Dogecoin (DOGE): The Birth of the Original Memecoin

Dogecoin (DOGE) was created in 2013 from a Litecoin fork. Its creators, Billy Markus and Jackson Palmer, hypothesized that by piggybacking off a popular internet joke, Dogecoin might be able to reach a broader audience than Bitcoin. It was also partially intended to be a parody of all the altcoins flooding the cryptocurrency market at that time.

Dogecoin owes its origin to a popular internet meme known as “Doge.” The meme features a cartoon representation of a Shiba Inu — yes, the Japanese dog breed — with scattered text displayed in Comic Sans font and deliberately written in broken English. The text (written in the dog’s voice) commonly includes pseudo-phrases such as “such wow,” “very scare,” and “so amaze.”

As far as most altcoins go, their main competitive edge over their predecessor Bitcoin is usually some sort of unique structural advantage (most commonly of a technical nature) in an area where Bitcoin has a perceived limitation. Most altcoins typically only gain traction alongside specifically advantageous use cases. This is not the case with Dogecoin. Its momentum and value is primarily driven by an inside joke on the internet — making it an anomalous cryptocurrency.

Such Wow

Jokes aside, Dogecoin developed a rather serious online following. Presenting itself as the “fun and friendly” cryptocurrency, Dogecoin was increasingly bought and sold in online crypto marketplaces by those looking to add an atypical currency to their crypto portfolios. It also became a popular method for tipping online content creators. It experienced explosive growth in the first months of its release, which even resulted in it briefly exceeding the combined trading volume of all other cryptocurrencies (including Bitcoin) in January 2014.

Continuing to defy odds, Dogecoin somehow managed to achieve a billion-dollar market cap without a whitepaper or any viable use cases, cementing its parodical status in the cryptocurrency community.

Cryptocurrencies in general are marked by high market volatility. Dogecoin is no stranger to volatility, and perhaps experiences even more than its fair share because of how much its performance is influenced by social media (a potentially volatile structure in its own right). For example, in April 2019, Elon Musk said on Twitter that Dogecoin “might be my fav cryptocurrency. It’s pretty cool.” The statement dramatically increased the cryptocurrency’s price. Similarly, between May 2020 and July 2020, the price of Dogecoin skyrocketed by almost 200% (from $.001571 to $.004398) due to a push from users on the social media platform TikTok to drive the DOGE price to $1.

The Structure of DOGE

Dogecoin is built on top of the Litecoin blockchain and is thus a scrypt-based cryptocurrency. Scrypt is the mining algorithm used within the Litecoin protocol. It differs from the SHA-256 mining algorithm used within the Bitcoin protocol. However, like Bitcoin’s SHA-256, it also operates within a Proof-of-Work (PoW) consensus method for mining and validating new blocks on the network.

DOGE is an inflationary coin, meaning that there is no limit to how many DOGE coins can be mined. It features a block time of one minute, which contributes in part to its notable market capitalization, despite a lack of ongoing Dogecoin technical development. In fact, Dogecoin has not received a significant update since 2015.