 2017, Dogetipbot was discontinued and taken offline after its creator declared bankruptcy; this left many Dogetipbot users losing their coins stored in the Dogetipbot system.
Currency supply :
Dogecoin started with a supply limit of 100 billion coins, which would have been far more coins than the top digital currencies were then allowing. By mid-2015 the 100 billionth Dogecoin had been mined with an additional 5 billion coins put into circulation every year thereafter. Although there is no theoretical supply limit, at this rate, the number of Dogecoins put into circulation will only double in 20 years (the next doubling will occur in the year 2075). There is no implemented hard cap on the total supply of Dogecoins. Nonetheless, in February 2014, Dogecoin founder Jackson Palmer announced that the limit would be removed in an effort to create a consistent reduction of its inflation rate over time.[49] In other words, the inflation rate improves over time starting at 5% in 2015 to less than 4% by 2019, 3% by 2027, and 2% by 2035.
Fundraising :
The Dogecoin community and foundation have encouraged fundraising for charities and other notable causes. On January 19, 2014, a fundraiser was established by the Dogecoin community to raise $50,000 for the Jamaican Bobsled Team, which had qualified for, but could not afford to go to, the Sochi Winter Olympics. By the second day, $36,000 worth of Dogecoin was donated and the Dogecoin to bitcoin exchange rate rose by 50%.The Dogecoin community also raised funds for a second Sochi athlete, Shiva Keshavan.
Criticism:
Dogecoin's origin as a joke has made it difficult to be taken seriously by mainstream media and financial experts.
The cryptocurrency has had a long and problematic history of scams.[64][65][66] It has been described as a pyramid scheme, where "those who got in early on bitcoin have a huge financial incentive to draw in others by any means necessary."
Akand Sitra of cryptocurrency risk management platform TRM Labs claims that Dogecoin itself is a scam, with over 65% of Dogecoins held by the top 98 wallets across the world. He also claims that the largest wallet holds 28% of all Dogecoins, and the top five wallets control 40% of the coin’s entire supply.
Risks of owning dogecoin :
Despite all the celebrity endorsement, social media hype and internet tribe support, there are a number of associated risks with owning dogecoin that not all investors are aware of.
- Unlimited supply: Unlike bitcoin and many other cryptocurrencies, dogecoin does not have a fixed supply. This means prices are not supported by scarcity and rely on buyers constantly buying new dogecoin that enters circulation to maintain its value.
- High issuance rate: Dogecoin has a fixed block reward where successful miners receive 10,000 dogecoins every minute, compared to bitcoin where miners receive 6.25 bitcoin every 10 minutes (until the next halving of that rate occurs sometime in 2024). Ultimately, this means more dogecoins enter circulation in two days (28 million) than bitcoin’s total supply (set to top out at 21 million around the year 2140).
- Infrequent tech development: Dogecoin’s tech development is maintained by a team of voluntary developers who, until recently, had submitted relatively few code updates and releases. Before the latest Dogecoin Core 1.14.3 release in February, the last update was released in November 2019.
- Concentrated ownership: According to data from IntoTheBlock, there are nine wallets that collectively hold more than 40% of all dogecoin, with one wallet holding 28%. This means that at any moment one of these whale investors could cash out and send the price plummeting, or alternatively could use their huge position to manipulate the market. In contrast, there is only one active bitcoin wallet that holds just over 1% of the entire supply.
Disclaimer:
This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.
Comments
Post a Comment