The Shiba Inu-themed crypto has risen more than 6,500% over the past year. But what exactly is Dogecoin? Knowing what Dogecoin actually is and if it’s an investment that is safe is to comprehend why cryptocurrency was created at all in the beginning. It started with Bitcoin.
Also Read: Facts About Litecoin | World’s Leading Cryptocurrency!
Facts About Dogecoin
- Dogecoin is a cryptocurrency developed to mock the cryptocurrency market following the fact that thousands of altcoins were created in response to Bitcoin.
- The creator of the cryptocurrency, Billy Markus Billy Markus, stated that “The first idea was to be an attempt to mock all the serious counterfeit coins trying to differentiate their own, yet all appeared identical.”
- The name and image depicted on the coin come from the famous meme that features the Shiba Inu dog.
- Dogecoin was created by utilizing the code of Litecoin that was a fork from the Bitcoin blockchain.
- Dogecoin has garnered a huge amount of online attention, with some calling for it to hit $1.00.
- The coin has a massive amount of more than 130 billion tokens. There are more than 144,000 new tokens being created each day.
Also Read: Facts About Litecoin | World’s Leading Cryptocurrency!
Understanding the fundamental ethos that prompted the cryptocurrency movement and the solutions it is attempting to offer our society are two things you should be aware of prior to investing in any cryptocurrency asset. If you’re looking for pure speculation and are willing to take the risk that Dogecoin is a good choice suitable for you. However, If you’re looking to learn the true motivation behind cryptocurrency, you might think about other options.
Bitcoin is a method to opt-out of the Bank Infrastructure.
Bitcoin began to emerge after the 2008 financial crisis and, though several attempts at digital currency and e-cash were made prior to it, its story began in the aftermath of the 2008 financial crisis.
In 2008, retirement accounts were flushed away as banks took on exceptionally large amounts of risk through the use of mortgage-backed securities and rehypothecation of collateral, building an unsustainable house of cards.
It became clear that banks were not carrying enough cash to cover their bets that were going to go south The positive outlook on the market waned. Investors began to panic and sell their portfolios. People who were approaching their retirement age and didn’t have the time to hang for a recovery in the economy had lost decades’ worth of savings for retirement funds.
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It was clear that someone or something had stopped the slides and to board up the sinking vessel. What was the solution? The narrative began to surround the banks regarding their “too large to fail” nature. However, the reality is that this was not the case. The economy was constructed with straw, and the bank’s practices of derivatives and derivatives sank like dominoes till the straw house fell apart. If more banks fail, the global economy will continue falling.
The solution? Government intervention in a free market and capitalist economy. The only way to stop the economic bleeding was to rescue the banks using taxpayer cash. That’s right. Taxpayers paid the price for the mistakes the banks made.
According to a study of bailouts carried out throughout the United States by Deborah J. Lucas, a MIT Sloan distinguished professor of finance, the people who gained from bailouts were institutions, not the individuals.
“As to who directly benefited, Lucas found that the most notable winners were the huge creditors who were unsecured of the largest financial institutions. Although their identities aren’t disclosed, the majority will likely to be large institutional investors like banks pension and mutual insurance companies, funds along with sovereigns.”
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The purchasing power and value of the dollar have since decreased due to the extra money pumped into the market by this kind of quantitative easing, particularly after the recent stimulus that followed in the wake of the pandemic.
M2 Money Stock
Although the dramatic increase in the amount of money available can increase the value of stocks, prices of goods, real estate, and services reduce the buying power and distances a dollar could travel. People who earn the same amount of money each year or who live pay-to-pay can be depressed by the rising cost of goods and services they used to pay for.
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Bitcoin’s solution to the problem
This is the point at which Bitcoin is a key element. Bitcoin was designed to offer solutions to a number of philosophical and technical questions that the society was faced with concerning how we utilize money.
Who is the one who controls money in the first place? Who determines the quantity of money, or whether the supply should be increased? Is a central authority in a position to create inflation via creating money or interest rates? Who decides who is able to access financial products such as brokerage and bank accounts? Who decides on where people are allowed to spend and make use of their money? Why can’t our money be more efficient?
The belief was always that the central banks handle these issues.
Bitcoin chose a different route. With Bitcoin the concerns raised above will all be addressed by the group of users. It is a currency created by the people and controlled by the people, with no central point of control.
