It’s time for Dogecoin! — AAX Academy
Dogecoin is a cryptocurrency that once started out as a joke, based on a famous meme, but has since then become one of the most popular coins in the crypto world attracting serious capital. The coin itself presents few innovative features, but what makes it unique is the vibrant community that has built up around it.
The history of Dogecoin
Shortly after Bitcoin gained traction beyond the original community, many new coins were launched with a vast range of use cases. Some altcoins were designed to offer a better payments experience, and others were built to power smart contracts and entirely new blockchain protocols like Ethereum.
In November 2013, Jackson Palmer made a joke about the state of the frenzied crypto world saying: “Invest in Dogecoin — pretty sure it’s the next big thing.” The joke caught the interest of many people including Billy Marcus, a programmer who then reached out to Palmer to turn the coin into reality. The following December, Dogecoin became a real coin ready to be mined and traded.
The coin hasn’t seen any major updates since 2015, but as it is based on Litecoin is does benefit from improvements made to the Litecoin code.
What makes Dogecoin different?
Dogecoin was designed to be a more approachable and friendly form of cryptocurrency compared to the cold complexity of Bitcoin. The main thing that separates Doge from most other coins today is that is an inflationary cryptocurrency, rather than a deflationary one.
The potential problem of Bitcoin and many other coins is that the built-in hard cap could at some point mean it is no longer profitable for miners to sustain the system. This would lead to either incredibly high fees to encourage miners to remain engaged, or very long transaction times as there won’t be enough incentive to process network transactions.
Dogecoin solves this problem by making sure miners will always get enough rewards to incentivize miners to keep mining. Since the underlying technology is based on Litecoin, LTC miners are even able to mine Dogecoin using Auxiliary Proof of Work (POW).
What makes Dogecoin special?
Perhaps the main thing that makes the coin special is not the technology or the features, it’s the community behind it. The whole vibe takes a much more light-hearted approach to crypto than usual, making fun of themselves in the process.
Many people in the community say they think of Dogecoin as a currency in its own right: “1 Doge is equal to 1 Doge.” They are also known for being generous with their Doge, tipping good content on reddit or even raising money for charitable causes.
Even founder Jackson Palmer has been straightforward about the coin reaching millions in market cap is unusual to say the least: “I have a lot of faith in the Dogecoin core development team to keep the software stable and secure, but I think it says a lot about the state of the cryptocurrency space in general that a currency with a dog on it, which hasn’t released a software update in over 2 years, has a $1B+ market cap.”
But that certainly hasn’t stopped the fun. After praising the coin for just being cool, Elon Musk was voted in as CEO of Dogecoin by decree of the people using a quick Twitter poll.
How much is that doggy, in the window?
The main driver for Doge’s price is simply media attention. Every now and then the famous meme dog resurfaces, rebuilding hype around the coin, leading waves of new buyers to hop on the Dogecoin train. Famously, a recent viral video on TikTok powered a pump and dump that pushed the price up 2.5x, only to fall right back down again.
With a long-term view, Dogecoin generally has an upward trend, but without any major software release planned in the future, nor a push for any type of mass adoption, the price will more than likely remain highly volatile with media-driven spikes every now and then.
But then the founder never intended Doge to be big in the first place. All he wanted was world domination.
Originally published at https://academy.aaxpro.com on December 17, 2020.