Dogecoin is back in the news amid murmurs well known DOGE fan Elon Musk is looking to launch financial services to compete with traditional banks on X (formerly Twitter) next year. But what is dogecoin and why is this speculation so potentially important for the cryptocurrency?
What is dogecoin?
Musk suggested dogecoin would be useable for purchases on the Twitter platform - a move that saw dogecoin’s price spike more than 30% - when he acquired Twitter in 2022, but he’s not talked about the topic since.
The first thing to understand about dogecoin is that it was set up as a joke. It was invented in 2013 by a pair of software engineers, Billy Markus and Jackson Palmer.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
It’s called dogecoin because it was based on the popular “doge” internet meme. This features a picture of a particularly cute breed of Japanese dog – the Shiba Inu – looking baffled, and surrounded by multicoloured words with spelling mistakes.
The idea was to parody the whole concept of cryptocurrencies and to highlight how easy it was to launch one. Yet some argue that this in itself drew attention to the cryptocurrency, and thus gave it a staying power and traction that has escaped many “serious” rival cryptos.
So what is dogecoin actually for?
How does dogecoin work?
Unlike some cryptos, which have specific uses embedded in them, dogecoin is simply a digital currency, just like bitcoin. Unlike bitcoin however, which limits the total number of coins that can ever be mined to 21 million, dogecoin has no maximum.
So technically, there is no restriction on the quantity of dogecoins that can be mined. It’s also easier to mine dogecoin, though you would still need specialist equipment to do so now. All of this should imply that even if dogecoin does have a value, it should be a lot lower than bitcoin’s.
As for its inventors, neither works on dogecoin anymore. Markus has said that he sold all of his dogecoin in 2015. Apparently, he made enough to buy a second-hand Honda Civic.
-
Barclays warns of significant rise in social media investment scamsInvestment scam victims are losing an average £14k, with 61% of those falling for one over social media. Here's how to spot one and keep your money safe
-
Over a thousand savings accounts now offer inflation-busting rates – how long will they stick around?The rate of UK inflation slowed again in March, boosting the opportunity for savers to earn real returns on cash in the bank. But you will need to act fast to secure the best deals.
-
What is an investment trust?Videos “Active” investment funds come in two main varieties, one of which is investment trusts. But what exactly is an investment trust?
-
What is a dividend yield?Videos Learn what a dividend yield is and what it can tell investors about a company's plans to return profits to its investors.
-
High earners to pay nearly £2000 more in tax due to fiscal dragVideos The government froze tax thresholds, which will drag employees into higher tax bands as wages rise with inflation. We explain what fiscal drag is, and how to avoid it.
-
What is a deficit?Videos When we talk about government spending and the public finances, we often hear the word ‘deficit’ being used. But what is a deficit, and why does it matter?
-
Too embarrassed to ask: what is moral hazard?Videos The term “moral hazard” comes from the insurance industry in the 18th century. But what does it mean today?
-
Too embarrassed to ask: what is contagion?Videos Most of us probably know what “contagion” is in a biological sense. But it also crops up in financial markets. Here's what it means.
-
Too embarrassed to ask: what is a marginal tax rate?Videos Your marginal tax rate is simply the tax rate you pay on each extra pound of income you earn. Here's how that works.
-
Too embarrassed to ask: what is stagflation?Videos Traditionally, economists and central bankers worry about inflation or recession. But there is one thing worse than both: stagflation. Here's what it is
