To those of us used to using paper money, cryptocurrency may seem... well, cryptic. Legal currency that you can never see or touch? “Coins” that can be spent with the click of a button?
As if that isn’t unusual enough, along comes the digital currency that started out as a joke but has gained a loyal following of serious users.
That currency is Dogecoin, an open-source peer-to-peer cryptocurrency that has exploded in popularity recently after Tesla and SpaceX founder Elon Musk and other prominent figures lavished it with attention.
Here’s everything you need to know about this more irreverent of cryptocurrencies.
What is Dogecoin?
Developers Jackson Palmer and Billy Markus created Dogecoin — pronounced “dohj-coin” — in 2013 as a parody of the popular Bitcoin cryptocurrency. As such, Dogecoin gives new meaning to the word “altcoin” — a shortening of “alternative to Bitcoin” that refers to cryptocurrencies that aren’t Bitcoin, the initial and most popular cryptocurrency.
Palmer and Markus drew the name from an Internet meme featuring a photo of a Shiba Inu dog with a skeptical expression surrounded by deliberately misspelled words and phrases representing its thoughts. “Doge” is the misspelling of “dog” in this meme language.
The Doge meme proliferated wildly. People appropriated it a vast array of comedic expressions. Know Your Meme named it the #1 meme of 2013.
Everything about Dogecoin was initially meant to be a spoof of cryptocurrency. Even the process of obtaining it was nonsensical. Where people usually receive a rational amount of cryptocurrency for solving mathematical puzzles with powerful computers (a process called “mining”), Dogecoin miners (called “diggers”) get a random number — maybe one, maybe hundreds of thousands — with no apparent rhyme or reason.
Markus, who now uses the name Shibetoshi Nakamoto online in an apparent spoof of Satoshi Nakamoto, the mysterious inventor of Bitcoin, left the dogecoin project in 2015. He made just enough from selling out to buy a used Honda Civic. He says he left due to harassment from the dogecoin community and continues to face harassment. Parker is also no longer involved with the project.
How does Dogecoin work?
As a cryptocurrency — or form of digital money — Dogecoin exists entirely online, though you can spend it on both digital and tangible purchases. Cryptocurrency is a decentralized, peer-to-peer form of money that allows people to trade it among themselves without banks, governments, or other institutions playing a moderating or middle-man role.
The digital, person-to-person nature of the currency is made possible by cryptography called blockchain technology
, which serves as an online ledger to track each transaction’s details. The blockchain stores this information as non-fungible tokens (NFTs) and shares it across a network of nodes, which makes it extremely reliable and secure despite being decentralized.
Like other cryptocurrencies, Dogecoin can be “dug” (mined), or obtained by using high-powered computers to solve mathematical problems. While Dogecoin uses the scrypt mining algorithm, which is less energy-intensive than Bitcoin's SHA-256 mining algorithm, digging for Dogecoin is still a very expensive task that uses a tremendous amount of energy.
Like other cryptocurrencies, Dogecoin uses private keys and public keys to stay secure. This is a system that uses one method of encoding and a separate method of decoding so that only those who have the right keys can code the encryption and take possession of the currency.
How did Dogecoin become so popular?
Dogecoin was initially just popular with crypto-enthusiasts on Reddit
, but soon began to gain more attention. In December 2013, Dogecoin’s value popped up almost 300% in just three days, and while it reverted 80% back down soon after, this incident was a defining moment for the new currency.
Shortly after that, hackers made off with millions of Dogecoin from the company’s native wallet, Dogewallet. What would have spelled doom for many other crypto projects was a rallying cry to the tight-knit Dogecoin community. They began fundraising and managed to replace all of the stolen assets. The community also showed its whimsical nature by sponsoring a fundraising event that raised $30,000 for the Jamaican bobsled team in 2014.
Dogecoin has made news at various other points in the last several years, including the time its value jumped 800% in 24 hours due to a campaign to ruin predatory hedge funds.
But the currency’s increase in popularity in more recent months can be traced to the online musings of one particular tech billionaire.
and SpaceX chief Elon Musk seems to have developed a kind of obsession with Dogecoin, talking about it regularly on social media at least since last July. In December, he posted a series of tweets about the topic, starting with “One word: Doge.” In February, among other Doge-related tweets, he tweeted that he bought some Dogecoin for his infant son “so he can be a toddler hodler,” using a term referring to those who buy cryptocurrency and hold onto it.
His digital expressions of interest have real-world results: Each time he tweets about Dogecoin, its value jumps upwards. For example, when he tweeted that “SpaceX is going to put a literal Dogecoin on the literal moon” on April 1, Dogecoin’s value shot up 35%, reaching a six-week high. On April 14, his tweet of an odd photo of an animal braying at the moon with the caption “Doge Barking at the Moon” sent the currency soaring 68%.
Rumor began in February that the Securities and Exchange Commission (SEC) is investigating Musk for this type of manipulation, but the investigation has not been confirmed. Musk, for his part, said such a probe would be “awesome.”
Other celebrities, from rapper Snoop Dogg to Gene Simmons, co-founder of the rock band Kiss, have joined in the fun of joking about Dogecoin online. Model and public figure Mia Khalifa tweeted “Okay I caved and bought the dog stocks lmaoooooo.”
With all this high-profile attention on the “dog stocks,” its popularity has continued to increase.
What is Dogecoin worth?
With Musk and others tweeting its praises, Dogecoin has seen its value rise by a factor of 20 since the start of 2021. Dogecoin’s price was about half a cent in January, and it was worth 10 cents by mid-April.
Dogecoin now has a market cap of about $7 billion — more valuable than many large companies. The market cap of cryptocurrencies can be determined by multiplying the current market price by the number of coins in circulation — otherwise known as the circulating supply. Dogecoin has a circulating supply of 129 billion.
How to buy and store Dogecoin
Unless you’re interested in learning to mine crypto, the best way to obtain some, including Dogecoin, is to buy it.
You can check out the price of Dogecoin on CoinMarketCap, a price-tracking website for digital assets, and then snap some up with your credit card on a cryptocurrency exchange, or crypto trading platforms, such as Coinbase, Binance, or Kraken
Once you own some Dogecoin of your own, you can store it in a cryptocurrency wallet
— an online location on your computer hard drive or some other digital hardware that keeps your cryptocurrency secure. Digital wallets are available from companies such as Coinbase, SoFi, Robinhood
, and Mycelium. Another option is a hardware wallet that stores your private keys on a dedicated hardware device.
What can I buy with Dogecoin?
The answer to the question of what you can buy with Dogecoin is “it depends.” Most online and brick-and-mortar retailers won’t accept any type of cryptocurrency, so you can’t just walk into your nearby pet store and order some dog food with your Dogecoin.
But some specific retailers or other institutions do accept this currency. For example, Latvian national airline airBaltic recently announced that passengers can now use Dogecoin and Ether to book flights. You can also use Dogecoin to buy gift cards for certain retail platforms, like Amazon and the Apple store, via Bitrefill.
Considering its peer-to-peer nature, Dogecoin can also be used to buy things directly from other people. Or you can exchange it into traditional currencies on currency exchange sites.
Should I buy Dogecoin?
When considering whether to buy any cryptocurrency, it’s good to look at all the factors that make it a risky bet as well as a potentially good investment.
Cryptocurrency is a risky choice since it is not backed by any government. Governments back national currencies, like U.S. dollars and British Pounds, to protect investors from certain kinds of losses. With crypto, you have no recourse if the worst happens, such as the company that issued your cryptocurrency going out of business.
Crypto’s value tends to be very volatile, swinging up and down frequently and rapidly. There’s never any guarantee the value will go back up once it has tanked, and there’s little way to predict which direction the crypto you’ve invested in will go. The volatility does provide a lot of upside potential, though, so if you like to take risks, crypto could be a nice place to try your luck.
What are some other cryptocurrencies I could buy instead of Dogecoin?
Dogecoin isn’t the right fit for every crypto investor. Quite a few may be put off by the fact that it originated as a joke and is only barely taken seriously now. Some may be uncomfortable with the way Elon Musk’s online musings tend to play fast and loose with the currency’s value.
If you’re interested in purchasing some cryptocurrency but aren’t quite sure Dogecoin is for you, check out our Beginner’s Guide to Cryptocurrency
. And investigate these alternatives that you might want to get into your digital wallet.
- Bitcoin. The grandfather of crypto, Bitcoin burst onto the scene in 2009 and started a whole new era of currency.
- Bitcoin Cash. This offshoot of Bitcoin that features faster transacting and lower fees were forced into existence by a “hard fork,” or a split in the blockchain.
- Ethereum. Second in popularity after Bitcoin, Ethereum focuses more than Bitcoin on decentralizing data.
- Litecoin. True to its name, Litecoin is faster and cheaper to use than Bitcoin, and features high trade volume and liquidity.
- Zcash. Calling itself “digital money,” Zcash prides itself on being fast, private, and have low fees.
- Ripple. Ripple is a platform with an associated cryptocurrency called XRP, on which institutions can transact globally.
- Stellar Lumen. By the same creator as Ripple, Stellar Lumen is all about individual usage, as opposed to Ripple’s focus on institutions.
In a world of finance that can feel all too serious, Dogecoin’s quirky, irreverent identity is a breath of fresh air. Its founder Billy Markus believes that the "friendly, low barrier to entry" nature of the currency has encouraged its popularity, which is rapidly on the rise.
Its quirkiness makes Dogecoin a special case, however — one that’s not right for every investor. It has yet to be seen how seriously the crypto community will take the jokey currency over the long term, and what will happen to its value as time goes on.
But for those interested in getting in on a hot cultural moment and seeing what all the fuss is about, investing in Dogecoin could be a nice way to spend a little extra cash.
If nothing else, it’ll give you something to tweet about.
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