Dogecoin: How a Meme Cryptocurrency Took the World by Storm!

If you’re into cryptocurrencies, it is likely that you have heard of Dogecoin, also known by its market ticker, DOGE.

Created in 2013 by Billy Markus and Jackson Palmer, Dogecoin was initially created as a joke.
However, Dogecoin quickly gained popularity due to its adorable shiba inu mascot, large online community, and low price per coin. Dogecoin has since become a widely traded cryptocurrency and a staple of the top 10 cryptocurrencies by market cap.

Despite its comedic origins, Dogecoin has gained utility over the years by being used for charitable causes, such as raising funds for the Jamaican bobsled team to compete in the 2014 Winter Olympics or contributing towards the Team Seas ocean clean-up project in 2021.

More recently, Dogecoin has received attention from high-profile figures, most notably Elon Musk, who has tweeted about the cryptocurrency and helped to drive its price up, mostly through Twitter.

But what is Dogecoin exactly, how does it work, what makes it unique, and what do the tokenomics look like?
Let’s find out.

Dogeclone is a fork, of a fork, of a fork. But what is a fork?
In plain English, that means Dogecoin is a variation of Luckycoin, which itself was a variation of Litecoin, which is a variation of Bitcoin.

As these variations were split or cloned from the original blockchain, known as the ancestor chain, it is referred to as being “forked” from the ancestor chain.
Meaning, on a technical level, Dogecoin acts very similarly to Litecoin, and fairly similarly to Bitcoin.

This means, when it comes to how Dogecoin verifies its transactions, it’s a Proof-of-Work consensus mechanism like Litecoin and Bitcoin.
To recap, Proof-of-Work is a consensus mechanism used in blockchain networks to verify transactions and add new blocks of data to the network.

Under a Proof-of-Work system, a network of nodes competes to solve a complex mathematical puzzle, with the first node to solve the puzzle being rewarded with a small amount of cryptocurrency.

Once a node solves the puzzle, a new block is added to the blockchain and the other nodes in the network verify the solution. If the solution is correct, the block is considered valid and the transactions contained within it are confirmed.

Dogecoin is unique for multiple reasons.
The first that comes to mind is the fact that it started as a joke but has become a legitimate cryptocurrency through its substantial online presence and charitable contributions.

Though secondly is likely that Dogecoin has a merge-mining relationship with Litecoin. This means that miners can simultaneously mine both cryptocurrencies without expending additional computational power.

This allows miners to earn rewards for both cryptocurrencies without switching between separate hardware.
Additionally, merge-mining has benefits for both Dogecoin and Litecoin.
By sharing mining resources, both cryptocurrencies benefit from increased network security and reduced risk of 51% attacks which was why the merge-mining relationship began back in 2014.
Back then, the Dogecoin network was so small that it was at risk of a 51% attack and had to merge with a larger network to save itself, choosing Litecoin as its savior.

To summaries, a 51% attack is where an attacker controls 51% of the network’s nodes. Once in control, the attacker can submit fraudulent transactions essentially killing all confidence in the project.
Overall, the merge-mining relationship between Dogecoin and Litecoin has helped to create a symbiotic relationship between the two cryptocurrencies, allowing them to share resources and benefit from each other’s strengths.

Initially, this favored Dogecoin as it saved their network. But, it could be argued that this merge-mining relationship benefited Litecoin more during the 2021-2022 crypto bull-run as Elon’s continued promotion of Dogecoin had a knock-on effect for both cryptocurrencies.

Like Bitcoin, Dogecoin was designed to be a digital payment method.
This means DOGE can be used as a medium of exchange when purchasing items. This could be online, but also through successful partnerships, through a prepaid crypto card, and used like a regular debit or credit card.

As we have learned from previous articles, crypto projects live and die by their tokenomics. However, Dogecoin defies the usual convention.

Most cryptocurrencies would lose value if too much was created too often. However, as 10,000 DOGE is created every minute, Dogecoin is apparently not one of them.

Usually, this would create immense downward selling pressure on the price but somehow, this has not been the case with DOGE.

Additionally, there is no limit on how much DOGE can be created overall, and currently, there are 133 billion DOGE coins in circulation, with an additional 5 billion released annually.

Surprisingly, Dogecoin is fairly well distributed with the largest private wallet holding around 5% of the total DOGE in circulation.
Of course, one person controlling 1 in every 20 DOGE can cause significant downward price pressure if this investor decides to exit their investment in Dogecoin.

Though, when you’re releasing 10,000 DOGE coins every minute it’s not as if there isn’t always plenty of Dogecoin constantly entering the market. This is something the original team planned for as a low unit cost encourages adoption and growth while keeping transaction fees low.

This original team and the founders themselves have long since left the project, and for years Dogecoin was running without an organization in control of its development.
Recently, a new development team was set up to turn Dogecoin into a sustainable, long-term crypto project. Despite Dogecoin’s humble, comedic beginnings the project has big plans for the future.

In conclusion, Dogecoin is a cryptocurrency that can be used for payments, and probably shouldn’t be as successful as it is.
Yet, it has somehow managed to transform from an online joke into a top 10 crypto project by investment capital.
The question really comes down to how the project will evolve with time. What will this new development team bring to the Dogecoin project that will help ensure it transitions successfully into the future?
We’ll have to wait and see to know for sure.