Updated July 5, 2019 – If you’ve been paying attention to crypto news lately, then you might have heard some of the buzz surrounding Dogecoin. This cryptocurrency recently crossed a milestone in its coin price and it also has been listed by two major cryptocurrency exchanges, Huobi and just today Binance. For a cryptocurrency that began its life as a joke, this is certainly a remarkable achievement.
A little background
Dogecoin is a peer-to-peer open source cryptocurrency that falls into the “altcoins” category. It is a decentralized virtual currency that uses P2P technology to execute its operations. It draws from scrypt (i.e. a password key) and enables fast payments for anyone anywhere in the world.
Getting its name from a popular Internet meme, it was launched in 2013. Since its release, it has gone on to receive widespread acceptance for online transactions. It presents itself as something broadly deriving from the Litecoin protocol, which differentiates it from the well-known Bitcoin. This is because it utilizes script technology as a ‘proof-of-work’ (PoW) scheme.
An additional feature is its block time of 60 seconds with the difficulty retarget time being four hours. There is no limit to the distribution of Dogecoins, which means the supply of coins would be uncapped. It’s because of this that Dogecoin is an ‘inflationary’ coin, whereas most cryptocurrencies are ‘deflationary.’ The latter type of coin includes the likes of Bitcoin.
Rise to prominence
Not too long ago, Dogecoin experienced a significant achievement. While some took it to be a late April Fools prank, the announcement has proven to be legit. The limitless supply cryptocurrency that came into existence based on a meme has now hit a peak. It now historically ranges between 50 and 100 Satoshis per coin, often reaching as high as 200 to 300.
The use and trading of this currency stretch across various platforms, including. These platforms include gambling sites and payment processors, which also accept Bitcoin, Litecoin, and Ethereum. Something especially noteworthy is that Dogecoin is one of the oldest cryptocurrencies with an adequate hash rate that Coinbase does not offer for sale.
Huobi spoke of the currency’s achievement when they listed it. They said they are providing support for Dogecoin out of a desire to give their clients “high quality” trading options. There has been extensive speculation that the team was refraining from coming out with the news on April Fools day. Obviously, no one was going to take the announcement seriously; especially from a currency that exists because of a meme.
Right after Binance announced their listing of Dogecoin on July 5th, the crypto’s price surged 37%. According to a CoinDesk article, even Binance CEO “CZ” admitted there was not much development on the coin, but instead a huge and dedicated community.
While it is true that many still see Dogecoin as a joke, there’s no denying that it possesses impressive qualities. It preserves a high degree of liquidity and on a number of cryptocurrency trading platforms.
There are a number of people who speculate that Elon Musk was helpful in the coin’s price surge. In early April of this year, he had this to say on Twitter: “Dogecoin might be my fav cryptocurrency. It’s pretty cool.” In addition, he temporarily had “Dogecoin CEO” on his Twitter page. The tweet was a response to a remark made by the Dogecoin community. They collectively made a semi-joke about electing a CEO for their cryptocurrency. The event that led to this will be further explained later.
Following those statements was a significant rise in price for Dogecoin. Its crypto market capitalization rose by $70 million in less than an hour, effectively taking it up to more than $400 million.
Again, it’s difficult to tell if Musk’s sudden involvement is the sole reason behind Dogecoin’s popularity acceleration. Moreover, was it the deciding factor for Huobi to list it on their marketplace? That’s still up for debate. Decrypt writer, Adriana Hamacher, provides another potential reason:
“Another explanation could be the bitcoin bounce at the beginning of the week, and the subsequent boon nearly all cryptocurrencies enjoyed as a result.”
Regardless, Musk’s engagement was met with positive reception. Dogecoin developer, Ross Nicoll, says that:
“It was cool to have Elon take part in our little community and we would like to thank him for the, approximately 17 minutes he was CEO.”
Aside from Huobi, there are other exchanges that offer stablecoins pairs for Dogecoin. Stablecoins are a new class of cryptocurrencies that offer price stability and/or reserve assets are backing them. They are gaining traction in recent months as they aim to offer two notable things for users. One is cryptocurrencies’ instant processing abilities for secure payments. The other is fiat currencies’ volatility-free stable valuations. They essentially provide the best of both worlds.
These stablecoin pairs basically allow traders to visualize a fiat value for the crypto. Huobi Global (hbg.com) is the thirteenth largest crypto exchange by trading volume at the time of this writing.
Huobi.com was previously known as HBUS, the exclusive U.S. partner of Huobi.
Words from the creator
Dogecoin’s original creator, Jackson Palmer, attracted attention back in February for angering some crypto community members. He went on a bit of a rant about the viability of Bitcoin and comparing it to other network technologies. This includes the Internet as a whole. He spoke of them regarding investment, user base, and scaling.
In Twitter, he had this to say:
“It’s plainly dishonest to liken blockchain technology to the advent of the internet, which after 10 years had obvious product-market fit and user demand.”
Palmer later went on to explain his opinions further, however, his attempts only led to more discussions. Some disagree with Palmer on various grounds, primarily the use cases for Bitcoin.
From here, the situation snowballed to a point where community members were (jokingly) asking for a new CEO. Several famous individuals were put into a poll and people voted on who they want to be CEO. This is where Musk came into the picture, as he was one of the options. When he released those tweets, it only made the gossip increase. This would presumably cause a price surge for the coin, which is still pure speculation.
Dogecoin and beyond
There is certainly an ironic twist to the story of Dogecoin’s rise to prestige. What began as a currency whose creation was made on a whim has since become vastly popular in the crypto community. It currently ranks at #28 on the CoinMarketCap and various payment processors are actively accepting Dogecoin. With a quarter-billion of assets that are invested in its infrastructure, it appears that the joke is now on Palmer.