A year in the life of Dogecoin (DOGE)
Many pundits were predicting that Dogecoin (DOGE)– the cryptocurrency based on the Japanese Shiba Inu dog internet meme – would not survive in the long term.
The altcoin started life as a joke after Jackson Palmer, an Adobe product manager in Sydney, decided to make fun of the rapidly growing number of cryptocurrencies.
That joke became a reality after software engineer Billy Markus got in touch, and soon Dogecoin was a fully functioning cryptocurrency – though it was so cheap it was mostly used for ‘tipping’ good online posts on tech websites such as Reddit.
But the currency was hit by an alleged scam surrounding the crypto exchange Moolah, which had been promoting Dogecoin, and Moolah closed down amid controversy in October 2014.
The episode hit Dogecoin’s credibility, the founders left in disgust at the way their creation had been manipulated, and development work on the code ground to a halt.
The coin price plummeted by 72% from $.000454 on 26 September 2014 to $.000125 by 14 January 2015.
There, you might think, the story might have ended. But despite the lack of updates, Dogecoin has not only survived into 2018, but hit its highest valuation ever on 7 January – $2.07bn. Along with all the other digital currencies, it was very much riding on the coattails of Bitcoin – which although down from its December peak of nearly $20,000, was still trading at $17,400 that day.
Dogecoin’s trading volume has remained healthy, too, at least, since 2017, after a three-year period from the end of 2014 when it flatlined between the $.000140 to $.000200 mark. At the start of 2017 it started to move upwards, and on 22 May 2017 the traded volume hit a then all-time high of $129m, later reaching a new high of $295m on 8 January 2018, according to CoinMarketCap.
Between 13 November 2017 and 7 January 2018 the token value rocketed by more than 1,500% and nearly touched 18 cents ($.0179) on 7 January.
While Bitcoin was very much in bubble territory, taking altcoins on a ride with it, rising digital-currency valuations were perhaps also partly fuelled by a declining dollar. The greenback had been falling since the start of 2017 due to uncertainty over economic fallout from the Trump presidency, and hit a low of 11545 on the Dow Dollar Index on 22 January 2018. The dollar reached a near three-year low against the euro of €1.246 on 29 January.
However, there’s another reason Dogecoin continues to look so good, according to CoinDesk.
Max Keller, lead core developer of Dogecoin, told the website the up-front figures showing a rising hash rate (production rate) for the coin are misleading, as it is merge-mined with Litecoin – with Litecoin’s hashing power giving security to the Dogecoin network.
Keller believes most new Dogecoin miners come from Litecoin, as Dogecoin mining is no longer profitable – the reward for mining a new block has fallen to just $2.
However, Keller, a mobile app developer for Deutschebahn, isn’t about to abandon his role with Dogecoin any time soon. “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?” he told Coindesk.
Fellow developer Ross Nichol has also told the coin website he plans to take time off from his day job at blockchain consortium R3 to work on a Dogecoin upgrade.
‘Big plans ahead’
Another leading member of the Dogecoin community, who goes by the pen-name Good Shibe, said in a post on Reddit at the end of 2017 that big plans were afoot for the much-loved altcoin. “We are perfectly set up with the Year of the Doge,” he said. “We have a fantastic, loveable mascot and serious, tried and tested tech behind our coin.
“Dogecoin, because of its history as a hedge (everyone drops a few Bitcoin into Doge… just in case) is sitting here on a massive pile of money that a straight-up Bitcoin peg simply isn’t an effective vehicle to move. We’re also, easily, one of the most ubiquitous coins on the internet – there’s over 100 billion coins, scattered everywhere… We’re a safe bet, we’re not going anywhere.”
He added: “The thing people forget about a great joke is that there’s always someone who hasn’t yet heard it. A great joke lives and spreads forever.”
Affection and resilience
Other Reddit users commented that Dogecoin had been undervalued and was now catching up, with many coin-buyers still having great affection for it. Some see the fact that it has survived a major scam, and an earlier hacking heist, as a sign that it can survive the test of time.
“The fact that it has been stolen through hacking and has also been associated with scams and yet has survived is a demonstration of its resilience,” wrote Brianna Browning on GlobalCoinReport at the tail-end of 2017.
“The cryptocurrency still boasts of a price that is well within reach, meaning it can be bought in volumes and it can also move to a higher price range. This also highlights the fact that it has some potential for growth.”
She said investors from Asian countries such China, Japan and Korea were the biggest supporters and traders of Dogecoin. “It seems that having a dog meme as the cryptocurrency’s logo has paid off,” she added.
Dogecoin’s co-creator Jackson Palmer is more equivocal, however. In an interview with Cointelegraph in March 2018 he said the crypto world was “rapidly racing towards an over-saturation of cryptocurrencies, crypto-assets and tokens”.
“2018 is shaping up to be the ‘year of the fork’, and with each fork of the original Bitcoin code I feel like every other crypto-token is slightly dissolved.
“Even if just from a consumer perspective, it’s very confusing. Dogecoin is ultimately just another fork of the Bitcoin source code… anyone could fork that and ‘improve’ it tomorrow by further tweaking the variables – so I think its future is the same as every other distributed ledger out there… pretty uncertain, easily disrupted and definitely not in a unique advantageous position to succeed.”
Still, Dogecoin is now trading at three cents ($0.003031), compared with $.000226 at the beginning of January 2017, and ranks at 41st out of the top 100 cryptocurrencies – there’s life in the old doge yet.
As developer Nichol told Coindesk, cryptocurrencies are a bit “zombie-like”. “It’s very, very hard to kill a cryptocurrency,” he says.