Those keeping an eye on the altcoin markets will know that the internet has been abuzz with Dogecoin lately. So, what is all the fuss about? Dogecoin originally started out as a satirical commentary on the rapidly growing altcoin sector, all the way back in 2013. However, the concept of fast payments with a fun and friendly community based around a popular Shiba Inu “doge” meme actually caught on and garnered a following. And now, approximately seven years later, what started as a joke coin has pumped roughly 600% just in the last week! Who would have predicted that?
We’ll get into the hype and the latest news about the Reddit group called SatoshiStreetBets and Elon Musk’s Dogecoin tweets in a bit. But first, let’s take a look at what Dogecoin is. Questions about that and Dogecoin’s use case rarely get asked when herds of people are “FOMOing” in. But if you’d like to know a bit more before blindly jumping on the current bandwagon, let’s first dig a bit deeper.
What Is Dogecoin, Doge, and DOGE?
Essentially, Dogecoin is a digital currency that allows people to send money to each other in a peer to peer network. Like other cryptocurrencies, Dogecoin is decentralized, secure, and can be used with a crypto wallet to buy goods and services. However, it distinguishes itself with a friendly, vibrant community and a memorable meme.
“Doge” is Dogecoin’s mascot, who often represents the coin. Doge (pronounced DOHJ or DOHG) is a slang term for a dog, originating – like so much nowadays – from a Reddit post. In this article, when we write “Doge” in lowercase, we’re talking about the Shiba Inu mascot, who doubles as Dogecoin’s logo. A Shiba Inu is a Japanese dog breed that became popular as an online meme. But when we write DOGE in capital letters, we’re talking about the coin itself. You can see DOGE’s price on Coingecko.
A typical Doge meme generally features the Shiba Inu along with creative internal dialog with captions in broken English. However, there have been all sorts of wacky antics and marketing ploys associated with Dogecoin in particular. Not necessarily from its founders, but fans and general members of the community have gladly contributed. One memorable video featured a guy with a southern accent saying, “Git ya some o’ dat Doggy Coin!” Silly stunts like that are probably why people refer to Dogecoin as a “fun and friendly internet currency.”
What Can You Do With Dogecoin?
The use cases for Dogecoin are mostly limited to trading DOGE for tangible items on Reddit or Twitter. However, some online industries such as the poker industry have begun to use DOGE, as does the Trezor wallet as a payment option. Someone even reportedly tried to sell a house with DOGE. Perhaps most notably, however, Dogecoin features very low transaction fees and fast transaction times.
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How to Get Dogecoin?
There are several ways to get DOGE, including buying, trading, and mining. You can buy DOGE on crypto exchanges like Binance or OKEx. Or you can get tipped in DOGE by participating in the community. For example, if you share enjoyable content with fellow members, they can tip you in DOGE. It’s similar to a “like” or an “upvote,” but tips hold material value.
Another way to get DOGE is from what’s called a “Faucet,” which is a website that dishes out small amounts of DOGE as an introduction. You can also mine DOGE and get it that way. However, mining is for advanced users and requires some tech-savvy skills.
Who Created Dogecoin?
An Australian entrepreneur named Jackson Palmer and a software engineer from Portland, Oregon, Billy Markus, created Dogecoin. As mentioned, the original intent was to satirize the altcoin market of 2013. But Dogecoin would be quick, fun, and free from the traditional banking fees. It later found a use-case for “micro-tipping” on social media.
Palmer purchased Dogecoin.com and put up a splash screen with the Dogecoin logo, while Markus designed Dogecoin’s protocol based on other cryptocurrencies in the ecosystem.
Dogecoin is a derivative of Luckycoin, which is a fork off of Litecoin – which, in turn, is a fork of Bitcoin. However, Dogecoin differs from Litecoin in several ways. One of them is that Dogecoin’s block time is only 1 minute, while Litecoin’s is 2.5 minutes. The 1-minute block intervals make it quicker to transact with than other blockchains. Also, there is no cap to the supply of coins, which makes DOGE like fiat currency in the respect that it can inflate ad infinitum.
