Dogecoin has been called “the world’s most expensive joke.” And it is, considering despite its frivolous beginnings, its total value is now higher than many S&P 500 companies according to Fortune.
In a space where cryptocurrencies are launched with high ambitions, Dogecoin didn’t pretend to be anything more than a playful take on the industry. And yet, it’s this very aspect that endeared it to millions of fans and attracted the support of high-profile advocates like Elon Musk, Mark Cuban, and Snoop Dogg.
But is Dogecoin a joke gone too far? And given the cryptocurrency’s massive gains in 2021 — should you invest in it?
Dogecoin (DOGE) is an open-source, peer-to-peer cryptocurrency. It was launched in 2013 by software engineers Billy Markus and Jackson Palmer. Dogecoin is an atypical cryptocurrency both by its tongue-in-cheek beginnings and its unlikely success as a joke currency.
Since its launch, Dogecoin has had its wildly volatile moments just like any other cryptocurrency. However, unlike other altcoins, Dogecoin has taken on something of a celebrity status thanks to being regularly invoked by high-profile people.
Self-appointed “Dogefather” and Tesla CEO Elon Musk, in particular, has contributed to the cryptocurrency’s climb by a dizzying 20,000% since 2020. At the time of writing, Dogecoin is sixth among cryptocurrencies in market rank, with a market capitalization north of $40 billion.
Dogecoin got its name from a popular Internet meme in 2013 that features an image of a Shiba Inu dog, often with multicolored Comic Sans text in the foreground. The text is deliberately in fractured English, with phrases like “much wow,” “much crazy,” “very amaze,” — apparently depicting the dog’s internal monologue.
Dogecoin is popular not just in media circles — the community has grown enormously over the years. As of June 2021, the Dogecoin Reddit community consists of 2 million members — compared with Bitcoin’s 3 million community members on the social platform.
Pro tip: If you’re planning to invest in Dogecoin, open an account with Coinbase. You’ll receive a $5 bonus after opening your account, plus you can receive up to $25 more when you learn about other cryptocurrencies.
The History and Rise of Dogecoin
Unlike many cryptocurrencies launched with million-dollar initial coin offerings (ICOs) and complicated whitepapers, Dogecoin had the improbable beginnings of a Tumblr post. Australia-based software engineer Jackson Palmer took a sarcastic dig at the then fast-proliferating altcoins, only for the Tumblr post to get syndicated on Twitter and go viral.
The post read, “Investing in Dogecoin, pretty sure it’s the next big thing.” Once on Twitter, the crypto community lapped it up, spreading its awareness. Palmer then bought and registered the domain name Dogecoin.com.
That’s when the brouhaha caught the attention of another software engineer in the U.S., Billy Markus. Markus, who had harbored ambitions of creating his own cryptocurrency, had not been successful in generating buzz around one.
Markus contacted Palmer and requested permission to create a cryptocurrency called Dogecoin. Palmer gave him the nod. Markus then based the new cryptocurrency’s code on the now-defunct Luckycoin, which in turn was based on Litecoin’s code.
Markus and Palmer launched Dogecoin in December 2013.
The Dogecoin Community
The die-hard, passionate community behind Dogecoin is probably its strongest suit and why it’s a success. Dogecoiners have a catchphrase: “1 DOGE = 1 DOGE,” meaning Dogecoin is a currency for the community and not a speculative currency for getting rich.
Dogecoin fans are also known to look after each other and be more welcoming of newcomers than other crypto communities. In the same month the currency was launched, the Dogewallet was hacked, causing the loss of $12k worth of dogecoins. Dogecoiners rallied together under the initiative #SaveDogemas to reimburse users who had lost money in the heist.
The Dogecoin community has also been known to band together to support good causes around the world. After the Jamaican Bobsled team qualified for the Winter Olympics but could not afford to participate, Dogecoiners raised over $30k to help send them to the games.
The community came to the rescue again in March 2014 by raising about $55k worth of the currency to sponsor NASCAR driver Josh Wise to Talladega. That same month, Dogecoiners showed their philanthropic streak by donating $30k worth of DOGE toward clean water efforts in Kenya.
Controversies of Dogecoin
Not everything is “amaze” with Dogecoin. The currency has had its fair share of controversy, its fun image notwithstanding.
First, the currency’s founder — Jackson Palmer — took a break from the cryptocurrency community in 2015, citing a “toxic” culture that was breeding in the space. Although he had no issue with Dogecoin specifically, he was unhappy with how the crypto ecosystem was non-inclusive and had adopted “anarcho-libertarian ideologies” that he didn’t agree with.
Dogecoin also took a reputation hit when one of the community’s own swindled the rest in the pretext of creating an exchange for the currency. British national Ryan Kennedy, aka Alex Green collected Dogecoin donations and used it to purchase $1.5 million worth of Bitcoin, which he had in return sold to fund a lavish lifestyle.
