THE Dogecoin is an altcoin, a cryptocurrency created as an alternative to Bitcoin, launched in December 2013 by two American software engineers: Billy Markus and Jackson Palmer. Among its main features is the fact that it was created based on the Litecoin protocol. Furthermore, Dogecoin is open source and uses the blockchain system, just like the other altcoins.
If you were using social media at the time of its launch, you probably already recognized where the name Dogecoin came from; after all, it originated from a hitherto popular meme called “Doge.” The meme on which this meme coin is based upon basically consisted of an image of a Japanese Shiba Inu dog, with English words misspelt in Comic Sans font. Do you remember seeing something like this?
By the way, did you know that Dogecoin was not the only cryptocurrency inspired by that same dog? There is also the Shiba Inu meme coin, which was released in August 2020.
The fact is that, as its name suggests, Dogecoin was essentially created for the purpose of lampooning the cryptocurrency market. Due to this tongue-in-cheek content behind its creation, the creators of the meme coin came under heavy criticism, and there are even some good reasons to think twice before investing in it.
When it was launched on the market at the end of 2013, the Dogecoin cryptocurrency was worth around R$0.0004 per unit. Now, in August 2021, it reached the value of R$1.50, an appreciation of approximately 375,000%.
Until now, the highest value reached by Dogecoin was around R$3.50 per unit.
Dogecoin Beyond The Meme
Despite the irony, which motivated the two creators of the meme coin, it ended up gaining a fan base, especially people who did not take the cryptocurrency market very seriously.
Its launch was successful, being valued at 300% two weeks after its availability – growth that, for many experts, can be easily justified due to the policy implemented by China to prevent banks in its territory from investing in cryptocurrencies, being an act of “rebellion” against this decision.
However, the animation was short-lived. Three days after this appreciation, the market value of this altcoin fell by 80%, especially since at that time it was possible to mine Dogecoin quite easily, without requiring powerful devices, such as Ethereum and Bitcoin. As a result, the reward mechanism had to be changed later, making it difficult to mine to prevent further gluts.
Also, in the same month of launch, the first big Dogecoin heist took place. The Dogecoin wallet – originally called Dogewallet – was invaded by hackers and users lost millions of altcoin units, which shows the lack of preparation of the platform to ensure the necessary security.
In addition to these incidents, another moment of crisis occurred in 2015, when Jackson Palmer left the cryptocurrency market because he no longer believed in the disruptive appeal that it brought to the financial market. In addition, in the same year, Billy Markus, one of the coin’s founders, also left the project, due to the “moral harassment” suffered by the community.
Currently, Dogecoin is mainly used on social networks like Reddit and Twitter, where people who browse these networks can give gifts to users and users who have produced good posts. Furthermore, this altcoin is rarely purchased by investors with the aim of profiting from cryptocurrencies, and we will cover the main reasons for this in a moment.
Dogecoin and Elon Musk: what is the relationship?
Since 2020, it is common to have the image of Dogecoin associated with the CEO of Tesla Motors, the South African-Canadian-American Elon Musk. This connection began with a simple tweet that said “one word: Doge.” With just this combination of three words, the CEO, already known for his extensive influence on investment trends in the most varied markets, contributed to the appreciation of the currency by approximately 20%.
This tweet was not the only one in the history of the CEO that contributed to the appreciation of Dogecoin at certain times. Other publications as simple as the first managed to promote a certain growth in the value of the units of this altcoin, without even having to give details about it.
However, like most investment trends that are followed without further analysis, Dogecoin is a cryptocurrency with drawbacks and risks that need to be considered.
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Risks and disadvantages of Dogecoin
If you have read a bit more about Bitcoin or other non-fiat currencies (currencies that are not centrally managed by governments or other financial entities), you know that most of them, including BTC, can only be issued up to a predetermined amount. . This limitation is the main feature that protects them from the effects of inflation.
Therefore, as a currency whose issuance of new tokens is unlimited, Dogecoin is susceptible to inflation. This means that it could see a drop in market value if a significant number of miners with suitable devices suddenly started mining it, as happened in the first few weeks of its release.
This unlimited mining also means that there is a very large amount of this cryptocurrency on the market, making it difficult for it to appreciate. For comparison purposes, just look at Bitcoin, which is limited to 21 million units. Currently, Dogecoin already exceeds 129 billion units. Therefore, its high offer and low value make it a good alternative for small online transactions, but an uninteresting investment.
Due to these issues, Dogecoin is not a recommended altcoin for those who tend to buy cryptocurrencies to profit from them. For this purpose, Bitcoin, for example, is a safer alternative with a higher return potential.
Now that you have read this far and have learned more about Dogecoin, take the opportunity to also consult our other content on the main cryptocurrencies in the market. It has a lot of analytical and explanatory content so that you can take full advantage of the possibilities offered by the largest cryptocurrencies.
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