Dogecoin made the news when Twitter, owned by Elon Musk, replaced the bird symbol with the shiba inu symbol of Dogecoin.
Starting out in 2013 as a joke to make fun of all the clonecoins trying to replace Bitcoin, Dogecoin has found staying power as the original memecoin. But how much is it still a joke?
The History of Dogecoin
Dogecoin was developed by software engineers Billy Markus and Jackson Palmer in 2013. At this time, new “clone coins” were coming onto the market everyday.
Clone coins are created when someone copies the code of another private digital currency and makes a slight change to create an “original” new coin. Markus and Palmer noticed that these coins were all very similar and essentially offered nothing new to the market, but all took themselves very seriously and each marketed themselves as the coin that would overthrow bitcoin.
Markus and Palmer then made Dogecoin, a clone based heavily on the Litecoin protocol, as a joke to make fun of this trend. Thus was born the memecoin.
A memecoin is a private currency that has perceived value only because people buy it to make a quick gain. Unlike Bitcoin, which has a strict supply cap, Dogecoin (and other memecoins) exist purely for speculation.
However, the joke caught on. 10 years later, people are still laughing. Or crying, once the bubble pops and their savings evaporate.
14.4 Million New Dogecoin Created Every Day
Dogecoin uses a Proof of Work consensus method like Bitcoin does. However, Dogecoin blocks are mined every minute, unlike the 10 minutes it takes for Bitcoin blocks.
Every 24h about 14.4 Million new Dogecoin are created which makes dogecoin an ‘easy money’. Money that is easy to create cannot hold it’s value over time as the additional supply lowers the market value. This causes hoarders of the currency to sell their holdings causing the price to crash.
Dogecoin has no upper limit in terms of its supply. While there will only ever be 21 million bitcoin, there could be potentially infinite Dogecoin.
This makes Dogecoin inflationary, because its supply increases over time, causing the value of each coin to decrease eventually if demand falls short.
The Tokenomics Of Dogecoins
In short, the total number of dogecoins will continue to rise with time as the currency does not have a hard cap. But what is the current circulating supply of Dogecoin?
As we’ve learned, Dogecoin block rewards are fixed at 10,000 coins per block which means 10,000 additional coins are created every Minute. Per day, 14.4 Million new Dogecoin are minted out of thin air.
As of today, over 4.6 million blocks have been added to the Dogecoin blockchain. Based on the data, the circulating supply of DOGE stands at over 135 billion, as of April 2023.
Why is Elon Musk Such a Fan?
Elon Musk has been very public over the years about his support for Dogecoin.
As the internet’s favourite meme lord, Musk clearly can’t help himself from getting involved in anything that doesn’t take itself too seriously.
It may be that he’s simply trying to profit from a pump-and-dump scheme. Whatever the case might be, his continuous support has lost him all credibility. He can never gain back a mature and trustworthy public image.
Dogecoin vs Bitcoin
There has been significant blowback from the Bitcoin community against Elon Musk’s continued support of Dogecoin. Bitcoin advocates argue that promoting these so-called “craptocurrencies” is highly immoral because they exploit ignorant fools.
Altcoins cannot have the same value proposition yet advocates of them make it sound as if Bitcoin and Dogecoin could be the same.
Bitcoin is the only decentralized money that can be understood as sound money. It’s hard cap and exorbitant hashrate give savers a viable reason to understand it as a long-term storehold of wealth. Bitcoin’s issuance rate is reliable and the network secure.
Dogecoin on the other hand, doesn’t even try to propose to be a good store of value. It’s unlimited supply make it clear from the start that it’s all a gamble.
Bitcoin is not just the world’s first decentralized money, it continues to be the largest by market cap and the most widely adopted. It also has the most mainstream adoption, with several large companies holding Bitcoin on their balance sheets.
Dogecoin might be a great meme and many people think it’s a good joke. But unfortunately they are lured into betting on it by prominent yet unserious celebrities like Musk.
The Bitcoin network will always attract those people serious about making open source, permissionless money a reality. The best coders and programmers, the economists and investment specialists, the fund managers and business moguls – they’ll always choose Bitcoin over a random memecoin.