As of January 2022, Dogecoin is one of the top 12 cryptocurrencies by market capitalisation - not bad for a coin that was initially meant to be fun based on a popular meme! But what is Dogecoin? Dogecoin is classified as an altcoin, meaning it is a coin that is not a bitcoin. It is similar to other cryptocurrencies in that it runs on a blockchain and its price can fluctuate.
However, unlike other cryptocurrencies, such as bitcoin, there is no limit to the number of Dogecoins that can theoretically exist. And according to one of its inventors, it is backed by a "carefree and inclusive" community. But where did Dogecoin come from and what exactly is it?
Let's start with Dogecoin's origin story. Dogecoin has been around for quite a while. It was invented in 2013 by two software engineers, Billy Marcus and Jackson Palmer, who actually intended it as a joke. They combined two of the hottest trends of the year - Bitcoin and the "Doge" meme, which depicts a Shiba Inu dog - and turned it into a new cryptocurrency. Marcus and Jackson wanted a coin that was accessible to the general public, so they created it with open-source software through which anyone could view their source code.
From these humble beginnings, the coin has gradually grown into one of the most well-known cryptocurrencies. Tweets from one of its best-known followers, Elon Musk, led to the Dogecoin price rising sharply in early 2021. And in December 2021, Musk announced that his company, Tesla, would even accept Dogecoin as payment for some goods. This was the beginning of the coin's transformation from a "joke" to a major cryptocurrency.
Dogecoin is a blockchain-based cryptocurrency with a pretty good pedigree. Dogecoin is a so-called fork of Luckycoin - i.e. it is a new cryptocurrency that was forked (or split off) from Litecoin, which in turn is a fork of Bitcoin. Dogecoin's roots thus essentially go all the way back to Bitcoin, yet it is not the same coin.
Dogecoin runs on a process called "Auxiliary Proof-of-Work". This means that crypto miners can work on certain other proof-of-work cryptocurrencies, most notably Litecoin, and mine Dogecoin at the same time, at no extra cost. In the Dogecoin system, just as in other proof-of-work coin systems, miners compete with each other to see who can solve complex mathematical problems to validate transactions the fastest and thus earn coins. For each Dogecoin block miners mine, they earn 10,000 Dogecoins.