Dogecoin Originally started as a meme in late 2013, it has suddenly gained a heavy following that has pumped its price to a serious market cap. This was least to be expected as Dogecoin has no use case other than value transfer, a typical blockchain application. With supporters like Elon Musk, entrepreneur Mark Cuban, WallStreetBets followers, and some social media influencers on TikTok, Dogecoin began to rise in value in 2021.
The coin or token is called dog is now (at the time of this writing) worth $ 0.50. Its overall worth has reached that of some of the largest multinationals in the world (here’s a Link to some companies). Dogecoin’s market cap even surpassed that of Ford and Twitter at some point. Before Elon Musk’s SNL appearance, the company hit over $ 80 billion in market cap (twice the amount of Twitter), and then it jumped when some DOGE owners left the market.
The biggest risk for anyone holding DOGE remains the price volatility typical of the cryptocurrency. It is also a Meme coin for the most part, that is not designed for specific purposes and is more likely to be used for pump-and-dump systems. It’s a market where prices can suddenly go up, but they can also go down so quickly. DOGE started increasing in January 2021 and has increased 12,000% to date (May 2021). As the price goes up, so does the creation of the coin, so there is an inflationary supply model. This keeps the price per coin relatively low due to the large supply in circulation.
Many financial analysts warn that it is a bad investment for most people as it is prone to pump-and-dump systems and has high circulating supply. Apart from these criticisms, Dogecoin corresponds to the basics of the cryptocurrency, just not the basics of the investment. You can use the Dogecoin network to transfer values and record transactions on a blockchain. Investing in this network is a different story, however.
Despite the good news about its value, there are some things that the average DOGE owner may not be aware of. As a cryptocurrency project, Dogecoin no longer has a full-time development team working on the software. Most of the developers are volunteers who maintain the code. The original founders, software engineers Billy Markus and Jackson Palmer, gave up Dogecoin long ago.
The red flag here is no major maintenance or further improvements being made to Dogecoin. A group of developers have taken over, but they are a small number compared to the development teams on other cryptocurrency projects. Maybe it can be about to change.
Let’s take a look at what makes Dogecoin useful. Although many laugh at it because it’s a meme coin, there are things that Dogecoin was designed for. The most important thing is that it supports peer-to-peer transactions like bitcoin. It was actually a fork of Litecoin based on the Bitcoin code base. Although it is a Litecoin fork, it differs in several ways. One of the main differences is that Dogecoin blocking time is 1 minute while Litecoin is 2.5 minutes. This speeds up Dogecoin transaction processing time significantly, even compared to Bitcoin’s 10 minutes.
Dogecoin uses the same cryptographic techniques as Litecoin. This is based on the Scrypt hashing algorithm used in Dogecoin’s own version of the PoW (Proof-of-Work) consensus mechanism. Scrypt is less resource intensive than the SHA256 used in Bitcoin, allowing miners to use non-ASIC devices for mining. A GPU can be used by miners, but there are also miners who prefer more expensive ASIC systems.
An ASIC has a big advantage over a GPU in terms of computing power. Since Dogecoin shares a legacy with Litecoin, miners who mine LTC can mine DOGE too. This uses a technique called merged mining or Auxiliary Proof-of-Work, with which several cryptocurrencies can be mined.
With a block spreading time of 1 minute, rewards of 10,000 DOGE are awarded for each block produced. This corresponds to 14.4 million DOGE per day or about 5.2 billion DOGE per year. A miner who successfully produces a block will receive 10,000 DOGE, which (as of this posting) is worth 1 DOGE = $ 0.50. This can be profitable for any miner who receives 10,000 DOGE for making a block. Like other PoW consensus mechanisms, Dogecoin also includes mining at this point in time Hashrate (computing power), Power consumption (energy consumption), and Difficulty target. The total circulating supply is 129.64 billion DOGE with a market capitalization of $ 62,685,528,736 ($ 0.4835 per DOGE).
The main criticism against Dogecoin would have to be the inflation rate. Although it was originally capped at 100 billion coins, 5 billion new coins have been added every year since 2015. It was a bug in the software that was never fixed so there is no hard and fast limit on what DOGE can deliver. That means that the offer just keeps growing. Unlike Bitcoin and Litecoin, which have limited supplies and cut block rewards in half, Dogecoin has not implemented such mechanisms on a regular basis to keep inflation in check. Dogecoin actually halved in 2015But the inflation problem really needs to be addressed.
Dogecoin can also be a kind of pyramid scheme where the previous investors can suddenly leave newcomers holding their pockets while the market is falling. This is quite common with such projects. It has even inspired new types of meme coins such as Shiba Inu and Safemoon. Investors are much younger, influenced by social media (e.g. TikTok), and drawn to the idea of just making money. If you view it as a fun and easy way to make money rather than a serious investment, then you understand that Dogecoin has very few basics.
