What Is Dogecoin (DOGE)? A Guide to Elon Musk’s Favorite Crypto

Officially launched on 6th December 2013, Dogecoin (DOGE) is an open-source cryptocurrency that got its name and logo from the once-popular “doge” meme. It was created by two software engineers, Billy Marcus and Jackson Palmer. 

This comprehensive article introduces you to Dogecoin, in simple terms, and contains all you need to know about the popular memecoin.

Dogecoin Explained

In 2013, a few months before Dogecoin was launched, a meme went viral and became popular online. This meme was related to the photograph of a dog of the Shiba Inu breed and a deliberately misspelled word “doge”.

That same year, on the 6th of December, Dogecoin was created and its logo and name were designed based on that meme. Thus, Dogecoin can be referred to as a memecoin.

Dogecoin is a popular cryptocurrency because it is considered the first memecoin and the first ‘dog coin’. Dogecoin started as a ‘joke’ because a meme inspired it.

Other dog-themed memecoins include Shiba Inu (SHIB), Bonk (BONK), Dogwifhat (WIF), Myro, and so on.

Unlike Bitcoin, though, Dogecoin has no limit on the number that can be mined. As such, an unlimited number of Dogecoin can exist in a lifetime. This makes it possible for millions of Dogecoins to be released into the market daily.

The memecoin, Dogecoin, also has its own blockchain. The digital ledger on the network is updated as soon as a new transaction is processed on the blockchain.

The blockchain uses a Proof-of-Work (PoW) consensus mechanism. As a result, miners of Dogecoin can process and record transactions on the Dogecoin network by solving complex mathematical equations in exchange for extra Dogecoins.

These extra Dogecoins, called the block reward, serve as a reward for miners for their work on the blockchain. Miners are then left with the choice to either hold or sell their digital assets in the open market.

As a medium of exchange, DOGE investors may use their coins to make payments and purchase items. Due to its unlimited supply which leads to its tendency to be susceptible to inflation, Dogecoin may not pass as a reliable store of value.

Another difference between the Dogecoin network and the Bitcoin blockchain is related to their different transaction speed. It is quicker and easier to mine coins on the Dogecoin network than on the Bitcoin blockchain. 

It takes about 10 minutes for miners to add a new block on the Bitcoin blockchain. However, according to Gary DeWaal of the Financial Markets and Regulation Group, it takes only one minute to process transactions on the Dogecoin blockchain.

Furthermore, miners will encounter more challenges while mining coins on the Bitcoin blockchain over time due to its limited total supply. On the other hand, the unlimited supply of Dogecoin makes it easier for miners to process transactions on the Dogecoin network.

Dogecoin and Elon Musk

Since its creation, Dogecoin’s value has, on different occasions, been affected positively by public comments and actions made by tech billionaire and Tesla CEO, Elon musk. Being a high-profile supporter of the cryptocurrency, Elon Musk’s tweets and statements on Dogecoin usually moves its price.

Here is one example. The value of Dogecoin rose from just under one penny at the beginning of 2021 to $0.68 by May 2021. This significant increase in price may be attributed partially to Elon Musk because, sometime in 2019, he called Dogecoin his favorite cryptocurrency.

Again, in January 2022, Dogecoin experienced a notable increase in value after Elon Musk tweeted that Dogecoin was an acceptable currency as a means of payment for Tesla’s merchandise.

Before then, there was only a limited number of items that Dogecoin could be used to buy. Hence, Musk’s comment made the cryptocurrency more attractive and this most likely contributed to the 20% increase in price it recorded.

Even very recently, Dogecoin experienced a significant surge in value within 24 hours after the Meta company owner changed X’s (formerly called Twitter) logo from the blue bird picture to Dogecoin’s icon.

Before this action was made, Dogecoin traded at $0.076. As the news spread, though, the memecoin’s value pumped to $0.105 which was a whole 30% increase. At the time of writing, Dogecoin’s price is trading at $0.15.

How Many Dogecoins Are There?

As stated earlier, the supply of Dogecoin is limitless. Unlike bitcoin, whose total supply is capped at only 21,000,000 coins, Dogecoin’s supply is unlimited. As such, an indefinite number of Dogecoins is available to crypto miners as long as the network continues to run.

This difference between bitcoin and Dogecoin has unique effects on each of these cryptocurrencies. Bitcoin has the ability to grow in value, stay highly valuable for a longer time and evade inflation due to its limited supply. 

Dogecoin, on the other hand, is highly inflationary by design. This makes it challenging for Dogecoin to sustain an upward surge in price for a long time. All of these are due to the cryptocurrency’s unlimited supply.

So, how many Dogecoins are there? Unlimited supply.

Coins Like Dogecoin

There are many coins with characteristics similar to Dogecoin. Here, we will examine some main characteristics of Dogecoin and name some cryptocurrencies that are similar to the digital asset based on these features.

Memecoins Like Dogecoin

Dogecoin is a memecoin. This means that its design and logo were created based on a meme. 

Bonk (BONK), Shiba Inu (SHIB), Pepe (PEPE) and Dogwifhat (WIF) are some examples of cryptocurrencies that fit into the memecoin description.

Unstable Coins

As with most digital assets in the cryptocurrency market, DOGE is highly unstable. This is due to its high price volatility. 

High price volatility makes it difficult for investors to accurately predict the coin’s price actions. This, in turn, makes it important for crypto users and investors to be careful before rushing into making an investment decision.

Popular cryptocurrencies such as Bitcoin (BTC), Ethereum (Ether), Ripple (XRP), Solana (SOL) and others fall into this category.

