Many of you may already have heard of Dogecoin or at least seen the popular logo with a dog’s face on it. Presently, it is listed as the thirty-third largest coin at CoinMarketCap with a market cap of $219 million. That in itself should tell you that this is definitely something worth considering despite some of the negative news you may have heard in the past. Today, we shall look at how this coin was started, it’s growth over the years and how it might perform in 2020 through all this pandemic madness going on right now.
What you need to know about DOGE
The story of Dogecoin (DOGE) goes back to 2013, and since then the coin has had its ups and downs. There is a lot to unpack here for those who don’t know about this very interesting coin, so we have broken it down into a few sections.
By December 2013, one BTC was worth $1,083.14. The world was beginning to pay attention to digital money as it was rapidly growing in value. Unlike most investors, Billy Markus and Jackson Palmer believed that cryptographic forms of money were being taken too seriously. They had imagined that crypto would be about fun and not just about investing. Thus, they decided to make their own coin.
The joke that launched DOGE
Jackson Palmer is an Australian investor with an interest in crypto and also a digital marketer. Stunned by the competition and the seriousness with which everybody was attempting to get onto the digital money train, he found a funny approach to deride their reality. He would use the then well known Shiba Inu dog image 'Doge' to create the logo of a coin.
Once, toward the end of a terrible day, he made a tweet in mock-reality about "DOGE" being the next best crypto to happen to humankind. This grabbed the attention of the digital money world favourably and interest in the coin immediately grew. Many similarly-minded 'netizens' got in on the joke with Palmer's "DOGE" and encouraged him to go ahead and give them an exciting and less-serious crypto-elective. (Everyone’s wondering: Will Africa Be The Next Frontier For coin?)
Supposedly, as Palmer thought about the idea to make an altcoin by a similar name, Bill Markus in faraway Colorado, United States, found that Palmer's idea mirrored his own mentality. Surprisingly fast, Markus already had a solid IRTC created, which depended on BTC’s security features. He then persuaded Palmer to join the master plan for DOGE, which existed for the sole purpose of sharing and expressing gratitude among network individuals who love utilizing cryptos over normal fiat currencies. (Read more on our: iExec RLC Price Prediction and Forecast for 2020)
In the long run, Markus cloned DOGE on the already effective design of Luckycoin, which was in turn based on LTC created by Charlie Lee (see LTC live charts). The utilization of Scrypt in building up this crypto confines the mining of it in huge numbers utilizing standard equipment.
Instead of targeting financial specialists who were blinded by the dollar-value of crypto coins, DOGE has created a provocative image to end the frenzy. Its users are not so much interested in pursuing profit like the gold rush that many other digital forms of money were being sought after and mined at that point. Therefore, we can say DOGE has a more liberal and social way of thinking behind all the innovative tech lingo of blockchain, mining, and wallets. DOGE advances that 'sharing and tipping' is more fun than 'making profit' as is the principal goal in the more popular coins. (WhatsApp, Telegram, Facebook: Who is Going To Be The Next Global Payments Leader?)
Luckily for Palmer, the idea of DOGE turned out to be more realistic than joke he had proposed. The cost of DOGE reached an unequalled high of $0.0173 per DOGE by January 2018 demonstrating a value growth of over 2,800%. Today, the coin is trading at about $0.0018, which is still more than double its original value. DOGE was also meant to be more about society and sharing than profit, and today the DOGE community is among the most active online. New users are warmly welcomed to the community and tipping is common for interesting comments and suggestions. In this way, one could even say that the original goal has already been achieved by bringing millions of people together as a community.
Examples of the values of a community can be seen in the various charity drives orchestrated by the Doge community. The first was a fundraiser in January 2014 that raised $25,000 in DOGE to aid the Jamaican bobsleigh team to attend the Winter Olympics in Sochi. The team had qualified for the competition but did not have enough money for travel, so one of the team members turned to the Doge community with a Dogesled campaign.
Another example would come later in March 2014 when the Doge4Water campaign was launched. It aimed to raise $50,000 in DOGE to set up water systems in Kenya for the World Water Day. In the end, $30,000 was raised, which went a long way to building wells and providing tools for storing and delivering clean water to residents in the desert-stricken region. That same month, the community once again stepped up to sponsor NASCAR driver Josh Wise. A total of $55,000 was raised to sponsor Wise.
