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.
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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.
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