Coins With an Unlimited Supply

There is an indefinite amount of Dogecoin left to be mined. This is yet another characteristic of this digital asset.

However, there are many other cryptocurrencies whose supply, like that of Dogecoin, is not limited. One of such coins is the second largest cryptocurrency by market capitalization, Ethereum. Others include Solana (SOL), Shiba Inu (SHIB), Polkadot (DOT) and so on.

Coins That Run on Their Own Blockchain

Dogecoin runs on its own blockchain, which is the Dogecoin network. Miners use the Proof-of-Work (PoW) technology to process and validate transactions on the blockchain. Dogecoin, though, is not the only cryptocurrency that runs on its own blockchain. 

Other coins such as bitcoin (runs on the Bitcoin blockchain and uses the Proof-of-Work consensus mechanism), Ether (Ethereum blockchain which uses the Proof-of-Stake consensus mechanism) and Solana (Solana blockchain which uses both Proof-of-Stake and Proof-of-History consensus mechanisms) all have their own networks like Dogecoin.

Is Dogecoin a Good Investment?

When considering whether to invest in any cryptocurrency, including Dogecoin, or not, the security of the network is an aspect that needs to be looked into.

Many cryptocurrencies have a robust mining community and investor base. Still, some of these coins fall victim to malicious attacks from hackers.

Sadly, Dogecoin is also not exempted from this. In fact, shortly after the launch of the coin in 2013, the asset recorded its first major theft. 

The online wallet platform, Dogewallet, was hacked and millions of coins were made away with. A month later, though, the issue was resolved as users who lost their Dogecoins were refunded.

This hacking incident is a reminder that online cryptocurrency wallets are prone to attacks. Also, investing in the cryptocurrency market, regardless of how long the asset has existed, involves risks.

It is, therefore, important to recognize this fact when deciding whether to invest in Dogecoin or not. As a potential investor, you need to always remember to only invest what you can afford to lose.

In addition, the continuous mining of new Dogecoins may not make it not a really good idea to hold the coin for the long-term. The fact that bitcoin has a maximum supply of 21,000,000 coins makes the digital asset very attractive and supports its significant growth in value.

The case is not the same with Dogecoin. Unlike bitcoin, millions of new Dogecoins are mined into existence every day. This makes it difficult for the value of the asset to increase steadily.

However, you can still invest in Dogecoin because the cryptocurrency may be used as a medium of exchange or means of payment.

Furthermore, making careful research should be a priority when deciding whether to invest in Dogecoin or not. Reading articles such as this and many others on Cointab.com might be of great help in sourcing relevant information.

The decision to invest in Dogecoin, and the cryptocurrency market in general, is an important one. Hence, do well to take in as much information as possible.

When Will Dogecoin Reach $1?

Even though Dogecoin is a popular meme-inspired coin, its price in the cryptocurrency market is low when compared with well-known cryptocurrencies such as bitcoin and Ether. At the time of writing, the price of Dogecoin is less than $1. 

This may serve as a cause of concern for crypto investors and onlookers. As such, the question, “When will Dogecoin reach $1?” is valid.

Considering how Dogecoin was designed and its price action history, it is difficult to accurately predict when the cryptocurrency will be traded at $1. 

One thing is certain, though: The cryptocurrency market is highly volatile. Since market hype has been repeatedly proven to pump the value of the coin, the $1 target may be reached sooner or later than investors expect.

Will Dogecoin Reach $10?

The answer to this question is still very much related to the crypto market’s volatility. Just like every other cryptocurrency, Dogecoin is very unpredictable. The price of the digital asset can rise or fall at any time.

This price fluctuation, however, may serve as a good pointer. As it has happened in the past, it is possible that a comment or an action from a well-known cryptocurrency investor may push the coin to trade at $10 in the future but this is not certain.

So, will Dogecoin reach $10? We do not know for sure. Time will tell!

Given the unpredictability of the cryptocurrency space, anything can happen to the price of Dogecoin. Either ways, ensure that you do not invest more than you can bear to lose. This will prevent you from feeling disappointed when the worst happens.

Where to Buy Dogecoin

Before the cryptocurrency’s value gained some ground on the market, it was possible to get free Dogecoins by doing basic tasks online. In recent times, though, you need to buy the coins to have them.

The easiest place to buy Dogecoin is on a cryptocurrency exchange that supports the network. In order to buy a coin, you have to first create an account on the cryptocurrency exchange and set it up. After that, you can buy and sell all you want on the platform.

After buying some Dogecoins on a cryptocurrency exchange, it is safer to transfer them to a crypto wallet. This action allows you to be in total control of your coins and your private keys and not entrust their safety on the cryptocurrency exchange.

Moving your coins to a cryptocurrency wallet will also reduce the risk of losing your assets due to malicious attacks or getting hacked. You can decide to either choose a hot wallet (online wallet) or a cold wallet (offline wallet).

Summary

Dogecoin is a cryptocurrency that was created in 2013. It is called a memecoin because it was inspired by a viral meme which featured a dog.

Dogecoin is often described as Elon Musk’s favorite crypto because the tech billionaire said so himself. His comments on the memecoin have been shown to influence its price positively.

There is an unlimited supply of Dogecoins as millions of new coins are mined on the blockchain everyday. This may contribute to its inability to sustain an increase in price for a long time.

To own Dogecoin or invest in it, you need to buy some on a cryptocurrency exchange that supports it. Dogecoin investment, just like every other cryptocurrency investment, should be backed by enough knowledge and research.