But the journey along the way has not been completely smooth as the coin has experienced some major setbacks. DOGE went live on the 6th of December 2013 and by the 25th of December 2013, disaster had already struck. A hacker managed to gain access to the Dogewallet and Instadoge file systems and stole 30 million DOGE coins valued at about $18,000 at the time.
In most cases, the loss would be written off but here the Doge community really came together in a way never before seen. A Save Dogemas campaign was started on Reddit by Ben Doernberg as a way to reimburse those who lost their coins. On Reddit, Doernberg explained that many of the community members were first-time crypto users who were not very experienced with the tech. To encourage them, individuals within the community donated their own coins and a mining group even promised to donate all the coins they mined until everyone was reimbursed. By February 2014, everyone who had lost their coins in the hack was fully reimbursed. Talk about a supportive community! (Find out: How Coronavirus Will Blow Crypto Markets in 2020)
Lamentably, this inviting nature sometimes verged on the naive, permitting perhaps the darkest time of DOGE's history to occur. The most infamous example is the Moolah episode. In 2014, Ryan Kennedy (utilizing the nom de plume Green) got associated with the DOGE community. He quickly turned out to be popular with clients because of his liberal DOGE giveaways. In fact, it was he who initiated the campaign to raise $55,000 to support NASCAR driver Josh Wise. Kennedy utilized this popularity to persuade the network to put resources into another crypto exchange that would make trading DOGE simpler - Moolah. Kennedy figured out how to raise over $750,000 for his thought.
Jackson Palmer then started getting messages about Kennedy's past tricks and endeavoured to caution the network. Unfortunately, he was disregarded and even pushed out by the network he had helped sustain. This occasion, to a great extent, provoked Palmer's takeoff from the network that he felt was committing the same errors as BTC. It would, before long, become evident that Jackson Palmer's warnings about Kennedy were right all along. Moolah fell and numerous clients lost their assets. It later became evident that Kennedy had been associated with various past scams and even rape cases. He was, in the long run, arraigned over the Moolah occurrence. (Calm Before the Storm: What to Expect from Crypto Industry in 2020-2021)
How it works
DOGE was created based on Luckycoin, which was in turn based on LTC, which was in turn based on BTC. Since DOGE is essentially created from BTC, the inner workings of the coin should be very familiar. Indeed, much of the DOGE structure is similar to BTC’s.
Basics of the DOGE network
At the heart of the network is a ledger referred to as a block. It is on this ledger that all transactions to ever occur on the network are stored so that there is a complete record. But to keep such a record in the hands of one person would be insecure, as is the case with banks and companies. A hacker(s) only needs to hack one point where the record is kept and they can have access to the whole bank or company’s files. To avoid this, copies of the ledger/block are distributed to many individuals around the world. In this way, it is impossible to hack any single point since there will always be many other copies out there with the accurate information. This series of blocks around the world is what forms the blockchain, which is really the essence of any network based on crypto.
Still, the copies have to originate from a single source, and if that source is compromised then the entire network would be as well. That is why transactions on a network like, say, BTC, have to be verified by at least 3 ‘nodes’ before being approved and registered as completed. The individuals who operate the nodes are called miners and they have a huge responsibility because it is they who keep the network ‘alive’, as it were. To reward them, they are given a certain number of the native crypto used in the network. In the case of BTC, that would be 12.5 BTC and in DOGE that’s 10,000 DOGE. This is also how new coins are introduced into any blockchain network. (This is our: ICON Price Predictions and Forecast for 2020)
However, to earn this reward the miners must solve complex mathematical problems that require a lot of processing power. Therefore, for a miner to receive the reward, they must expend a lot of processing power in a system known as Proof of Work (PoW). Such a system was put in place to limit the number of new coins that can be minted in the network while also incentivizing the mining process. (Keep an eye on these: Top 5 Important Events In The Crypto World In 2020)
How it differs from BTC
The above describes how the BTC network works, and it is also very similar to the DOGE network. But that is where the differences start to arise between the two networks. The first difference is that DOGE uses a Scrypt algorithm instead of BTC’s SHA-256. The main difference between the two algorithms is that Scrypt requires less processing power but a bigger memory volume compared to SHA-256. This makes Scrypt more friendly to individual users using personal computers to mine as even these PCs can also successfully solve the mathematical problems.
