What is Dogecoin: the joke that changed cryptocurrency

Bernardo Montes de Oca
August 19, 2021

This story started as a joke. However, it became one of the most noticeable cryptocurrencies as of late. From the Olympic games to Musk, Dogecoin has been everywhere.

But, there's a lot more than meets the eye. Though the humor was evident at first, many ask themselves: for real, what is Dogecoin? 

Well, when billionaires swear by it, it's time to start taking it seriously. It's time to discuss how Dogecoin and how a joke can change the world.

Dogecoin's origins

This story begins, to most people, as a joke cryptocurrency. But there's more to it than humor.

In 2013, Jackson Palmer, an Adobe engineer, had a hobby of following the cryptocurrency craze. Take Bitcoin, for example. That year, its value went up to $266, dropped to $50, $100, $70, and, by year's end, $140.

Around that time, a Shiba Inu became the go-to meme for mispronounced knowledge on anything and everything, earning the nickname Doge.

One night, after a long day, Palmer tweeted some magic words. "Investing in Dogecoin, pretty sure it's the next big thing." Boy, was he right.

At that moment, the tweet had some traction. So, Palmer decided to buy the site dogecoin.com and post a picture of the iconic dog with comic sans writing.

Much wisdom, we have to say. But, of course, it was a small gesture, and still, it was enough to reach Billy Markus, thousands of miles away, in Portland.

Markis was a software engineer who had tried, to no success, to create his cryptocurrency. So when he saw the dogecoin.com website, he decided he should make the coin.

He tweeted at Palmer, but he started working on Dogecoin even before he got a response. He has claimed it took him three hours to develop it. So, by the time Palmer replied, all Markis had to do was convince him that Dogecoin worked.

And, so, the famous cryptocurrency was born. But, what was so different about it?

A Doge's DNA

This video holds the believed origins of the term Doge. These few seconds would explode years later. Like Dogecoin, it was only a joke.

But that essence remains engraved deep in the crypto's DNA. To understand, let's discuss how Dogecoin was born and how it differs from Bitcoin, for example.

First of all, Bitcoin is Satoshi Nakamoto's creation, whoever he is. The intention was to create the leading digital currency in a decentralized financial system. But, both Palmer and Markus had no such goals.

So, there are key differences. For example, let's look at security. Because Markus created the coin so quickly, experts believe it lacks critical aspects other cryptos have.

Then, there's the source. Bitcoin is, in short words, the OG crypto, with its blockchain proof-of-concept. It's an essential piece of the cryptocurrency world—usually, developers spin off their tokens from Bitcoin.

Key differences with Bitcoin

You can say that Dogecoin is Bitcoin with a dog face on it. But that's not entirely accurate. Markus has stated that all he did was take Bitcoin's coding, remove the parts where it said Bitcoin, and replace them with Dogecoin.

But even that's shying from the truth. Dogecoin is closer to Litecoin and allows for faster mining and transactions.

Dogecoin also uses a different consensus mechanism. Instead of using Bitcoin's SHA-256, it uses scrypt technology, like Litecoin.

Then, there's the most significant difference. Bitcoin has a finite amount of coins available on the blockchain. So it's expected that the last Bitcoin rewards will issue at around 2140, in theory.

Dogecoin used to have a limit. It started with 100 billion coins, one of the highest in the world.

After reaching it in 2015, Dogecoin went to an unlimited cap of sorts. In theory, it will issue 5 billion coins per year from 2015 onwards. So, while Bitcoin creates scarcity, Dogecoin is the opposite.

Finally, there's the value. Many factors lead to a drastic difference between them. By July 2021, one bitcoin was worth $32,117.96. One Dogecoin had a value of $0.2002.

How much is a dogecoin worth?

When, in December 2013, Palmer and Markus launched Dogecoin, they had lost control. Their creation was out of their hands, and neither could predict what followed.