Nonetheless, Dogecoin recently hit a new all-time high on January 28, 2021, after a meteoric rise of 1,100%. Although Dogecoin’s price has since fallen, price spikes seem to be a recurring theme, so let’s delve into some of Dogecoin’s historic “moon” shots.
Dogecoin’s History, 2013-2021
Dogecoin has a history of wild price spikes – mainly because of the popularity of its funny dog meme. Major celebrity endorsements and TikTok challenges have also enabled its price to moon with no other explanation. Hence, the power of marketing and hype.
December 6, 2013 – The Launch
Palmer and Markus officially launched Dogecoin on December 6, 2013. Within 30 days, they already had over a million visitors to their website, Dogecoin.com. Dogecoin started its coin production with 100 billion DOGE in circulation. It jumped nearly 300% in 72 hours to $0.00095 in six days with billions in volume. Unfortunately, this happened simultaneously with China’s decision to ban Chinese banks from investing in Bitcoin. So, not surprisingly, DOGE’s price crashed by 80% within three days.
December 25, 2013 – The Hack
A hacker stole millions of DOGE by accessing Dogewallet’s file system and redirected its contents to his address. This hack was the first time Dogecoin got unwanted attention as it became the most talked-about altcoin on Twitter.
However, as a testimony to its fun and friendly community image, they started the “SaveDogemas” initiative. This effort provided donation coins to the hack victims and repatriated them for their losses.
January 2014 – Market Cap
Dogecoin’s online community quickly developed, as did their trading volume that reached a market cap of $60 million. Dogecoin’s trading volume briefly surpassed all other crypto-currencies combined. However, its market cap never came close to Bitcoin’s, and it remained more or less a joke.
Mid-2015 – DOGE Mining
By mid-2015, the number of mined DOGE had reached 100 billion.
2017 – Crypto Boom
Dogecoin’s first real pump occurred back in March 2017. It coincided with the spike in retail investment that started floating all the altcoin boats. The crypto that first began as a joke rocketed up by more than 1,890%, blowing past its previous all-time high of $0.0021.
Not long after the peak, DOGE dropped 75% during a two-week selloff that affected the entire cryptocurrency market.
January 2018 – Price Spike
On January 7, DOGE shot past the $0.02 mark going 380% past its previous high. Its market cap rose close to $1.6 billion during this time. Again, this boom was short-lived, with the price falling 70% to $0.004 in a week.
September 2018 – Dogecoin/Ethereum
Dogecoin rallied independently of the rest of the crypto market in September of 2018. The rally was due to a system test of the Dogecoin/Ethereum bridge. This update would have allowed interoperability between the two blockchains. Hence, the announcement did rally the price 173% in two days. However, when the update got put on the back burner, the spark was snuffed out before it could catch fire.
July 2020 – TikTok
DOGE’s price spiked after a TikTok collaboration formed, trying to jack the price of DOGE to $1.
January 2021 – SatoshiStreetBets
Only a few days ago, a Reddit group called WallStreetBets disrupted the plans of some heavy-hitting hedge funds by giving rise to a short-squeeze. The Reddit community rallied and started buying some more or less failing stocks, most notably GameStop (GME), after hedge funds had been excessively shorting these companies. Soon after, a group called SatoshiStreetBets decided to do the same thing to Dogecoin.
Dogecoin, WallStreetBets, SatoshiStreetBets, and Elon Musk
This latest Dogecoin pump all started when WallStreetBets encouraged people to buy failing stocks like GameStop to inflict some pain on the hedge funds, forcing them to buy to cover their shorts. The buying pressure pushed the stock’s price even higher.
Insiders and big-money players have been pulling these kinds of stunts forever, leaving the average trader scrambling to cover. But the big players were none too happy when regular people started doing it back to them. For once, small investors realized they could collectivize and beat the insiders.
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However, hedge funds were quick to cry foul when faced with this coordinated buying strategy. In a widely criticized move, Robinhood halted trading on the stocks in question, which sparked outrage and seemingly only confirmed what many already suspected – that the stock market is a rigged game.
Will the Robinhood Scandal Help Crypto?
Thankfully for us, Robinhood and the traditional stock market’s loss is arguably crypto’s gain. The spillover effect was that the WallStreetBets mania spilled into cryptocurrencies and ignited a rally that caused DOGE to rocket to a 1,100% gain (800% in 24 hours), a new all-time high of approximately $0.087.
