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What started as a funny meme eight years ago quickly made its way around the internet, capturing the imaginations of millions. Dogecoin’s rise since the start of 2021 has been epic, with everyone’s favorite meme coin catapulting into the top 5 cryptocurrencies by market cap. Dogecoin has become so ingrained in popular culture that it was featured on a Saturday Night Live segment by Elon Musk.
Coinmama customers from all over the world can now buy Dogecoin with one of our many payment methods.
What is Dogecoin?
Dogecoin is a cryptocurrency and means of payment similar to Bitcoin, Bitcoin Cash and Litecoin. It was first launched in 2013 by Billy Marcus, an engineer at IBM, and Jackson Palmer of Adobe to reach a wider audience than Bitcoin. The founders of Dogecoin decided to feature a cute Shiba Inu as their mascot and meme to gain widespread attention. It was long before the Shiba Inu meme, captioned with a funny fictional monologue, started circulating the web.
Dogecoin is a cryptocurrency that uses a Proof-of-Work system similar to Bitcoin, with one key difference from a technical perspective. While Bitcoin uses an algorithm known as SHA-256, Dogecoin’s creators copied Litecoin’s version of the Proof-of-Work algorithm. Dogecoin’s algorithm, known as scrypt, is designed to level the playing field by making mining more challenging with dedicated ASIC miners and allowing people to mine with their computer’s GPU.
Success can sometimes mask underlying concerns, and Dogecoin is no different. Despite its growing popularity and global appeal, Dogecoin faces two major challenges in its quest for greatness.
The first challenge it faces is lack of development.
One of the defining characteristics of Bitcoin and other cryptocurrencies is their open source code. Any developer can copy their code, in whole or in part, make corrections and include it as part of their project. For example, both Bitcoin Cash and Litecoin were born by “forking” Bitcoin, copying Bitcoin’s code and making their own slight modifications. Just as Litecoin forked Bitcoin to create an independent cryptocurrency, the creators of Dogecoin used Litecoin as inspiration for their project.
However, open source also poses risks for crypto projects, as it allows anyone to see how actively they have been developing and upgrading their code. Looking at the Dogecoin statistics on Github, a popular online code repository, we can see that the Dogecoin codebase has not seen much development since early 2018.
How many dogecoins are there
The second major disadvantage of Dogecoin is its unlimited supply.
Bitcoin’s most significant advantage as a form of money is its fixed, predictable supply. Only 21 million Bitcoins will ever be mined, giving Bitcoin its signature monetary resilience. Bitcoin is currently inflating at 1.76% per year, with 328,500 coins added to the supply each year. When the next bitcoin halving event occurs in 2024, the amount of new bitcoins added to the supply will drop to 164,250 per year.
On the other hand, Dogecoin has none of these scarcity properties. The current supply of Dogecoin is 130 billion, with 5 billion coins added to the supply each year. And unlike Bitcoin, the supply of Dogecoin is unlimited.
Dogecoin may lack the qualities that give Bitcoin its monetary superiority. However, crypto supporters were quick to point out that Dogecoin is still a harder form of money than the US dollar. Both have an unlimited supply, but Dogecoin inflates at a slow, predictable pace. At the same time, the Federal Reserve continues its erratic inflation of the US dollar.
Bitcoin vs Litecoin vs Dogecoin Comparison Chart
| Bitcoin | Litecoin | Dogecoin | |
| Proof of Work Algorithm | SHA-256 | Script | Script |
| Current supply | 18,705,000 | 66,752,415 | 129,000,000,000 |
| Maximum supply | 21 million | 84 million | Unlimited |
| Coins added 2021 | 328,500 | 2,628,000 | 5,000,000,000 |
| Inflation rate | 1.76% | 3.93% | 3.88% |
| Time to block | 10 minutes | 2.5 minutes | 1 minute |
| Average transaction fee | $20 | $0.06 | $1.35 |
Fundamentals no longer drive the markets. The memes?
In January 2021, a generation of activist investors took global markets by storm when they rallied around heavily shorted companies like Gamestop, sending them to sky-high valuations. These young investors coordinated with each other through memes and videos, mainly on the Wall Street betting forum Reddit, where they came up with the initial plan to boost GME’s stock price. What drove GME’s bulls wasn’t a deep understanding of the company’s financials. Rather, memes that position GME traders as the antithesis of Wall Street’s elite and the financial system designed to benefit them spread like wildfire across the web, attracting more and more GME buyers.
The rise of Dogecoin can be seen through a similar lens. A meme-turned-billion-dollar market, Dogecoin marks the shift from fundamental investing to meme-driven investing favored by the digitally native youth. While meme-driven investing can be fun, it’s critical to dig into the fundamentals of each asset to understand the risk behind it.
Whether one likes or agrees with the meme-driven investing trend, GME and now Dogecoin show that it’s likely here to stay. We are excited to allow Coinmama customers to participate in this journey.
