Crypto Explained: Dogecoin

Many Harritonites have gotten into crypto trading because of the pandemic. One of the most debated cryptos of the halls is Dogecoin (DOGE). This cryptocurrency is the tenth-largest in the world, sitting on $36 billion. Its fame brought out many new cryptocurrencies like Shiba Inu.

In 2013, Dogecoin started as a joke by Jackson Palmer and Billy Markus. Its satirical creation was proposed to allow investors to have an alternative to Bitcoin. It was named after the famous internet sensation ‘Doge’, which originated in 2010. Its internet joke identity led it to become one of the most distinguished currencies ever. In fact, two weeks after its release, the value of Dogeoin jumped 300%. Unfortunately, Doge did not catch serious traction until 2020, when the CEO of Tesla and SpaceX, Elon Musk, tweeted about the crypto. This social media interest surged Doge “to the moon.”

Despite Dogecoin starting off as a joke, some see it as a legitimate investment. Many people invested in Dogecoin before it went “to the moon.” Glauber Contessoto told CNBC, “Between his savings and borrowed funds... he invested over $250,000 in Dogecoin on February 5 when it was priced at about 4.5 cents. About two months later, on April 15, he says he became a Dogecoin millionaire on paper.” Unfortunately, Dogecoin fell after its peak, on May 8th, 2021, at ¢73.76. Now, DogeCoin sits around ¢25 and seems to give no hint of a rebound.

Billy Markus, the cofounder of Dogecoin, based its code on Luckycoin, whose code originated from Litecoin and initially used a randomized reward for block mining, but that changed to a solidified reward in March 2014. According to Investopedia, “Dogecoin uses Litecoin's scrypt technology and is a Proof-of-Work (PoW) coin. Proof of Work (PoW) forms the basis of many cryptocurrencies, allowing for secure, decentralized consensus.”

Dogecoin is an inflationary coin, while cryptocurrencies like Bitcoin are deflationary ( there is a limit to the amount of coins made). Investopedia states, “Every four years, the amount of Bitcoin released into circulation via mining rewards is halved, and its inflation rate is halved along with it until all coins are released.” Also, Dogecoin is a token (an asset rather than a currency) so it depends on community interest. Unfortunately, community interest is finite, and recently it has proven to lose investors money. Even though Dogecoin and other altcoins have made people a lot of money, they are not strategic cryptos to invest in. Many who have invested since Dogecoin’s peak have either lost money or are currently losing money.

A long-term investment into Dogecoin is illogical because the public interest in it has declined mostly. Most celebrities are moving towards new cryptocurrencies like Shiba Inu. Shiba Inu, otherwise known as the ‘Dogecoin Killer’, is another crypto that depends on public interest. As public interest has decreased, the value of Dogecoin has followed. Investing in Dogecoin would be ridiculous now that it has lost the eyes of the general public; this fact mixed with the coin’s inflationary nature has caused its value to crumble.