Dogecoin has been around since late 2013, starting as a joke initially. The coin has been designed to be a satirical homage to Bitcoin. Besides being a joke and meme coin, Dogecoin wasn’t intended to serve any other purpose. Yet, you can use it to transfer value.
5 Interesting Facts About Dogecoin
Here’s a list of five interesting facts about Dogecoin:
Dogecoin started as a joke created by Jackson Palmer and Billy Marcus in November 2013. Marcus recently claimed that he sold all of his DOGE in 2015.
There are 128,264,356,384 DOGE coins in circulation at this moment, compared to 18.5 million bitcoins.
Dogecoin hosts one of the largest communities in the crypto space.
In 2014, the Dogecoin community raised $55,000 to sponsor NASCAR driver Josh Wise and covered his car entirely in Dogecoin and Reddit alien images.
If you wondered which dog is on Dogecoin’s logo – it is the Shiba Inu, which is a hunting dog breed.
Shiba Inu dog breed. Source: American Kennel ClubThe DOGE Cult
The cult surrounding Dogecoin still attracts new users to the world of crypto. Therefore, for many people, it serves as an entry point to the crypto world. On top of that, Dogecoin hosts a very approachable community that catapulted DOGE to cult status.
It’s important to know that the currency is not actively maintained. Dogecoin hasn’t seen many updates since 2015. At the moment, the latest code update is from November 2019.
Presently, the network is being secured by miners, just like the Bitcoin network. For each block that is mined, miners receive 10,000 Dogecoins as a reward.
Let’s take a look at Dogecoin’s design characteristics:
Mining: Dogecoin’s Proof of Work Algorithm
Dogecoin’s blockchain works like any other primary blockchain. Blocks are chained together using a hashing algorithm, and outputs can be spent. In other words, users can spend their Dogecoins by sending a transaction to a DOGE address.
Next, miners who run nodes receive and validate transactions. Any invalid transactions will be rejected. Of course, valid transactions are added to blocks, which are further added to the blockchain.
On top of that, Dogecoin uses the Proof of Work (PoW) algorithm that Bitcoin also uses. It capitalizes on putting in “work.” Any modern computer can quickly calculate a hash. There’s nothing difficult about that, as it takes less than a second to compute a new hash.
To make it more difficult to mine new blocks, the Dogecoin blockchain introduces a “difficulty” property just like the Bitcoin blockchain. Now, the generated hash must match a specific pattern according to the “difficulty” property.
In other words, the higher the difficulty, the fewer matching hashes are possible. Therefore, it takes longer to generate a hash that matches this particular difficulty. For that reason, people refer to this algorithm as Proof of Work (PoW).
Bitcoin mines a new block every 10 minutes, while for the Dogecoin network, miners generate a new block every minute on average.
Supply: Inflationary Design
Bitcoin implements a hard cap for the total number of Bitcoins that node operators can mine, set at 21 million bitcoins. To date, just over 18.5 million Bitcoins have been mined. Once we hit the 21 million mark, nobody would be able to mine more bitcoins. From this point on, Bitcoin miners will only receive transaction fees for finding a matching hash.
Dogecoin takes a different approach to its economic design. The coin has chosen for an inflationary design.
This design choice means that Dogecoin enjoys an infinite supply. As mentioned before, miners receive a reward of 10,000 DOGE coins for each block they mine. Therefore, at the current rate, 14,400,000 DOGE coins are mined daily (= 10,000 DOGE rewards * 24 hours * 60 minutes).
Dogecoin has opted for an inflationary design to replace lost coins. You often see stories about people who lose access to their wallets. In one particular example, a man lost access to his Bitcoin wallet containing 7,002 bitcoins.
Yet, there’s a lot of discussion about inflationary designs (Dogecoin) vs. deflationary designs (Bitcoin). It’s important to note that growth in the money supply does not necessarily lead to inflation.
“Money supply growth doesn’t necessarily lead to inflation if there is an equal growth in the value of the goods and services in an economy. In fact, it could be argued that a productive and growing economy requires a growing money supply to support it.
Though such a system can be more productive over time, it is prone to financial instability due to the difficulty in targeting inflation.” – Reads an article on the matter.
Initially, Dogecoin aimed to reach a stable supply of 100 billion DOGE coins as their stability point. Though, their supply already surpassed this number and continues to grow. In other words, it’s not easy to find the right balance between usage and inflation.
DOGE in 2021: Elon Musk’s Puppy
Elon Musk has shown his interest in Dogecoin several times. In July 2020, Musk openly endorsed Dogecoin, which resulted in a 14% price increase.
Elon Musk and Dogecoin ‘Lion King’ Meme Gone Viral. Source: TwitterRecently, he started talking about Dogecoin again. On February 15th, Tesla’s founder openly criticized whales (large token holders) for hoarding large amounts of Dogecoin.
According to Musk, this hoarding prevents Dogecoin from becoming the “currency of the internet.” Musk believes that Dogecoin’s large community has the most potential to become an actual currency because of the wide variety of people holding DOGE coins.
Whether Dogecoin will become the “people’s crypto” as Elon Musk envisioned is doubtful. Yet, Dogecoin hosts one of the largest communities of all crypto projects. Still, it’s not an ideal candidate to become an official currency because of its lack of technical support and maintenance.