Key takeaways
- Dogecoin is a cryptocurrency created as a joke in December 2013, with a Shiba Inu dog from a famous meme as its logo.
- It is one of the oldest cryptocurrencies still in use. A large community uses it for tipping, payments and fundraising for good causes.
- Dogecoin uses proof of work like Bitcoin, but its supply has no limit. On average, 10,000 new DOGE are created every minute.
- Its price depends heavily on social media buzz and has swung enormously.
Contents
Dogecoin (DOGE) is a CryptocurrencyCryptocurrencyA digital currency secured by cryptography and recorded on a shared ledger, with no bank or government issuing or controlling it. created as a joke in December 2013, with a picture of a Shiba Inu dog from a popular meme as its logo. The joke grew into one of the world's best-known cryptocurrencies, which a large community uses for tipping, payments and fundraising.
Dogecoin is often called the first MemecoinMemecoinA cryptocurrency born from an internet joke or meme, usually with little or no practical use, whose price rests almost entirely on hype., a cryptocurrency born from an internet joke. This article explains how Dogecoin began, how it works and what the risks are.
How did Dogecoin begin?
Dogecoin launched on 6 December 2013. Its creators, Billy Markus and Jackson Palmer, felt that people were taking crypto far too seriously and that it wasn't much fun. So they made one that was light-hearted and approachable.
The name and logo come from the "Doge" meme, in which a Shiba Inu dog is surrounded by multicoloured text in the Comic Sans font. Dogecoin is open-source software built on Bitcoin's code.
Markus and Palmer both stepped away from the project in 2014. Since then, a small group of developers has maintained the software, with contributions from dozens of others.
What is Dogecoin used for?
Dogecoin has always been as much about its community as its technology. The community values kindness, mutual support and teaching people about crypto. That explains both its popularity and how it is used:
- Tipping online. On Reddit and elsewhere, it soon became common to send people a little Dogecoin as a thank-you, for a helpful answer or a funny post. Low network feesNetwork feeA fee paid to a crypto network, not to a bank or company, for including your transaction in a block. suit these small payments well.
- Payments. Some online shops and payment services accept Dogecoin. A new BlockBlockA batch of transactions added to a blockchain in one go, together with a reference to the block before it. is added to the chain roughly once a minute, so payments are confirmed quickly.
- Fundraising. In 2014 the community raised 26.5 million Dogecoin, then worth about USD 30,000, to send the Jamaican bobsleigh team to the Winter Olympics in Sochi. Later, more than 40 million Dogecoin were raised to build clean-water wells in Kenya.
The Dogecoin network has now been running for almost 13 years, making Dogecoin one of the oldest cryptocurrencies still in use. Many supporters see it first and foremost as a currency to spend, not an asset to hold.
How does Dogecoin work?
Dogecoin has its own BlockchainBlockchainA public ledger where transactions are grouped into blocks, each linked to the one before, so past records can't be altered without it showing. and its own coin, DOGE. It works much like Bitcoin, with three main differences.
A different puzzle and faster blocks. Like Bitcoin, Dogecoin uses proof of workProof of workA consensus method where the right to add the next block to a blockchain goes to whoever first solves a hard computing puzzle.. MinersMiningThe process in which computers compete to solve a puzzle so they can add the next block to the blockchain and earn new bitcoin and fees. compete to solve a computing puzzle, and the first to solve it adds the next block to the chain. Its puzzle, called Scrypt, differs from Bitcoin's and is also used by Litecoin. Its blocks also come more often: one a minute on average, against one every ten minutes on Bitcoin.
Merged mining. Since September 2014, Dogecoin has allowed merged mining with Litecoin and other coins that use Scrypt. A miner can work on both chains at once, with the same hardware and the same electricity. This greatly increased the HashrateHashrateThe total number of guesses a network's mining computers make each second, and a measure of how well the network is protected from attack. of the Dogecoin network and makes a 51% attack51% attackAn attack where one party controls more than half of a network's computing power or stake and can then rewrite recent transactions. on it far more expensive.
No supply limit. This is the biggest difference. Bitcoin has a fixed maximum supplyMaximum supplyThe largest number of units of a cryptocurrency that can ever exist under its rules, such as 21 million for bitcoin. of 21 million, but Dogecoin has none. For each block, the miner receives a fixed block rewardBlock rewardWhat a miner receives for adding a block to the chain: newly created bitcoin plus the network fees in the block. of 10,000 DOGE. That adds up to just over 14 million new DOGE a day and about 5.3 billion a year, and issuance never ends.
At first the reward was much higher and fell in steps. By early 2015 about 100 billion DOGE were in circulation, and the fixed reward has applied ever since.
Why no cap? Dogecoin's developers argue that steady issuance is needed to pay miners and keep the network secure. The new coins also make up for coins that are lost. Because the same number of coins is added every year, issuance shrinks as a share of the total as the supply grows. That makes Dogecoin more like a currency with fixed, predictable InflationInflationA general rise in prices over time, which means each króna buys less than before. than like digital gold.
What are the risks?
Dogecoin has a long history and real-world use. Even so, it counts as a memecoin, and its price depends heavily on social media buzz rather than on use:
- Huge price swingsVolatilityHow much and how quickly the price of an asset moves up and down.. In May 2021 the price of Dogecoin was more than 200 times higher than in December 2020. Just over a year later, in June 2022, it had fallen by more than 90% from that peak.
- Single posts can move the price. The researcher Lennart Ante studied 47 posts about crypto by Elon Musk on Twitter, in a study published in 2023. On average, only his posts about Dogecoin had a significant effect on its price.
- Supply keeps growing. Billions of new DOGE are added every year. If demand doesn't keep pace with supply, that can push the price down.
- Copycats and scams. Its popularity has spawned thousands of imitators. Scammers also often pose as famous people and promise to send back double whatever people send them. Read about the most common crypto scams.
Dogecoin at Myntkaup
At Myntkaup you can buy, sell and hold Dogecoin. You can also deposit DOGE and withdraw it to your own crypto wallet on the Dogecoin network.
Make sure the sender and the recipient use the same networkBlockchain networkThe blockchain a cryptocurrency or token is recorded and sent on, such as the Bitcoin network or the Ethereum network., because crypto sent on the wrong network can be lost. The article How to send crypto to another wallet covers what to check. You can see the current price in krónur on the Dogecoin price page.
Frequently asked questions
Is Dogecoin the same as Shiba Inu?
No. Both coins feature a Shiba Inu dog, but they are built differently. Dogecoin has had its own blockchain since 2013 and uses proof of work. Shiba Inu (SHIB) appeared in 2020 and is a TokenTokenA digital asset created with a smart contract on another cryptocurrency's blockchain, rather than on a blockchain of its own. on the Ethereum network. Read more in What is Shiba Inu?
Why does one DOGE cost so little?
Because there are so many of them. More than 100 billion DOGE have been in circulation since 2015, and billions more are added every year. The price of a single unit therefore says little on its own. What matters is the total value, the coin's market capitalisation. Read What is market capitalisation?
Closing thoughts
Dogecoin started as a joke but has become one of the oldest and best-known cryptocurrencies in the world. It rests on the same basic ideas as Bitcoin, but its supply has no limit, and many in its community see it as a currency to spend rather than to hold.
Its price still depends heavily on buzz, though, and can swing a lot in a short time. Learn about the risks and read why crypto prices are so volatile.
