Will Dogecoin succeed, in that will Dogecoin be worth anything after the ‘meme-fad’ passes away? To answer this question, we have to take a look at what gives crypto-currencies value in the first place, and decide if Dogecoin can indeed be valuable someday, based on what it brings to the table.
On the surface, Dogecoin is just another altcoin that is a litecoin clone. There was no premining. I wouldn’t talk about desirability, but some of the interesting features of Dogecoin include –
- About 34% of the total Dogecoin supply has already been mined as of today.
- It will take about 1.5 years to completely mine all the Dogecoin supply.
- There will be 100 billion Dogecoins in existence when it is completely mined out.
- Block time (to get 1 confirmation of a transaction or time to commit one new block to the network) is 1 minute.
Again, there is nothing unusual about any of the technical specifications here. There are many altcoins with no premine. There are lots of altcoins with very high number of units (infinitecoin) designed to be rapidly mined out (quark) or have very fast confirmation times (fastcoin). However, it seems like Dogecoin and the community just took off for a number of reasons. Also, it is very important to note that a lot of altcoins also ‘took off’ for a small amount of time, only to crash back down. Irrespective of its market value, Dogecoin doesn’t show the characteristics of pump and dump altcoins.
It is important to ask – what makes a crypto-currency succeed? I would argue – the network and community using the crypto-currency. The whole space is very new and niche. Value is derived from people using and trading things of value, mostly over the internet. Dogecoin has caught the imagination of the people and press and is leveraging this to form something promising. The network hash rate of Dogecoin has exceeded that of Litecoin! The small miners enjoy mining Dogecoin.
Here are some things that Dogecoin showed possible and then made possible –
- The Dogecoin community capitalized quickly on the initial wave of popularity. This means building more lasting infrastructure around this coin.
- Number of coins at 100 billion definitely contributed to the psychology of owning ‘a few’ coins instead of 0.0000x coins.
- Dogecoin became the de-facto tipping coin on the internet, being used even more than Bitcoin. Remember, even though Bitcoin promises to facilitate micro-transactions, the transaction fees can be fairly high (0.0001 BTC is about 8 cents). Tipping bots were created around this coin that help it spread.
- Exchanges were quick to include Dogecoin so they could start raking in the fees. Almost every altcoin exchange I know of trades Dogecoin today.
- People were happy to create experimental services around the coin.
- Reddit community really took off.
- No previous ‘philosophical baggage’ – Dogecoin just started as a joke and kept things in a lighter vein. No plans to overthrow central governments from most people in the community.
These types of successes are hard to predict in foresight but very interesting to study in hindsight. Dogecoin did many things right. The Reddit Dogecoin community is super-active and tries to do a lot of good, such as raising over $30,000 for the Jamaican Bobsled team in the Sochi winter olympics. The qualitative ‘feel’ of the Bitcoin and Dogecoin communities couldn’t be more different.
Also, a lot of people are holding out and asking for whether Dogecoin will reach $1. This is hard to answer because it depends on the whole future of crypto-currencies. However, let me tell you this – it is highly unlikely that with Bitcoin at around $1000, Dogecoin will reach $1. Bitcoin at $1000 gives Bitcoin a market value of about $12 billion. Dogecoin at $1 would give it a market value of about $40 billion. I don’t see Dogecoin becoming that valuable with respect to Bitcoin. However, if Bitcoin were to go up exponentially and reach a high market cap with respect to the dollar, there’s every chance that crypto-currencies like Dogecoin will have a market value in billions and indeed, Dogecoin might just even reach $1.
If you want to buy Dogecoin, please read my full guide on how to buy Dogecoin.
What are your reasons to buy into Dogecoin?
Great article the only flaw in your theory is the bitcoin marketcap. You have to understand that doge will have its own. I predict by December or sooner at this rate. All coins are measured under yes but dogecoin isn’t other coins, its path will be separate.
Thanks for your comment. Unfortunately, I have to humbly disagree. I have been in this space long enough to realize that crypto-currencies rise and fall together, on an average. The fate of Doge, like it or not, is intricately tied to Bitcoin, at least for the near future. I am not disputing the fact that Dogecoin can carve out a niche of its own and become a dominant force in areas where Bitcoin will lag (forum tipping, for example). That being said, I highly doubt it would increase in market value beyond Bitcoin.
I guess time will tell 🙂 still a great article I’ve been in the cryptocurrency world since 2011 I just see this as a completely different ballgame. I hold 200 btc and see it as an investment not a currency like dogecoin is.
That’s actually a very good point. Come to think of it, Dogecoin could probably occupy the space of transactional currency and Bitcoin the space of store of value. I guess it also depends on the infrastructure that’s built around the currency. You’re right, time will tell. I would be more than happy to correct my hypothesis if things change, come December 🙂
To me, dogecoin is a “gateway drug” for other altcoins. While most are fearful of Bitcon and it’s high value, lots of the young tech-savvy demographic (target audience) are finding community and support for dogecoin, which in turn leads them to find out about other altcoin options. It’s the intrigue and excitement that dogecoin is giving to the entire cryptocurrency landscape that I feel is vitally important to sustain and bring altcoins to the mainstream.
Love the article. Would love to see a recap in a few months.
That’s a good way to look at it, and I guess you’re definitely right when you say it’s a ‘gateway drug’ to other altcoins. It seems to be much easier to get some Dogecoin to play around with, than, say, Litecoin or Bitcoin. There is a very liquid market (say you get a tip and you send someone else a tip, so the cycle’s complete for you) for getting and spending Dogecoin already. I’d definitely like to do a recap in a few months. The community aspect is already fascinating, so perhaps there will be an article even before that!
Great blog and resource, btw!
But could Dogecoin reach 10 cents or a 4 billion dollar market cap while bitcoin holds a 12 billion cap? Seems quite plausible.
Dogecoin has better chance than Bitcoin. BTC is now a zero real value hoarding commodity and nothing more. Pay attention to what happened with various bubble economy. Hoarders panic sell becsuse there are no more demand and buyers. Then hoarders unload! Bubble bursts! It is then over. Bitcoin hoarding & very limited number being held by a very few, crumbling is inevitable. Only question is when not IF.
This makes no sense. Hoarders panic sell, because there is no more demands and buyers. Then hoarders unload?
BTC wont fail. Obviously your trolling or just stupid. Maybe both, I can’t tell. Go read about the mechanics of BTC and how successful it has been since 2009.
The only way for a dogecoin to be in race that it has to come out to the regulations. If governments accept dogecoin and start using it then the results will be unexpected. However the physical cash comes in danger and govt will not be happy with that.
Although if a market accepts it as a regular transaction currency ( ex. Scan the QR CODE and pay the amount for groceries) then definitely it has future.
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