Dogecoin & the Memeification of Crypto
Recent fintech headlines have been talking about the miraculous recovery of Dogecoin! But what is Dogecoin exactly? Who created it? Why? What brought its downfall and what miracle happened to it? Most importantly is: why in the world would someone choose Dogecoin as its brand name!
What is Dogecoin?
It’s a cryptocurrency like Bitcoin and Ethereum, but it’s not your average cryptocurrency. It all started as a joke between software engineers Billy Marcus and Jackson Palmer. Palmer chose the name for the cryptocurrency based on a popular 2013 meme. Specifically, the Shiba Inu dog meme.
How does it work?
Just like any other cryptocurrency, Dogecoin uses its own blockchain. Unlike Ethereum, it still relies on a proof of work (POW) consensus mechanism. This means that computer geeks use their supercomputers to solve mathematical equations to process transactions and record them on the blockchain. So, they use more power and produce more emissions. No wonder it was Elon Musk’s favourite crypto in 2021!
Speaking of which, a glimpse of how word of mouth could make or break any industry/business, Musk’s comment on Dogecoin has led it to reach the top 5 cryptocurrencies worldwide in 2021! As of now, it’s still a part of the top 10 cryptocurrencies in the world.
Bitcoin vs. Dogecoin
Even though Bitcoin is well-established and is a household name in the crypto market, Dogecoin -surprisingly- got the upper hand when it comes to efficiency. Dogecoin takes way less time to process payment than Bitcoin.
Another major point is that Bitcoin has a cap whereas Dogecoin doesn’t. Now, what is a crypto cap? The term is basically used to describe the maximum number of new cryptocurrency coins that can be created.
For Bitcoin, the maximum number of coins that can be created is capped at 21 million. This ensures Bitcoin's ability to hold its value and increase in value over time. Dogecoin, however, doesn’t have a limit, but there’s a fixed reward of 10,000 DOGE for each new block added to the blockchain. This incentive makes more miners hop on the Dogecoin blockchain where more of them will dump new coins onto the market and so its price decline.
Why is it popular Dogecoin's?
The reason for that would be the extreme fluctuation of its value in a short span of time! Dogecoin's value grew to $0.14 by November 2022 but just as quickly, it went down the hill! Then it rose again until it hit a low of $0.08. Now the reason for its inadvertent popularity and that November growth is Musk. Because as soon as he bought Twitter (now known as X), the Internet wouldn’t shut up about it including the crypto world.
Unlike some cryptocurrencies, Dogecoin doesn’t have a great security system which makes it vulnerable to hackers. It’s also a bit risky to invest in it, but then again, investing always comes with a little risk!