Dogecoin (DOGE) has become a powerful force in the digital currency world in recent years, with its unique history and immense popularity amongst users. But how did a coin based on a meme become one of the most valuable in the market? This article covers Dogecoin’s history, from its humble beginnings to its rise in 2021, as well as its technical features and what potential buyers should know.
Key Takeaways:
- Dogecoin is an open-source project created as a joke in 2013 that has since become a popular cryptocurrency.
- It functions similarly to other Proof of Work (PoW) cryptocurrencies and is used for payment.
- The price of Dogecoin dramatically surged in 2021 following growing celebrity endorsements and hype on social media platforms.
- Despite its extreme volatility, Dogecoin continues to be an important player in the cryptocurrency space.
Dogecoin’s Humble Beginnings
The inspiration for Dogecoin came in November 2013 when Jackson Palmer, then a marketer at Adobe, noticed that altcoins with almost no differentiating features were popping up everywhere. As a joke commenting on the abundance of altcoins, he tweeted: ‘Investing in Dogecoin. Pretty sure it’s the next big thing,’ referencing the viral meme of a Shiba Inu. His tweet got a lot of attention, and one night, as a way to keep the joke going, he purchased dogecoin.com and photoshopped a picture of the internet-famous dog onto a coin.
Billy Markus, a software developer at IBM, saw the website and reached out to Palmer with the idea to make Dogecoin a reality, based on the experimentation he had already done with creating his own cryptocurrency. After a few emails back and forth, they launched Dogecoin, and the rest was history.
What Is Dogecoin?
Although Dogecoin has its roots as a meme coin, it quickly became an internet currency that facilitated online tipping on social media platforms because of its unlimited supply and low price. It also functions similarly to many other cryptocurrencies and can be used as a means of payment wherever it is accepted.
From a technical perspective, Dogecoin is very similar to some of the earliest altcoins, which, like Bitcoin (BTC), operate on the Proof of Work (PoW) consensus mechanism. Since it was forked from the now-defunct Luckycoin, which was itself a fork of Litecoin (LTC), the two coins share many similarities.
Although the technology behind Dogecoin is similar to Litecoin and Bitcoin, it is important to note that Dogecoin has an infinite supply, unlike LTC and BTC. This means that all else being equal, the price of Dogecoin will continue to fall unless its adoption and utility outpace this rate of inflation.
The creation and success of Dogecoin paved the way for other meme coins like Shiba Inu (SHIB) and Floki (FLOKI). To learn more about them, check out this University article.
How Did Dogecoin Become So Popular?
On 27 January 2021, amid the GameStop short squeeze saga, Redditor u/lomac2w0 posted a thread proposing to start a Dogecoin rally, which quickly gathered almost 10,000 upvotes and spawned numerous similar threads. Popular Twitter user The Chairman then tweeted to his 750,000 followers, ‘Has Doge ever been to a dollar?’ That was all it took for DOGE to go on a monster rally from US$0.007 to $0.087 over the next 24 hours.
Despite explosive early gains, Dogecoin quickly crashed from $0.087 to $0.023. The party seemed over until 4 February 2021, when Elon Musk came to the rescue of DOGE traders, tweeting a photo of a rocket blasting off to the moon, captioned by a single word: ‘Doge’.
With other celebrities like Gene Simmons and Snoop Dogg joining the hype, Dogecoin kept up the momentum for the next few months and traded at around the $0.05 level. It saw a parabolic surge in April 2021 after Musk fired off a series of tweets: announcing SpaceX putting Dogecoin on the moon; sharing an image with the caption, ‘Doge Barking at the Moon’; and calling himself The Dogefather. This time, the ‘Musk effect’ catapulted Dogecoin to its historical all-time high (ATH) of $0.711 on 3 May 2021.
However, prices fell after the billionaire entrepreneur’s appearance on Saturday Night Live just five days later. The frenzied sell-off was possibly a result of Musk calling Dogecoin a ‘hustle’ during the show or a case of ‘buy the rumour, sell the news’ — an adage about how traders typically react to news about an asset. The downtrend continued over the next year, especially after the 2022 crypto winter set in. As of May 2023, Dogecoin is hovering between $0.07 and $0.08.
But it seems Musk still has a soft spot for Dogecoin. After he acquired Twitter, the social media platform briefly changed its iconic blue bird logo to Dogecoin’s mascot. Although the switch was never explained, it’s a potential indication that Musk will champion his favourite meme coin again in the future.
Buy or Leave Dogecoin?
As its price history demonstrates, DOGE is a highly volatile token with price swings of -75% in one day. From a trader’s perspective, this trait can have positive and negative implications. Nevertheless, with such high volatility, savvy traders who don’t mind playing the risk could potentially reap the rewards.
Regardless, Dogecoin will continue to be an important player in the cryptocurrency space. It’s the eighth-largest coin by market capitalisation, after all, and has one of the most passionate followings of any project. Ultimately, it is up to the individual to weigh the potential risks and rewards before making any decision to purchase Dogecoin.
Where to Buy Dogecoin
In the Crypto.com App, users can conveniently buy DOGE and 250-plus other coins using a credit/debit card, Apple Pay, Google Pay, or 20-plus fiat currencies transferred from their bank account. To do so, users can tap ‘Buy’ from the home screen and then select the token to purchase along with the payment method.
Visit the Help Centre for more information, and download the Crypto.com App here.
Due Diligence and Do Your Own Research
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Past performance is not a guarantee or predictor of future performance. The value of crypto assets can increase or decrease, and you could lose all or a substantial amount of your purchase price. When assessing a crypto asset, it’s essential for you to do your research and due diligence to make the best possible judgement, as any purchases shall be your sole responsibility.