There was no short squeeze going on with Dogecoin, however. Instead, people collectivized via the SatoshiStreetBets group to push DOGE higher. A post on SatoshiStreetBets read: “Let’s make DOGECOIN a thing.”
Some well-timed tweets by billionaire Elon Musk and influencer Carole Baskin (“Tiger King” celebrity) also helped fuel the rally. Elon tweeted out a picture of “Dogue,” a play on the fashion magazine titled “Vogue.” Some took this to be evidence that the billionaire supported the coin’s rally. “Mr. Musk is with us… to the moon,” one Reddit poster commented. And when DOGE prices faltered, Reddit posters encouraged people not to sell but to keep on buying.
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Another Pump and Dump?
Following the previously mentioned series of events, DOGE became the most talked-about cryptocurrency on Twitter. In fact, the coin even launched into the top ten briefly based on market cap, motivating one poster to call DOGE the “crypto GME” (GameStop’s stock ticker). Other posts encouraged pushing DOGE to the $1 mark.
Pump and dump schemes are not new in the crypto world. These happen when a token is hyped by those who got in early. They then sell near the top just as the latecomers are FOMOing in to get “rekt.”
Dogecoin to the Moon
Dogecoin certainly puts the fun in crypto. And with its warm and fuzzy branding, it’s quite natural that a group like SatoshiStreetBets would single it out for a pump. Thankfully, in this case, Dogecoin served well as a crypto introductory ambassador for those aggravated with the stock market.
However, Dogecoin is different from GameStop. It’s not a dying company. On the other hand, it’s not a blue-chip cryptocurrency either. For those new to crypto, tempted to load up based on “to the moon” fever, you should be realistic. While Bitcoin pushes its way back up to $40k, don’t expect DOGE to hit those kinds of numbers.
There’s not enough investment capital to pump DOGE that high. That’s because of supply and demand laws at work. Dogecoin has 128 billion coins in circulation with no cap on its supply. Bitcoin currently has just over 18 million coins circulating.
Dogecoin would need a market cap of around 128 billion just to reach the $1 mark. So, if it would, you’re looking at a market cap of about 80% of Ethereum, the no. 2 cryptocurrency in the world. Not financial advice, but if you decide to ride one of these periodic DOGE hype cycles, think about taking profits on the way up rather than waiting for this magical $1 mark that influencers keep pushing. What’s more, keep in mind that even Dogecoin’s founders have been clear that they view the creation of Dogecoin primarily as a joke.
So, whether Dogecoin will remain the joke it was created as, or whether it all part of some bright marketing scheme (founder Jackson Palmer was in the Adobe Systems marketing department), or if Palmer and Billy Markus set out to create a fun and fast peer-to-peer digital currency with an actual use case, it certainly has topped the hype cycle numerous times in its history.
After all, whether DOGE has utility or not, doesn’t mean it can’t moon now and again. It might be the right play for those who enjoy the roller coaster rides of sharp price swings. The power of marketing, brand-name recognition, cute memes, and tweets by influential celebrities are more than enough to incite a crowd and get the herd moving DOGE in a positive direction.
As they say in the stock market, “don’t fight the tape.” It doesn’t matter if a stock doesn’t have good fundamentals once the herd starts moving on it. But crypto is more volatile, so a well-timed play can make lots of money as long as one doesn’t get caught in the middle of a rapid whipsaw as the herd starts stampeding in the other direction.
The Future of Dogecoin
DOGE became the people’s coin early on, but there are things to be concerned about Dogecoin moving forward. For one thing, it hasn’t undergone any significant changes since 2015. And there are reports that Jackson Palmer has nothing to do with it anymore
In short, Dogecoin could get left behind, especially with all the radical innovations happening in the DeFi space on Ethereum. One of the positives is Dogecoin’s relaxed and fun-loving community. However, most people are in crypto to “grow their bags.” Not sure how loyal the community will be if Dogecoin continues to stagnate, while more new and exciting projects leapfrog it in DeFi. We’ll see. If you want to develop your DeFi skills to keep up with this bleeding-edge technology, make sure to join Ivan on Tech Academy today!