Where Can You Use Dogecoin?
Dogecoin may be a hit with investors right now, but it’s yet to be as embraced in the world of retail. At the time of writing, no major brand accepts Dogecoin for payments. The most high-profile use case of the currency is billionaire investor Mark Cuban’s Dallas Mavericks basketball team. Through a collaboration with cryptocurrency wallet BitPay, the company is enabling fans of the team to use Dogecoin to purchase tickets and merchandise.
In the hospitality sector, the Kessler Collection accepts Dogecoin, and is the first luxury hotel group in the U.S. to accept cryptocurrency. Customers in the outfit’s eight hotels can also pay for services with Ethereum, Bitcoin, and four stablecoins, including USDC.
Latvian airline Airbaltic, which was the first airline to accept crypto payments, is now accepting Dogecoin. Users can book flight tickets with Dogecoin, as well as Ethereum, Bitcoin, and stablecoins USDC, GUSD, PAX, and BUSD.
Canadian Internet service provider EasyDNS also accepts Dogecoin since April 2021. The company prides itself in being the first Internet Corporation for Assigned Names and Numbers (ICANN) member to accept Bitcoin, and is also the first to accept Dogecoin.
Other places where you can spend Dogecoin include:
How and Where You Can Buy Dogecoin
One reason Dogecoin is popular is there’s no shortage of places to purchase it. Like with any other cryptocurrency, you’ll need a cryptocurrency wallet before you can begin your DOGE adventure. A cryptocurrency wallet is a device, software or medium that lets you store, send, receive, and check the balance of your cryptocurrency funds.
Alternatively, you can use the wallet provided by the exchange from which you buy Dogecoin, although this option means you’re not in full control of your DOGE.
Here are the steps to grabbing your first DOGE:
1. Choose a Dogecoin Wallet
You can choose a Dogecoin-specific wallet such as MultiDoge and Dogecoin Mobile Wallet or a multicurrency wallet that supports Dogecoin. A multicurrency wallet allows you to hold and manage multiple cryptocurrencies from a single device.
Here’s a selection of a handful of the trusted multicurrency wallets that support Dogecoin:
2. Find an Exchange
This should be pretty easy. Some of the biggest names in the world of exchanges offer Dogecoin. Even so, don’t be afraid to do a little research and find an exchange that suits your needs.
If you want to buy or sell Dogecoin, it’s important to go for a reputable exchange. Also, you want to use an exchange that’s robust in security. That’s because any cryptocurrency exchange is always a target for hackers.
Here’s a list of some the best exchanges and platforms for buying and selling Dogecoin:
Every exchange has its procedure or rules for buying DOGE, but usually the general steps on most exchanges will be as follows:
Most exchanges will require you to provide your name, email address, country of residence, and contact details, including your email and phone number. With centralized exchanges, expect to provide Know Your Customer (KYC) information. Centralized exchanges are those in which trades between users are intermediated by the platform instead of decentralized exchanges where trading activity is purely peer-to-peer.
Besides name and contact details, KYC information could involve date of birth, physical address, government ID, and Social Security number (for U.S. citizens).
Depositing Fiat Money
To purchase DOGE or other cryptocurrencies, you’ll need to add funds to your account using traditional fiat money — that is, a currency that is government-issued. The U.S. dollar, the British pound, the Japanese yen, the Canadian dollar, and the South African rand are all examples of fiat money. Expect to fund your account using your credit card, although some exchanges will allow you to use PayPal.
Depending on the exchange, you might need to first buy a more mainstream cryptocurrency like Bitcoin or Ether and exchange it for DOGE. Some exchanges don’t have the option to buy DOGE directly but list it as a trading pair with other cryptocurrencies.
With your account funded, you’re ready to buy DOGE. Most exchanges have a pretty straightforward way to do so. Either you’ll see a menu from which to choose DOGE from many cryptocurrencies, or you’ll see a “Buy Dogecoin” button. Proceed and enter the amount of fiat money or other cryptocurrency you’d like to convert to Dogecoin.
Remember to double-check the transaction before hitting Send. Crypto transactions are irreversible, so you want to make sure your orders are correct.
Should You Invest In Dogecoin?
With meme-fuelled hype and celebrity endorsements, Dogecoin is hogging the crypto spotlight. It rose to an all-time high in 2021. Industry experts even bet Dogecoin is still poised to eclipse the long-awaited $1 level. But should you invest in Dogecoin?
Here’s what you need to know about investing in Dogecoin:
1. Underlying Value
Forget for a minute the “crypto has no intrinsic value” line crypto detractors love. When it comes to Dogecoin, there’s truly not much of an intrinsic value this time.
