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What’s Dogecoin? Why Is Everybody Talking About It?

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Dogecoin (DOGE) was initially launched in 2013 as a sarcastic play on mainstream cryptocurrencies like Bitcoin (BTC). Dogecoin—pronounced "dohj coin"—was inspired by a meme of a Shiba Inu dog, which is now reflected in its emblem and name. Dogecoin runs on its own blockchain using Litecoin (LTC) technology.

It’s purposely ubiquitous in contrast to BTC, which its founder Satoshi Nakamoto created to be scarce to give it a store of value. On the other hand, Dogecoin is practically unlimited in supply, and 10,000 new coins are produced per minute.

However, Dogecoin's status as a "worthless" cryptocurrency took a surprise turn in 2021—its value skyrocketed, putting it in the world's top cryptocurrencies by market capitalization. Despite each coin having a value of less than a penny, its abundant supply saw it cross a valuation of $50 billion. At the time of writing, Dogecoin's market cap is roughly $8.2 billion.

But how did it happen? Since Dogecoin's growing global circulation is virtually infinite, there are currently 133 billion coins. When each coin's value is multiplied by the number of coins in circulation—which is how crypto market cap is calculated—the overall market value can become quite large.

For most of its history, the crypto community viewed Dogecoin as a joke, a funny "meme coin" that existed in good humor but carried little-to-no value. However, this humorous take on digital currencies has attracted a passionate online community that has drawn the attention of billionaires like Elon Musk and sponsored Olympic teams.

But before we discuss Dogecoin’s influential ties, we must first understand what a meme coin is and whether it has any practical use in the real world.

What are meme coins?

Meme coins are a virtual currency type that draws inspiration from memes, which are humorous concepts recorded in pictures or videos. Some meme coins are created as a homage to certain memes. Dogecoin is one of the world's most popular meme coins.

Software engineers Billy Markus and Jackson Palmer, the creators of Dogecoin, never intended Dogecoin to be used in any practical way. Ironically, meme coins exist to fit that exact description.

Meme coins have very little utility and lack technical innovation by design. Like the memes they draw inspiration from, the primary purpose of a meme coin is to go viral on the internet. This widespread virality is where they draw most of their value from. Since their popularity and success are based on their viral status on any given day, meme coins are highly volatile—even more so than mainstream cryptocurrencies like Ethereum (ETH), BNB, and Solana (SOL).

Besides their lack of utility and abundant circulating supply, meme coins function like any other cryptocurrency.

Dogecoin’s celebrity influences

Dogecoin has links with several celebrities who have shown their support to endorse the meme coin. Elon Musk, Mark Cuban, and Snoop Dogg are just some celebrities who’ve had a tremendous influence on Dogecoin’s market performance.

Elon Musk’s Saturday Night Live monologue saw him make jokes about Dogecoin, which led to the cryptocurrency’s sudden increase in value. However, a short while after trending online, Dogecoin’s value fell just as quickly. This makes Dogecoin (and meme coins generally) a precarious investment.

Musk tweets about Dogecoin occasionally, leading to its rise and fall depending on Musk’s opinion at the time. His automotive company, Tesla, also accepts Dogecoin as a form of payment.

Dogecoin uses

As a meme coin, Dogecoin is only intended for trading and isn't built to be used as a utility token. Dogecoin is prone to abrupt fluctuations in value as the prevailing hype around it determines its price. This also depends on the actions and words of celebrities and social media influencers. As a result, Dogecoin's value is often relatively low.

However, this isn’t specific to Dogecoin. Most meme coins aren't practical for real-world usage. Instead, you can invest in Dogecoin and sell it when the price is high. That said, Dogecoin is accepted as a form of payment at more than 2,000 locations. You can also use Dogecoin to buy various products and services, such as luxury vehicles or vacation packages. You can even exchange your coins for prepaid Mastercard cards.

The rise of Dogecoin

For all its intention as a meme-inspired cryptocurrency, Dogecoin has a few inspiring stories from all over the world.

The Jamaican bobsled team and the Winter Olympics

In 2014, a community of supporters raised more than 26 million DOGE, helping the Jamaican bobsleigh team travel and participate in the Winter Olympics in Sochi. Winston Watt and Marvin Dixon were the pair who drove the sled. When news broke that Jamaica had qualified, Watt admitted that they didn't have enough funding to travel to Russia. As a result, Watt started a public PayPal account to raise the required $40,000.

The campaign quickly raked in a little more than 26 million DOGE. In fact, there were so many donors that it appeared to increase the currency's value; in just 12 hours, the DOGE-BTC exchange rate increased 50%.

Kenya’s water crisis

To gather funds for the construction of water wells, the Dogecoin Foundation—a nonprofit organization established by the creators of Dogecoin—revealed they’ll host a fundraiser for Kenya’s water crisis in 2014. The fundraiser, Doge4Water, aimed to collect $50,000 to celebrate World Water Day to help the rural areas in eastern Kenya. The fundraiser managed to amass a total of $31,996.

Dogecoin in space

Shortly after his appearance on Saturday Night Live in 2021, Elon Musk announced that his company SpaceX would launch a Falcon 9 rocket in collaboration with Geometric Energy Corp. Musk dubbed the rocket “Doge-1” and revealed that the entire mission would be paid for in Dogecoin and is expected to launch in December 2022. The project would cost around 129 million DOGE, or $62 million. Musk tweeted that the project would allow Dogecoin to be the first meme and the first cryptocurrency in space.

Is Dogecoin a scam?

Dogecoin has been a target of past scam attempts in the crypto community. However, the cryptocurrency itself isn’t a scam. It started as a joke and earned the title of a “meme coin.” However, it functions just like any other cryptocurrency and has amassed an enthusiastic Dogecoin community.

Despite its large market cap, Dogecoin is still an extremely risky digital asset. Its value is proportional to its online hype and heavily depends on celebrities endorsing it. As a result, you should be careful with your investment practices if you decide to purchase DOGE. Other cryptocurrencies and investments have value built on more tangible fundamentals. Who’s to say if people still care about DOGE 10 years from now?

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