A history of Dogecoin
Dogecoin is digital currency that started life as a joke and went on to become a top-10 crypto contender, with a market cap that hit more than $2bn.
Dogecoin was founded in 2013, inspired by Doge, a popular internet meme based on a Japanese dog breed, the Shiba Inu (‘Shibe’ for short). A fun picture of a dog with its ‘thoughts’ written over the top – like a humorous birthday card – was passed around the internet and quickly gained a cult following.
It was used for a Google Easter egg graphic and was even picked up by Delta Air Lines and used in a safety video.
Dogecoin’s market cap has now fallen to just $338m and it lies in 42nd position in the top 100 (14/6/2018), according to Coinmarketcap – and therein lies a tale of some of the worst excesses of the crypto frenzy.
A brief history of Dogecoin
Dogecoin was launched in December 2013, after Jackson Palmer, an Adobe product manager in Sydney, decided to make fun of the rapidly growing number of cryptocurrencies. He tweeted that he was investing in a new digital currency called Dogecoin: “Pretty sure it’s the next big thing,” he joked.
Palmer then went one stage further and bought the domain name, putting a coin on the home page embossed with a picture of the Doge dog. He added a note saying, “If you want to make Dogecoin a reality, get in touch.”
Meanwhile in the US, Billy Markus was developing his own cryptocurrency, Bells [after the currency used in Nintendo’s Animal Crossing], when he came across the Dogecoin website. He got in touch, and the duo decided to turn Dogecoin into a real cryptocurrency based on the bitcoin blockchain, and mined in the same way.
In case you’re wondering how to pronounce it, there is no official pronunciation. “‘Officially’ it’s something like ‘dohjcoin’, coming from the Homestar Runner [cartoon series],” Palmer told the International Business Times. “I’ve pronounced it every way though, do-ge coin, dog-coin, doggy-coin, etc. Whatever is the most amusing at the time.”
Thanks to its internet fame, Dogecoin took off and rapidly gained traction, with a devoted online community, reaching a market cap of $60m in just one month.
By the middle of 2015, 100 billion coins were in circulation, with an additional 5.25bn coins being added every year thereafter. Its value is so small – it’s currently trading at just $.0035 – that it tends to be used in a different way to most cryptocurrencies.
Development and growth
Dogecoin’s founders saw see the currency very much as a community venture.“We want to secure its place as the internet currency [that is] perfect for micro-transactions and tipping people you think are awesome,” Palmer told IB Times in April 2014.
“An example goal is that some people can tip a person streaming on Twitch.tv and then that gamer can go and purchase some DLC or a new game entirely with that Dogecoin. I think that’s a really nice place for the currency to sit.”
Markus added: “We wanted to set a tone that Dogecoin wasn’t really about hoarding and shilling and trying to get rich like we see in many other altcoin communities but that it was really just about having fun and tipping and learning about cryptocurrency, and I think that message actually did resonate with a lot of folks. The coin is where it is today because of the community’s enthusiasm, excitement, and good nature.”
Dogged by problems
There was an early hiccup when, less than three weeks after the launch, 21 million coins, worth roughly $12,000, were stolen from Dogewallet. Undeterred, the community set about raising cash to reimburse the hack victims.
The cryptocurrency shot to fame later that year in the run-up to the Winter Olympics at Sochi, when, inspired by the hit movie Cool Runnings, Dogecoin devotees raised $50,000 so the cash-strapped Jamaican bobsleigh team could take part.
More than $36,000 was raised in just two days, and the media coverage helped propel the ‘alt currency’ into public awareness.
Palmer told the Sydney Morning Herald he never intended Dogecoin to get too serious, but the internet community had other ideas – rapidly gaining ground on the popular internet social platform, Reddit. “That’s true virality,” Palmer said. “[Dogecoin] grew a mind of its own.”
Dark side of the coin
At the start of 2014 a British man by the name of Alex Green founded a cryptocurrency exchange called Moolah to promote the spread of Dogecoin. It was the beginning of a dark period for the digital currency from which some experts believe it may never fully recover.
Green started handing out generous amounts of Dogecoin through tips on Reddit, and also donated to causes the Dogecoin community were involved with – including sponsoring Nascar racing driver Josh Wise.