According to Coin Market Cap, at 8:42 am on December 15th, 2013, Dogecoin's value was 0.05 cents ($0.0005588). That same day, at 5:16 pm, that value almost doubled at 0.09 cents ($0.0009026).

From then, the rollercoaster ride became a mainstay in Dogecoin's DNA. Between January 2014 and May 2017, the crypto oscillated between 0.009 cents ($0.00009) and 0.15 cents ($0.0015). But, by July 2017, Dogecoin reached a high, at the time, of 0.38 cents ($0,003873).

At its highest, this crypto had everyone jumping with joy and some quite shocked. It was fulfilling the Dogecommunity's motto: "To the Moon!" At its lowest, critics rejoiced, insisting it was a joke.

Another use for Dogecoin

Meanwhile, the Dogecoin community trudged along, working with charities and notable causes. For example, during the 2014 Winter Olympics, they created funds to finance the Jamaican Bobsled team and Shiva Kevashan.

They've also worked with NASCAR racing teams and water supply in Africa. So, some might see it as a joke, but Dogecoin was getting serious.

It was even a part of the 2017-2018 crypto bubble. In January 2018, it reached a value of 1.7 cents ($0.01709). It even crashed, along with the rest, when the bubble burst in 2018.

In that sense, Dogecoin was no different than other cryptocurrencies. But, in late December 2020, its behavior changed.

Dogecoin saw a rise in value like never before. It didn't slow down until May 7th, when it reached an all-time high of 73.8 cents ($0.7376), breaking the critical 50-cent line. But, it also meant a 7,252% increase in value in 2021 alone.

Then, two days later, it dropped 43,6% in value. So, what was behind this crazy rollercoaster ride? Well, Dogecoin itself.

It's all about the cult behind Dogecoin.

2021 has been crazy for Dogecoin, thanks to some big names. So naturally, every mention causes drastic changes in its value.

What's interesting about Dogecoin is that some news outlets, to this day, call it a "joke" coin. But it's in the top ten in Coin Market Cap. Plus, those big names are huge.

Mark Cuban owns the Dallas Mavericks, and he's no stranger to the spotlight. In March 2021, he announced that the team admitted Dogecoin for tickets and merchandise. His reasoning: because we can.

Now, this isn't new for the Mavericks; they have accepted bitcoin since 2019. Another team, the Sacramento Kings, do so since 2014. But that was bitcoin, not the "joke" Dogecoin.

But basketball is no match to the boost from another billionaire. Of course, we're talking about Elon Musk.

Musk and Dogecoin: a love affair

Musk is no stranger to controversy and naming his kids with mathematical equations. But, he also has an intense affair with Dogecoin.

He nicknamed himself the Dogefather. His SNL comments shook the crypto world. Plus, once tweeted: Dogecoin is the people's cryptocurrency. So when he speaks, people listen.

With Dogecoin, it's no different. Every time he mentions any crypto, the market has to brace itself.

Yes, Musk has been unpredictable, but mostly on the positive side.

Mostly.

Once, he took to Reddit to ask users how to improve the "joke" coin, and Dogecoin went up 10%. But, those SNL comments caused the value to drop 30%.

In July 2021, Musk and Twitter founder Jack Dorsey announced a live conversation for a cryptocurrency platform. Immediately, the world braced for impact because "nothing was off-limits."

In the meeting, he suggested using Ethereum and Dogecoin for lower costs and faster transactions. So, the value went up, and so on.

To a degree, that's what Dogecoin is all about. It's irreverent when other cryptocurrencies want to be serious. What's ironic? The world does take it seriously.

So, Dogecoin began as a joke, and, for a long time, it was. But, as we venture further into the future, more and more people have stopped laughing. And, who knows? Perhaps, it will reach the moon.

Bernardo Montes de Oca
Content creator in love with writing in all its forms, from scripts to short stories to investigative journalism, and about almost every topic imaginable. From start-ups to nature, from literature to aviation. Hearing impaired, so let’s talk loud and clear.
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