One ridiculous observation by Dogecoin is the block reward of 10,000 DOGE. Now that number just seems too crazy to even think about, but it can make miners profitable. The question is whether this will be sustainable in the future when the network effect increases the number of users. We have to remember that Dogecoin has only appreciated in value recently and in contrast to the greater number of users and transactions on the Bitcoin network.
In order to keep the rewards for miners up, Dogecoin has to have more and more inflation, which means there are more pumps from people using FOMO. In addition, the money supply from sources of income generated through the use of the FOMO must be liquid in the network. This can be done through the introduction of DOGE as a payment currency by some companies and through DeFi protocols.
There are some Dogecoin supporters out there who believe this is a faster network for payments. This is because blocks are being generated every minute. Another argument in favor of Dogecoin is that it is more energy efficient and less harmful to the environment when mining. Dogecoin proponents say mining DOGE isn’t as energy-intensive as Bitcoin or other PoW cryptocurrencies. Doge uses a network hashrate of around 396.26 TH / s (average 150 TH / s), while Bitcoin is many times higher at 164.35 million TH / s (as of May 2021). The higher the hashrate in a network, the more energy is required to create a block. While the higher hashrate can be alarming, it actually serves a purpose on the Bitcoin network by providing security.
Dogecoin developers have been reported has been working with Elon Musk since 2019. Perhaps that’s why Musk became so fascinated with Dogecoin. Those who follow Crypto Twitter may have seen one too Tweet about that. This has become big news that has moved the markets. The developers who work with Elon Musk focus on the technical aspects of the cryptocurrency. There are many things that need improvement as Dogecoin is not a second generation blockchain based on Ethereum and has many use cases. Dogecoin remains just as rudimentary as Bitcoin in terms of development.
According to a Coindesk Items:
Dogecoin’s five-person development group is currently working on new versions, most notably Dogecoin version 1.21, which inherits aspects of Bitcoin Core 0.21 but still requires code redesign to fit into Dogecoin’s design.
This basically means that Dogecoin will follow Bitcoin step by step in the development process. The good thing is that they use software development best practices. Dogecoin may be a meme on the outside, but on the inside it is based on secure and stable code.
There are also concerns about the operation of the Dogecoin node. Since it became more popular, the number of nodes has increased to around 1,300. The problem is that many of the nodes are not configured correctly by their operators. According to a Dogecoin developer, these are nodes “Run with the default setting, which only allows outbound connections, not inbound connections.” The problem with this is the synchronization of nodes in the networks. Incoming connections must also be opened so that other nodes can communicate with each other. However, the configuration must be done correctly, otherwise cybersecurity threats may arise.
Flare Networks has also joined Development efforts for Dogecoin. This is done by integrating DOGE into Flare’s main network. This allows DOGE to be used with smart contracts. This opens up the use of DOGE in DeFi (Decentralized Finance) applications in the Ethereum blockchain network. Without integration, Dogecoin would not have much interoperability with other blockchains. Users would have to go to the digital exchange to switch between DOGE and other cryptocurrencies.
Adding new functionality to an old project would be the key to continuing to use it. It may seem like a meme alone has already increased Dogecoin adoption. Developers should be concerned about the security of Dogecoin’s wallet and network. All you have to do is one bad hack to erase the network’s worth. So this should be just as important as functions.
The main driving force behind Dogecoin has to be its community. A loyal base of owners who actually use and trade DOGE has developed. The reason it survived so long is because of the interest of its users. Online communities on Twitter and Reddit typically use DOGE to flip and trade articles. DOGE has also been used for peer-to-peer payments among people who just want to exchange value (no questions asked). Perhaps this is one of the main use cases for DOGE as a currency for fast digital payments that not many people can use.
In 2021, DOGE found others use cases. Mark Cuban, the Dallas Mavericks entrepreneur, has allowed payment by DOGE for team items and playing cards via BitPay. The crypto ATM operator CoinFlip has allowed the purchase of DOGE with cash. Elon Musk asked on Twitter if he should accept DOGE payments for Tesla. While Bitcoin continues to be strong as a digital gold supply and Ethereum is the payment processing layer, DOGE can potentially become the crypto equivalent of cash. Unlike cash, due to the transparency of the blockchain, users are pseudonymous and can still be tracked.
In the future, it may be necessary to develop new developments for Dogecoin to support Dogecoin’s growing popularity. It has outperformed established cryptocurrencies in market caps such as Bitcoin Cash and even Litecoin. This is because there is a community that believes in it. Many of these owners may not be here for the basics, but more out of greed for the money. If so, Dogecoin remains on shaky ground. What can help with this is the loyalty of the most persistent supporters and the development team’s new vision of where they want this project to be going. Like any system, Dogecoin can remain relevant as long as there is a community that continues to give it value. It would be up to the developers to ensure this.