If you are not tired of hearing about Dogecoin and/or seeing memes online about it, then here is some more. In October 2011, Charlie Lee, a former google engineer decide to create a lighter version of Bitcoin and called it “litecoin.” Its purpose was to allow faster and more cost effective transactions than Bitcoin. According to Litecoin’s white paper, there will only be only 84 million coins in circulation or LTCs and every block (a group of transactions added to the cryptocurrency blockchain) is to be created every 2.5 minutes as opposed to bitcoins blocks which are created nearly 10 minutes. One of Charlie Lee’s goals was to allow users to purchase everyday items such as coffee, groceries, gas and have the transactions settled in seconds as opposed to minutes like Bitcoin.
Well, it seems like this upgrade was not enough for some engineers who decided to create an even lighter cryptocurrency which goal was, among others, to be used as an online tipping system. Dogecoin was the result. Dogecoin (DOGE) is a peer-to-peer, open-source cryptocurrency. It is considered an altcoin and an almost sarcastic meme coin. Launched in Dec. 2013, Dogecoin has the image of a Shiba Inu dog as its logo. While it was created seemingly as a joke, Dogecoin's blockchain still has merit. As mentioned above, its underlying technology is derived from Litecoin. Notable features of Dogecoin, which uses a scrypt algorithm, are its low price and unlimited supply. Dogecoin has a loyal vibrant community of supporters who trade it and use it as a tipping currency for social media content.
The most amazing thing about crypto currencies like dogecoin is that they are and will continue to gain value due to the loyal amount of followers that they enjoy and who are willing to rally online and pump it up with consistent community organized buying sprees. These pump and dump groups are nothing new, they have been around for years and perhaps centuries under different names. The basic idea is to pump the price of an asset by over buying it and the opposite by over selling it. Today, most of these groups communicate on channels like telegram and can become very larger and popular in short periods of time. This says a lot about the democratization of investment and investors, before this type of manipulation (if that’s the proper way to call it) was only enjoyed by whales and investors with inside information, but with the proliferation of the internet and enormous amount information at our fingertips, pretty much anyone can find a pump group, participate, and most of the times benefit if done with caution. Game stop became the perfect example of these schemes. In January of this year, a large group of enthusiasts got organized on Reddit to buy share of Game stop and were able to increase the price of the stock by more than 400%.
As of today, Dogecoin may not have a very well defined purpose, but the fact that it has become “the internet currency” and the coin of choice for memes, gives it a lot of value. Elon Musk is known for twitting about dogecoin regularly and helping increase its price. At the end, value is whatever a group of people decide to pay for a commodity, so the more adopted dogecoin becomes the more value it will have.
The Dogecoin official video claims that the cryptocurrecy has already helped fund olympic athletes, and helped provide clean drinking water to those in need. It also mentions that their group on Reddit will be glad to assist those newcomers with any questions they may have, plus send them some free coins. Im not sure if the “free coins” part still holds true since the valued has gone up almost 150,000% in over a month, but the community will be glad to welcome you and grow in the process.
The future is unpredictable and very volatile in this industry, but it is very interesting to see how groups of people can control the value of a commodity to benefit them financially. We will continue to gather and curate blockchain and crypto information for you.
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