With SHA-256, hardware manufacturers are able to create devices called ASICs that provide raw processing power specifically for the mining of coins. Many of these put together create a mining pool that has much better chances of solving the problem and being rewarded compared to an individual computer. Today, there is a small number of mining pools, particularly in China, that dominate the BTC network and receives virtually all the rewards. Scrypt tries to solve this by requiring more memory and a longer processing time. ASICs are not particularly good at this and do not have a lot of memory. (Get ready as: BTC Cash Halves The Mining Reward 2020)
This gives users with a personal computer, provided it has a graphic card, a chance to compete. In addition, the mining difficulty in mining DOGE is much lower than that on the BTC network. Within the BTC network, the mining difficulty is set to adjust automatically based on the number of miners. Think of it like demand and supply, only in this case demand is determined by algorithms to ensure there is a balance. For instance, when there are many miners on BTC, the difficulty automatically increases so that the creation of new blocks remains constant. DOGE does not have a lot of miners, thus the mining difficulty is much lower and any miner has a chance, however small, of getting that reward. (BTC SV Genesis Hard Fork 2020: What's New?)
The other major difference is that DOGE is an inflationary coin while BTC is a deflationary coin. On BTC, the mining rewards are halved every 4 years so that fewer BTC are produced every day. This is done to ensure the value of BTC keeps rising due to lower supply and also to extend the time before the 21 million coins in circulation hard cap is reached. The problem with this is that investors have an incentive to hoard coins with the expectation of higher value in future, just like they do commodities like gold. Besides, once the hard cap is reached, there will no longer be an incentive for miners to keep mining because there will be no more rewards. The only solution would be higher transaction fees since this is yet another way miners make money.
With DOGE, though, the idea is not to make a profit but to create a community based on sharing. At first, rewards for mining DOGE were random, but this was later changed to the current 10,000 DOGE reward for mining. The goal is to keep the supply close to 100 billion coins in circulation without changing the reward. The developers of the network figure that many coins will be lost in various ways and some will even be destroyed to keep the supply stable. This way, users of DOGE will feel free to keep sharing without the pressure of investing and miners will always be rewarded. (You should be aware of the: 2020 BTC Halving Warning Update)
What do these differences mean for DOGE?
There are some very clear differences you find when working with DOGE compared to either BTC or LTC. The first is the extremely low transaction fees. Remember that the network wants people to share, tip and even raise money for fundraisers. That is why the fees are so low they are even negligible. The other difference is that transactions can be processed extremely fast. Using Scrypt means that less effort is required to process a transaction and to hash a block. In fact, a new block is generated every minute on the network meaning that transactions can be verified very fast. (You should know about the: New Rules and Crypto Regulations in Germany As Of 2020)
Perhaps the biggest difference is that the interface when using DOGE and the community are both so friendly. Navigating through another crypto network can be quite complicated for the uninitiated user. Between selecting a crypto exchange to finding a crypto wallet and navigating through the rest, it can be quite overwhelming. The DOGE network has been made much simpler, and you will be welcomed warmly into the community by individuals who are genuinely interested in the community and not just making money.
But with all this simplicity in the network lies some danger. We have already seen how hype within the community has the potential of roping people into dangerous projects like Moolah. A bigger danger can arise due to the low mining difficulty and number of miners. LTC uses Scrypt algorithm too, so it is possible for a LTC miner to use their equipment to mine DOGE as well. If a big enough mining pool of LTC miners was to switch to DOGE, then the network could be destabilized. For now, there is no danger of that because LTC is still very profitable, but perhaps when the hard cap is reached…
Let’s talk price
We know that talking price about DOGE is an abomination, but we thought it might be a good idea to do so nonetheless for our visitors who may be interested in investing. Members of the DOGE community refer to themselves as ‘Shibes’ and they believe that 1 DOGE = 1 DOGE. The phrase is meant to convey that DOGE is not to be used as an asset but more as a transactional tool. We hope that any shibes reading this won’t be too offended.
Historical price performance
When DOGE was first launched in December 2013, the coin was trading at about $0.0005. Compared to the likes of BTC and LTC at the time, it was much cheaper and had a lower market cap. Nevertheless, the developers didn’t mind because it wasn’t supposed to be an asset to be invested in. But people still showed a lot of interest and just like the rest of the crypto market its value started to rise. It did have several things going for it that propelled its rise in value. (Ethereum 2.0 Launch 2020: What’s new?)
One was the simple marketing strategy of making it seem like a joke, which obviously grabbed people’s attention. Many news articles published in December and January about crypto couldn’t fail to mention DOGE, whether in a positive or negative light. On one hand, many enthusiasts saw the coin as lighthearted but still relevant and so invested in it. On the other, critics used the coin’s logo, memes, and the language used on Reddit as an example of how crypto was a joke. (Crypto Brokers: Evolution of Forex Brokers in 2020)
Either way, all these only fueled the attention it got and maybe even saved the DOGE Foundation a lot of money they would have otherwise had to spend on advertising. Even the unfortunate incident of a hack on Christmas 2013 contributed to this attention feast.