For instance, Bitcoin has held up over time because of its underlying value as an inclusive and decentralized money system. Ethereum joined a crowded field of cryptocurrencies in 2015 but left all of them in the dust and rose to number two thanks to its promise of decentralized applications and smart contracts. Such cryptocurrencies have real-life value, and consequently, a competitive advantage and staying power.
When all the hype and puff dies down, ask yourself: will Dogecoin still be a viable investment?
2. Dogecoin’s Endless Supply
Another factor to consider is Dogecoin’s limitless supply. Dogecoin co-founder Jackson Palmer scrapped the cryptocurrency’s supply cap, which was 100 billion, to dissuade people from holding onto it as an investment. The idea was for DOGE to remain the fun cryptocurrency that people can use for tipping.
In addition, 10,000 new dogecoins are released as block rewards every minute. That’s about 14.4 million dogecoins entering into circulation every day, or roughly 5.2 billion per year.
One of the laws of supply and demand dictates that an increase in supply, with all factors being constant, leads to a decrease in demand and price. While Dogecoin might’ve bucked this trend recently, it’s likely that it will conform in the long run.
The Verdict: Should You Invest?
Remember though, the world of crypto has no rules. Dogecoin in 2021 shot to heights no one could have fathomed in 2020. But DOGE’s price could very well descend toward zero in the same unpredictable manner. With that in mind, it appears Dogecoin is good for short-term speculation but is not as good an idea for long-term gains.
Still, the decision on whether to buy Dogecoin is one only you can make. A useful rule of thumb is to do your own research — DYOR, as the crypto community says — before investing in any cryptocurrency. Never put more money in a cryptocurrency than you’re willing to lose.
Can You Mine Dogecoin?
Yes, you can mine Dogecoin. Dogecoin mining is a lot easier and faster than Bitcoin — whose mining difficulty is infinitely higher than Dogecoin’s.
The block reward for mining Dogecoin is 10,000 DOGE.
Because Dogecoin’s code was based on that of Litecoin, and both use the proof of work consensus protocol and the scrypt hash function, the two coins can be mined together employing the merged mining model. Merged mining, also called auxiliary proof of work, is the process through which two cryptocurrencies with the same consensus mechanism and hash algorithm are mined simultaneously.
If you want to try your hand at Dogecoin mining, you can either go solo or join a mining pool.
Solo Vs. Pooled Dogecoin Mining
There are two ways you can go about mining DOGE: solo or pooled mining. Solo mining is when you undertake all the mining operations by yourself and with your own hashing power. Going it alone allows you to reap all the block rewards. The caveat is it could take weeks or even months before your solo mining efforts yield any fruit.
That’s because of competition from pooled mining. Pooled mining is when miners combine their computational resources to increase their hashing power. The more computational power a miner deploys, the higher the success rate of finding new blocks. In a mining pool, the participants split the block reward according to the amount of computing power contributed. Pooled mining means you don’t get all the rewards, but you’re guaranteed profit.
What You Need to Get Started
To start mining DOGE, you’ll need a few systems in place first. Obviously, you’ll also need a strong and reliable Internet connection.
This essentially means you need a computer — Windows, Mac OS, and Linux systems all work. However, you’ll need more powerful hardware such as GPUs and ASICs if you want to mine at any meaningful scale.
GPUs, or graphical processing units, have become a crypto mining staple due to their good performance and speed. ASICs, or application-specific integrated circuits, are equipment built for mining a specific cryptocurrency.
You’ll need software to complement your hardware. Your software of choice depends on your type of processor. Here’s a snapshot of the best software options out there:
You’ll need a wallet that supports Dogecoin to send your coins when you reap block rewards.
Cloud Mining Dogecoin
Alternatively, if you want a hands-off method to earn Dogecoin, you can look into cloud mining. Cloud mining involves mining cryptocurrency via a remote data center that you’ve leased. Such a datacenter is owned and operated by a third-party who mines the cryptocurrency and shares proceeds with subscribers.
Cloud mining lets you circumvent the technical hassles associated with a typical mining operation. The data center owner runs the operation and gives you a cut of the proceeds. More or less, it’s a lease agreement where you invest in the operation by paying for electricity.
However, cloud mining contracts are typically time-locked. That means even if the price of Dogecoin falls and mining becomes unprofitable, you’re still tied to the contract.
If you’re not keen on personal or cloud mining, hash power marketplace NiceHash is worth a look. At NiceHash, you buy hashing power from other members of the community. The platform works this way: participants connect their mining equipment and rent hashing power to interested participants.
Dogecoin threw away the rule book about cryptocurrency. That very reason has made it a darling among crypto fans and several outspoken celebrities.
Like any other cryptocurrency, it experiences wild fluctuations that you can either profit or lose from, depending on which side of the wave you’re caught in. And while there’s no certainty with any cryptocurrency, Dogecoin’s lack of fundamental value makes it particularly risky to invest in long-term. The idea is to invest money you’re willing to risk.