Bitcoin intended to give the ability to make money and autonomy available to all who desired access to the internet, whether for good or better or for worse. Many have debated the transparent characteristics of Bitcoin and the possibility of its use in illegal ways However, it is possible to claim that the freedom, security and overall benefits it could offer our society exceed its negative usage cases.
Concerning supply it was determined that the amount of Bitcoin will be restricted to ensure that its buying capacity would not decrease just like dollars do. In time, the members of the network increased significantly growing more powerful. Today, it is an international community of users and is controlled by the users, not any other bank or government.
In the very beginning block in the chain the following text, “The Times Jan/03/2009 Chancellor at the brink of another bailout for banks” refers to an article concerning the second bailout of economics to banks in England during the recession of 2009.
What is Dogecoin?
Dogecoin was created out of the doge meme’s fame and the crypto movement during a period when cryptocurrency was gradually gaining momentum in 2013.
It was developed by utilizing software that is open source from Litecoin and other projects with some modifications. It’s like Litecoin, except that it doesn’t have a limit on supply. In reality, Dogecoin miners earn 10,000 Doge per block, and blocks are created each minute. This means that 14,400,000 new tokens pour in the pockets of miners every day or are traded on the market.
In an interview with Insider, in a recent interview with Insider Dogecoin’s co-creator Billy Markus, said that “The first idea was to be an attempt to mock all the serious replica coins that were trying to differentiate their own, yet all appeared identical. Dogecoin was a duplicate coin, but it was simply Dogecoin instead of being taken seriously.”
It’s essential to remember this. One of the Bitcoin’s major objectives and features was to prevent the increase in prices and dwindling purchasing power associated with the dollar and develop an alternative system in which that is not the case.
The majority of Bitcoin’s value comes from its low supply and limited supply. The supply of Dogecoin is literally infinite. In the present market the miners of Dogecoin are making money due to speculation and memes. has increased its value to unimaginable levels. A miner or a pool of miners could get 10,000 Doge from solving the problem of a block.
Another thing to think about is decentralization. Decentralization is the reason that makes Bitcoin the security it has. This is the reason why Bitcoin works as a currency controlled by the community that is its user.
The number of its nodes can partly assess the degree of decentralization of a currency. Although other variables affect this such as miner distribution I will use the node count to evaluate how decentralized Dogecoin and Bitcoin since I was able to find very little or no information regarding the distribution of Dogecoin’s miners.
According to Blockchain, Dogecoin only has 1090 nodes based on Block Explorer. With this low number of nodes, it means it is more vulnerable to an attack of 51% where one person or group has control over more than half in the entire network and has control over the network.
By contrast, Bitcoin has nearly 10,000 accessible nodes spread across the world in 97 countries. If a similar attack was to occur in conjunction with Dogecoin it could put users on the verge of losing their entire value.
Very few own the majority of the Stock
A further issue with Dogecoin is that few wallets hold the vast majority of the supply. This allows a handful of users to exert the ability to control price fluctuations because they could significantly impact the market’s liquidity.
At present, 0.002% of Dogecoin wallets hold around 2/3 of the coin’s total supply. Comparatively to Dogecoin’s, Bitcoin’s wallet sizes are remarkably uniformly spread. According to a study by Glassnode, Wallets holding one Bitocin or less have around five percent of the total supply of Bitcoin. Wallets holding 10-50 Bitcoin hold almost 9% of the total supply , and wallets holding 500 to 1000 Bitcoin have 6.6 percent of the total quantity.
What is the reason Dogecoin Pumping when it has Nothing to do with the Fundamental Value?
If Dogecoin’s supply is growing so fast, how come its price keeps increasing? The answer can be attributed to a variety of market trends.
The primary reason is because of inflation and stimulus. In February of the year 2020, there was $15.4 trillion in dollars that were in the country’s economy. Following the various stimulus programs this has increased to close to $20 trillion. The prices of stocks, real estate prices, commodities, and much more have all increased due to the flood of money.
Another reason that Dogecoin’s growth has been helped by the increasing use of finance applications, such as Robinhood and Robinhood, among younger generations. The ability to trade and invest has never been more accessible. The majority of large brokerage firms reduced their commission fees and minimum account requirements to zero in 2019 making trading and investing available to anyone who is 18 or over using a smartphone.
With the ease of access for younger audiences, a brand new kind of culture has emerged and was spotted through Reddit and other platforms, which are more focused on humor than on making sound investment choices. The subreddit on the Reddit called r/dogecoin appears to expand in line with the popular subreddit r/wallstreetbets that, which is famous for its thematic posts and controversial trading.