Another reason for the growth was the genuine campaigns and fundraisers held by the DOGE community. We have already discussed some of the high profile campaigns that caught media attention, but there were plenty more that raised lower amounts. These kinds of events created a lot of demand for the coin and subsequently caused its value to rise. For example, Jackson Palmer and Billy Markus recalled the Dogesled campaign to raise funds for the Jamaican bobsled team. After the campaign, the pair didn’t think much of it, but later on during the day at a restaurant, they noticed that the coin had grown by over 50% in value and had to their house to help convert the coins to fiat. (To The Moon: Most Promising Asian Crypto Companies 2020)
Like every other coin in the years to come, its value continued to track upwards to reach an all-time high of $0.0173 in January 2018. By then, the total growth had been 3,360% since its launch, an impressive figure. Also, like every other coin, prices started to plummet to the current price of $0.0017. The most recent dip in price has come in the past 3 months due to the outbreak of Covid-19 across the world. (From now on: Swiss Banks Start Offering Crypto Trading To Their Clients)
Price predictions for 2020
This is the year when several coins will be undergoing serious changes and improvements. BTC and its forked versions will be undergoing the reward halving events while Ethereum is finally moving to Ethereum 2.0. Meanwhile, DOGE has not had any improvements whatsoever since 2015. That’s almost 5 years ago! Still, the coin has been resilient and is ranked 33rd ahead of other projects like Steem, Theta, Nexo and lots more. This can only be attributed to the still-active community that continues to generate demand for the coin.
That being said, it is not a sustainable model for running a crypto network. Jackson Palmer has already distanced himself from the project. In fact, there have been no more improvements to the project since his departure in 2015. Palmer even went on to say that he believes coin markets are a bubble that will burst, losing investors a lot of money. These are not encouraging actions or words from the founder of a project, and it goes to show that interest in the coin may decline. Today, there are only a few developers still working on the project and they only work on it part-time. (Do you ever wonder: Will Crypto Trading Become Popular in Islamic Countries?)
Another problem is that DOGE is deflationary, and it is unlikely to ever reach the $1 mark. Obviously, the developers and users don’t care about the price, but investors really do, and it is they who have the ability to increase liquidity and value. As a result, it is unlikely any serious, institutional investors will be placing their money on DOGE. (Be aware of the: OmiseGo (OMG) Coin and Price Prediction for 2020)
While there may be some negatives on DOGE, there are still a lot of positives. The main one is the sheer resilience of the coin and its community. One would have imagined that after the Christmas hack of 2013, the coin would have gone under. Remember this was the same year Mt Gox went bust after a hack, so investors were certainly on edge. Instead, the community pulled together and rescued the project. It is remarkable that the DOGE community is still as active, proving that there will be demand for the foreseeable future.
There was also fear of a 51% attack because of the low number of miners. Such an attack would essentially hand control of the coin to the hackers, but the developers created a merged mining operation with LTC. Doing this created a higher number of miners for both coins to prevent such an attack and ensuring the network is safe. (These are the: Most Secure and Regulated Stablecoins of 2020)
Finally, despite all the funny memes and criticism it still receives, DOGE is still very widely accepted. Major crypto exchanges like HitBTC, Bittrex and Poloniex offer several coin pairs based on DOGE. Exchanges are usually very critical of the coins they list on their platforms, so it is a big deal to be listed by a major exchange like the ones mentioned above. Add to that, there are several wallets one can use to store their coins like Dogechain (online), DOGE Core (software), MultiDoge (software) and some hardware wallets. (It’s time to: Find Out More About Tezos and Its Price Prediction For 2020)
Given all the above and the current state of panic over Covid-19, we would not recommend investing in DOGE. If you are genuinely interested in the tech and community, then feel free to buy as many DOGE as you want. But for someone looking at this project from an investment perspective, it may not be the most ideal option. Some day, the developers may come back and make improvements to the project, but until then this will remain as an enthusiasts’ thing. Crypto has already proved it can’t be a safe haven, and the price of DOGE will most likely decrease as the year goes by. At best, the price will be saved by the very active community that continues to generate demand, but it is unlikely there will be any growth whatsoever.
To see how much attention this coin is receiving, watch this short video: