UNITED STATES—Dogecoin has dominated the crypto and tech headlines in recent weeks, seeing an almost 500% rise since the start of April. Many major cryptocurrency exchange platforms have seen a significant increase in the number of Dogecoin holders, with exchanges such as changelly offer a review of prices on an almost daily basis as interest in this crypto-craze continues to soar.
It’s a cryptocurrency, similar to the more well-recognized Bitcoin and Ethereum, except it’s different in some aspects when compared to the more popular coins.
Dogecoin was created by crypto enthusiasts as a kind of joke, mocking the industry and reflecting the lighthearted nature of the cryptocurrency community at large. The logo, which is based on the early 2000s meme of a Shiba Inu dog, truly embodies the movement and has drawn the interest of a huge portion of the internet.
Wallstreetbets, the Reddit forum behind the GameStop stock frenzy back in February has played a big part in the rising price of the coin. The popularity of Dogecoin has exceeded all expectations and finds itself as the fifth largest cryptocurrency by market cap.
What is Dogecoin and How does it work?
Dogecoin was created primarily to poke fun at Bitcoin, as many in the internet community felt it was something that wasn’t going to be around for very long and many crypto traders were taking the whole thing far too seriously. With Bitcoin recently reaching an all-time-high of $63,000, it seems Bitcoin holders have had the last laugh.
Either way, Dogecoin continued to build a public profile with it’s creators and community of enthusiastic tech-heads setting up publicity stunts such as Sponsoring Stefan Parsons and BJ McLeod of NASCAR, as well as funding the Jamacian Bobsleigh team to attend the 2014 Olympics—Cool Runnings anyone?
Cryptocurrencies’ very own celebrity leader Elon Musk tweeted saying that Dogecoin was the “people’s crypto”, adding credence to the meme by promising to plant a physical Dogecoin token on the moon. While some may look at all this and see it as a joke, the value of Dogecoin has skyrocketed by 5,000% in 2021.
This is all very impressive. But, what makes this coin different from Bitcoin and Etherum?
Dogecoin is built on blockchain technology, no different than what we see with Bitcoin and Ethereum. All transactions are recorded in the Dogecoin blockchain ledger, which is copied for every owner.
Much like the vast majority of other cryptocurrencies, Dogecoin can be used for payments and purchases, but it isn’t as useful as an investment when compared to Bitcoin. This is due to the fact there is no lifetime cap on the number of Dogecoins in circulation. To be clear, the leader in the cryptocurrency market is Bitcoin, which has a cap of 21 million coins.
What next for Dogecoin?
Dogecoin remains a highly sought after cryptocurrency, but for how long? The unlimited lifetime number of Dogecoins makes it something that holders won’t hold onto in the long term. As an investment, it will never be stable. However, it may function as a spending currency, as we see with Bitcoin Cash or DASH.
The growth Dogecoin has seen in recent weeks is unlikely to be sustainable, as the constant flow of new coins makes it a highly volatile asset. Moreover, the level of security and the number of people working to support Dogecoin is far fewer than we see with crypto market leaders Bitcoin and Ethereum.
As with any cryptocurrency purchase, there is always a level of risk. So, it’s unfair to claim that Dogecoin is somehow much more perilous than any other altcoin, especially when it has the support of the internet community at large. Nonetheless, it’s probably advisable to avoid putting too much of your savings into a cryptocurrency that started out as a joke!