A gold coin reminiscent of old 8-bit video games. A shiba inu dog with a void expression on his face. Comic Sans.
A visually comedic appearance is one of many things that makes Dogecoin, the cryptocurrency central to many-a Elon Musk tweet, stand out. The coin named after the classic meme is currently experiencing a surge into mainstream popularity through an abundance of prominent supporters, but it is far from a new phenomenon.
But what exactly is Dogecoin, where does it come from, and why is it quickly turning into the most popular cryptocurrency on the market?
A brief history
Like most good things in life, Dogecoin started out as nothing more but a joke. One night in late 2013, Jackson Palmer of Adobe, observant of the recent emergence of crypto alternatives to bitcoin – many of which have creative names such as Megacoin or AnonCoin – decided to make a simple joke that would kick off the bizarre development of this currency: ‘investing in Dogecoin, pretty sure it’s the next big thing’. Friends inquired and asked him to make it a reality, so he did.
Now, you might ask, what in the world is a Doge and why is it so funny? Well, if you somehow managed to avoid the internet completely in 2013, that is a valid question. If not, you will likely be able to instantly recognize the now iconic picture of a Japanese Shiba Inu that will pop up on your screen if you simply google ‘Doge’. The internet meme emerged in the first half of the decade, but its long-lasting legacy is still felt in ironic posts and the world of finance.
At the time, IBM’s Billy Markus was working on developing his own cryptocurrency himself, though less successfully. Upon stumbling across the first website for Dogecoin that Palmer had created, Markus felt compelled to reach out and make the wild idea a reality.
Since then, the famed Shiba Inu has brought the value of this altcoin to its current position as the fourth most valuable cryptocurrency on the market, at a Market cap of $70 million – higher than companies such as Nintendo, BMW and Adidas (as of May 2021) -, having surged past the 50-cent-threshold in April.
More than a currency
What makes Dogecoin really stand out from other cryptocurrencies, and allow it to surge beyond the limitations of most altcoins is its image and cheap, meme-oriented aesthetic.
The use of the currency is as viral as any real meme; and the possession of Dogecoin is – despite it evolving into a very real cryptocurrency – almost still a joke. Yes, it serves its purpose – but its also an investment with a distinct and extremely unique visual identity and history compared to its counterparts.
And beyond that – Dogecoin has built a community. What you have here, essentially, is a product that not only has the upside of regular investments, but also provides inspiration for content creation. User-generated content is a catalyst of social engagement, and observing the cohesion and togetherness of Dogecoin can provide insight into what sort of real life implications this can have.
For example, Dogecoin has a reputation for fundraising. Most notably, a NASCAR sponsorship and the support for the Jamaican bobsled team unable to attend the Winter Olympics in Sochi out of financial reasons have made positive headlines for this community.
But also in the sector of more direct social impact, this community has managed to come together to bring positive change: around March 2014, the project Doge4Water has managed to raise 40 Million Doge – or $50,000 – for clean water in Kenya.
It helps that the group has grown to include some extremely prominent members: most notably, Elon Musk, self-proclaimed Dogefather and famed CEO of Tesla, SpaceX, and god knows how many other ventures, has expressed his active interest in Dogecoin many times on Twitter, leading to repeated surges as well as drops in the currency’s value.
Most recently, Musk announced that SpaceX will be launching a space mission paid entirely by Dogecoin to the moon next year, fittingly named DOGE-1.
Mark Cuban, Shark Tank Shark and owner of the Dallas Mavericks, has taken the biggest step towards Dogecoin mainstreamization to date by introducing payment via Doge for both ticket sales and merchandise of the Mavs, after previously doing the same for Bitcoin and Ethereum.
The consequences of crypto
Among these clear signs of progress it is worth pointing out the other side of this particular type of coin: Doge is another in a long line of altcoins operating on its own blockchain; and another one that through its incentives encourages mining for profit.
Not only does mining inflate the value of any cryptocurrency, it can also cause immense environmental damage through the burning of energy when creating bitcoins, while providing no societal value other than allowing for the rich to get richer.
The process in which cryptominers consume such energy sees them adding to the global blockchain by updating it with their own ledgers filled with bitcoin transactions, for which it is required to solve complex mathematical equations – the solutions of which have been dubbed hash. Since the crypto incentive is only rewarded to miners that are able to arrive to this solution quicker than others, the ‘hashrate’, or number of hashes produced in a second, is often increased by setting up large facilities full of computers. These are massive consumers of energy.
According to a report by the University of Cambridge, Bitcoin mining, for example, consumed more energy than Google, Facebook, and some countries such as Bangladesh, a country with a population of over 160 Million. If it were a nation, it would rank 27th globally among the world’s most energy-consuming countries.
The use of renewable energy for crypto mining is becoming more frequent, but not sufficient the report by the University of Cambridge states that renewables account for less than 40% of energy consumption in cryptomining.
This dark side of cryptocurrencies needs to be considered and eventually regulated in a responsible manner that benefits humankind, rather than actively damaging it.
One can only hope that emerging currencies such as Doge as well as Bitcoin and other powerful altcoins adopt sustainable energy in their mining processes as quickly as possible.
Dogecoin is a light-hearted variant of an increasingly popular investment opportunity, but it offers a lot more: it is an opportunity, an alternative to the mainstream, it is comedy within finance, a joke that completely blew out of proportion. It is a possible danger to the environment, and it is the anchor of a community willing to help out when needed. Simply, it is Doge.