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Cryptocurrency News Articles
Dogecoin (CRYPTO: DOGE) Has Minted a Lot of Millionaires Since Its Launch in December 2013
Oct 18, 2024 at 10:03 pm
The cryptocurrency was originally created as a parody of Bitcoin (CRYPTO: BTC) by two software engineers, Billy Markus and Jackson Palmer, and named after the viral "doge" meme, which features a Shiba Inu dog.
Dogecoin (CRYPTO: DOGE) has quickly become one of the most well-known cryptocurrencies in the world. It was created in 2013 by two software engineers, Billy Markus and Jackson Palmer, as a parody of Bitcoin (CRYPTO: BTC). The coin is named after the popular "doge" meme, which features a Shiba Inu dog.
Since its launch, Dogecoin has seen wild price fluctuations, largely driven by hype and social media attention. In 2021, it soared to an all-time high of $0.73 on May 8. This surge was fueled by a series of bullish endorsements from celebrities like Elon Musk, Mark Cuban, and Snoop Dogg, as well as increased interest from retail investors.
However, Dogecoin's price has since declined and is currently trading at about $0.12. The altcoin lost its luster as rising interest rates drove investors away from cryptocurrencies and other speculative investments.
Despite the price drop, a $10,000 investment in Dogecoin on the first day it was traded, Jan. 23, 2014, would still be worth nearly $779,000 today.
Here's a closer look at Dogecoin and some of the factors that could influence its price in the future.
The key differences between Dogecoin and other cryptocurrencies
Dogecoin was created from the open-source code for Litecoin (CRYPTO: LTC), a token that was forked from Bitcoin's blockchain in 2011. Like Bitcoin and Litecoin, Dogecoin is mined with the energy-intensive proof-of-work (PoW) consensus mechanism.
However, Dogecoin's developers subsequently launched a new hashing algorithm called Scrypt, which consumes less power and can process transactions at a faster rate than Bitcoin's own mining algorithm. This version of Dogecoin can quickly process retail transactions, perhaps making it a useful real-world payment tool someday, but at the cost of less robust data security. The upgrade attracted more attention from online supporters who call themselves the "Doge Army."
But unlike Bitcoin, which has a maximum supply of 21 million tokens, Dogecoin doesn't have an ultimate supply cap. There are currently 146.3 billion Dogecoins in circulation, and that supply is increasing by about 10,000 tokens per minute. This ballooning supply could make it difficult for Dogecoin ever to revisit its record highs.
As a PoW blockchain, Dogecoin doesn't natively support smart contracts, which are used in proof-of-stake (PoS) blockchains like Ethereum (CRYPTO: ETH) to develop decentralized apps (dApps), non-fungible tokens (NFTs), and other crypto assets. PoS blockchains also enable their investors to "stake" (or lock up) their tokens to earn interest-like rewards. Ethereum was previously a PoW blockchain, but it transitioned to the PoS mechanism in 2022 to reduce its energy consumption.
Dogecoin's lack of a developer foundation makes it a difficult token to value, but a handful of businesses -- including Tesla, Microsoft, and AMC -- have started to accept the token for payments. That support might eventually stabilize its price.
Coinbase launches futures trading for Dogecoin
Earlier this year, Coinbase Global (NASDAQ:COIN) launched new futures trading for Dogecoin. Those listings could pave the way toward Dogecoin future exchange-traded funds (ETFs) or even spot price ETFs in the distant future.
Another persistent rumor is that Dogecoin, like Ethereum, might migrate from the PoW to the PoS mechanism. If that happens, an influx of developers could set a firmer foundation under Dogecoin's price by tethering the token to new dApps. Dogecoin's investors could also reduce its volatility by staking their tokens. They could also finally set up new "burn portals" to take more tokens out of circulation and cap its supply. However, that could be a very difficult transition to pull off.
Ditching the PoW mechanism would also alienate its mining community, since PoS tokens can only be staked instead of mined. Declining interest rates might drive more investors back to Dogecoin, but bigger "blue chip" tokens like Bitcoin and Ether would also benefit from that rotation. In other words, it's still tough to see the long-term catalysts for Dogecoin.
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