Even those who are not familiar with cryptocurrency probably recognize the famous mascot of Dogecoin. The Internet-famous Shiba Inu dog which became focal point of the Doge meme also became the face of this curious digital token. It was all supposed to be a joke until Dogecoin achieved a huge market capitalization and remains heavily traded on the most popular cryptocurrency exchanges.
The History of Dogecoin
Programmer Billy Markus always considered cryptocurrency to be an oddity. The Portland programmer had followed Bitcoin from its launch. Markus believed that digital tokens faced a hard battle to achieve legitimacy as a means of exchange. To prove it, he decided to create his own cryptocurrency as a joke. Dogecoin was officially born on December 6, 2013.
Markus wanted to create a token that was cool and fun to own. His initial hopes was that he would reach a broader demographic than Bitcoin, which was still being embraced mostly by tech nerds and those who were looking for anonymous way to transfer funds. Markus found a partner in Jackson Palmer, a marketing professional for Adobe Systems who was based in Australia. Palmer was enlisted to oversee the marketing campaign to promote the launch of Dogecoin.
The token begun to be mentioned on Twitter long before it was released. In truth, the developers didn’t even obtain the Dogecoin domain until long after people were talking it up on social media. The two developers decided to move forward by adopting Luckycoin as a model. The hallmark of Luckycoin was that miners received a random award for mining a block of the currency. Luckycoin took its inspiration from Litecoin, giving the Dogecoin developers a decent pedigree in terms of their new blockchain.
It was determined that 100 billion Dogecoin tokens would be created. This was later changed to an infinite number, further evidence that Markus and Palmer had little faith that their token project would be taken seriously. It seems that they were really hoping to use Dogecoin to prove that the ease with which digital tokens could be created would render them worthless. That strategy backfired in a huge way.
Just thirteen days after its launch, on December 19, 2013, the token jumped 300% in value. Billions of the tokens were being traded on cryptocurrency exchanges. There was a subsequent crash in the early days which wiped out 80% of the token’s gains, but it was soon back on the rise. What is amazing is that this increase in value was occurring while other cryptocurrencies were in decline. Bitcoin and other tokens were rocked by the Chinese government prohibiting Chinese banks from investing in cryptocurrency.
Dogecoin Gets Hacked
Markus and Palmer were about to get a hard lesson in just how “real” digital tokens are in the eyes of those who hold them. On Christmas day in 2013, less than a month after the official launch, hackers targeted Dogewallet, an online-based cryptocurrency wallet where individuals were able to store their tokens. Millions of tokens were stolen, leaving those who invested in the token wringing their hands in fury.
The hackers were able to access the filesystem of the Dogecoin platform and alter the method in which coins were sent and received. All the tokens were then sent to a static address. It was a blow that most digital tokens would never be able to overcome, but the event only served to increase Dogecoin’s popularity on social media. Within hours the token became the top trend on Twitter, even though the majority of posts were negative in nature.
It was then that Markus and Palmer decided to implement a unique form of damage control. The developers decided to market Dogecoin to audiences that had little or no previous knowledge of cryptocurrency.
Dogecoin Goes to the Olympics and NASCAR
In January of 2014, still reeling from the recent hack on its wallet, Dogecoin took another strange step in its odd trip to the top of the cryptocurrency markets. Markus and Palmer decided to use the token to raise money for an Olympic team. In less than 24 hours the team had raised $36,000 of its $50,000 goal in Dogecoin tokens. The recipients? The Jamaican Bobsled Team. Surely those who didn’t get the joke would get it now.
But it wasn’t a joke. As a result of the stunt, the value of Dogecoin began to shoot up on the cryptocurrency exchanges. An immediate increase of 50% was realized by investors, and the token was off to the races. Other, more serious fundraisers would soon follow. Among them was a project which brought fresh water to residents of Kenya.
In March of 2014 the developers decided they wanted to embark upon more fundraising. This time the goal was to sponsor a race car driven by Josh Wise on the NASCAR circuit. Few people thought this effort had any chance of succeeding, but 67.8 million Dogecoins were devoted to the effort, and Wise debuted the new Dogecoin car at Talladega Superspeedway on May 4th, 2014. Wise could only finish in 20th place, but it didn’t matter. For almost a minute the car was featured on national television while the race commentators talked about cryptocurrency. The move was a brilliant advertising ploy, and the value of the token spiked again.
Trading and Using Dogecoin
Even though it may have started as a joke, investors are laughing anymore. Dogecoin has become one of the most heavily traded digital tokens, achieving an unbelievable market cap and trading volume that has made mainstream news headlines.
In January of 2018, the joke became a little too real for Dogecoin creator Jackson Palmer. In an interview with Coindesk, Palmer expressed concerns that a token started as a joke could achieve a $1 billion market capitalization.
Palmer stated that a digital token which had not had its software updated in two years and featured a dog as its mascot was not necessarily a good indicator for the legitimacy of digital tokens. He went on to add that he believed the token’s development team was taking the necessary measures to keep the platform secure, but his apprehension as an investor was evident.
Regardless of the creators’ intentions when creating this coin, investors have found unique ways to use the token. It has even been used to try and sell a house. Reddit members often trade the coin among themselves for real goods and services. It has also been accepted by websites for online gambling and porn.
What Can We Learn From Dogecoin?
There are some important lessons that can be gleaned from the success of Dogecoin. Some are positive and some are concerning. All of them should serve as guideposts to developers of cryptocurrency in the future.
Dogecoin has taught us that cryptocurrency is no laughing matter. Traditional investors like Warren Buffet can try to pooh-pooh away the concept of digital tokens as much as they want, but those who use cryptocurrency aren’t listening. They are finding ways to make money off the tokens through trading, and they are using them to complete exchanges of real-world goods.
On the negative side, the ease with which a joke token rose to the top of the cryptocurrency world has some concerned that digital token releases are ripe for fraud. This has led to Google and Facebook putting bans on ICO advertisements.
No one can truly predict what the future holds for cryptocurrency, but what all must agree on is the idea that blockchain technology has forever changed how people think about economic scenarios.