Who let the DOGE out?
Dogecoin ($DOGE) was created back in 2013 to poke fun at the growth in altcoins across the cryptocurrency market. It was literally created as a joke; using the shiba inu meme and everyone’s favourite font — comic sans — to best capture internet culture. It was never intended for mass adoption, real world use or a top 5 spot on CoinMarketCap.
Technically it’s a fork of a fork of bitcoin, so is built using a copy of the Luckycoin codebase which itself adapts the Litecoin codebase, which itself is a modification of the bitcoin codebase, and there’s a few notable changes from the bitcoin implementation:
- Where bitcoin has a supply cap of just under 21m (to read more about this), DOGE has an unlimited supply making it an inflationary asset. An interesting item to note is that initially it was created with a 100billion cap but this was removed through an upgrade in February 2014.
- Bitcoin blocks are created every c10 minutes however Dogecoin blocks see intervals of just 1 minute. This is due to Dogecoin changing from the SHA-256 hashing algorithm used in bitcoin’s proof of work consensus to a less complex and hash rate intensive version, Scrypt.
- The current block reward on the bitcoin blockchain is 6.25BTC (halving every 210,000 blocks since the 50BTC reward in the genesis block). However successful miners on Dogecoin receive 10,000 DOGE per block. This has been a fixed reward since block height 600,000 when the asset moved from a finite to unlimited supply.
- The latest software version (v1.14.3) was released in February of this year, marking the first activity since the November 2019 release and building upon the last significant work in 2015. This is a world away from the active bitcoin development community with frequent releases and large protocol upgrades in the pipeline.
- Miners of DOGE can also use their hashpower to merge mine on the litecoin network (merge mining explained), this allows for a more efficient hash rate use and the potential to earn both DOGE and LTC block rewards.
Two advantages of these technical modifications; a vast supply and quick confirmation speeds, make DOGE a suitable candidate for micro-tipping. This purpose led to much of the early growth for the Doegcoin community with tipping for video content, articles and social media engagement. However the real boom for the asset came in 2020 with the rise of a TikTok trend aiming to get DOGE to $1 and then celebrity endorsements by self proclaimed DOGEfather Elon Musk, as well as Snoop Dogg, saw the popularity grow even further.
So whilst the technical fundamentals of Dogecoin are weak and it’s certainly not the most innovative asset out there, the engaged and passionate community continues to keep the asset towards the top of CoinMarketCap. Time will tell whether the memecoin can sustain this growth or whether it will be sent back to its kennel.