Moolah began to raise funds from the Dogecoin community, raking in more than $750,000, according to Palmer – largely as a result of goodwill arising from Green’s earlier generosity.
Several of the main players in the Dogecoin setup – including Palmer and Markus (who had already left his day-to day role as he felt the whole thing was getting out of hand) – questioned Green’s motives.
“I was sceptical of this at first, thinking [Moolah] was a shady, corporate interest taking the fun out of dogecoin,” Palmer told Coindesk. “It all seemed like some kind of pyramid or Ponzi scheme, and Ben [Dogecoin board member Ben Doernberg] and I started pushing back on it pretty hard.”
In October 2014, Moolah suddenly went into liquidation and Green disappeared. Palmer and several others became suspicious.
Then Palmer received an email from a former girlfriend of Green in England that made him sit up and take notice. The subject line read: “moolah – Mr. Alex Green.” The first line read: “Alex Green = Ryan Kennedy/Gentle.” She alleged Kennedy had run a scam event in Bath called ‘Magic: The Gathering’.
Palmer later received a data dump from a laptop ‘Green’ had left behind, and he and Doernberg published the information about the alleged scams online. But the Dogecoin devotees wouldn’t believe him, and it “culminated in a backlash… and the community kind of ousted us for our opinions”, Palmer told Coindesk. “We got shouted out and we just said ‘screw it’.”
Kennedy was later arrested after a three-year investigation by police codenamed Operation Sparrow. He is due to stand trial at Bristol Crown Court in September for the theft of £1m worth of bitcoins that were allegedly used to fund a luxury lifestyle.
According to a statement by the Somerset Constabulary, Kennedy has been charged with offences under the Fraud Act of 2006 and Proceeds of Crime Act 2002. The alleged offences took place between January to December 2014.
The whole Moolah episode left a nasty taste in the mouth for Dogecoin founders Palmer and Markus, who have both left the Dogecoin community. Palmer now runs his own popular YouTube channel and considers himself a cryptocurrency sceptic.
“Cryptocurrency is a solution in search of a problem,” he told Cnet, adding that Dogecoin is ”a reminder that we can’t take this stuff seriously”. He said: “I hope people see Dogecoin and say, I’m not going to put all my money into this. Because right now there’s a dog on a coin and it’s worth half a billion dollars.”
Jackson Palmer: One of the original two co-founders, and a product manager at Adobe’s Sydney office when he launched the idea.
Billy Markus: Co-founder, an IBM programmer based in Portland, Oregon. He is still a software engineer, but has left the limelight. He tweets regularly using the handle Shibetoshi Nakamoto.
Ryan Kennedy/Alex Green: Kennedy started a Dogecoin exchange called Moolah, using the
handle Shibetoshi Nakamoto.
Ryan Kennedy/Alex Green: Kennedy started a Dogecoin exchange called Moolah, using the pseudonym Alex Green. Kennedy later used Moolah’s parent company, Moopay Ltd, to buy the digital currency exchange MintPal, which, according to Coindesk, closed in October 2014 after Moolah went into liquidation. Kennedy is awaiting trial in the UK on fraud charges.
Ben Doernberg: Former board member of the Dogecoin Foundation. Doernberg was one of those warning the Dogecoin community that Moolah founder ‘Alex Green’ might be a scammer.
What people are saying
Dogecoin is a “clear indication of speculation”. Richard Asquith, vice-president of global indirect tax at Avalara. He says altcoins such as Dogecoin are attractive to speculators in search of the next bubble. Globalcoinreport.
“It is clear that the many people affiliated with this individual [Ryan Kennedy] were not aware of whom they were dealing with.” Ben Doernberg, on CoinTelegraph.
“When you’re part of a community that large for over three years, you do get attached. Plus, you know how it works and if you can relatively easily apply that knowledge to an update, or providing something new to the community, why not do it?” Max Keller, lead core developer of Dogecoin, on where the currency goes from here, talking to Coindesk.
“It’s a DIY project for us, a hobby just to pick at every now and then… It’s very, very hard to kill a cryptocurrency.” Ross Nicoll, a 37-year-old Dogecoin developer.
“It’s a sad thing, whether the coins you lose are worth much money or not, it’s like losing a piece, a fun piece, of the cryptocurrency history.” An anonymous ‘shibe’ (the name given to Dogecoin followers). Coindesk