What is Dogecoin? Everything you need to know about the cryptocurrency

We're going to the moon.

Some proponents of Dogecoin or DOGE, a cryptocurrency that started as a joke but is now one of the most popular coins around, would have you believe that the sentence above is all you need to know about Dogecoin.

In a way, they'd be right. Dogecoin does not require a lot of thinking. Fans of the cryptocurrency often buy it and hodl it (a crypto way of saying "not selling") until...well, until something great happens. Until you become rich, perhaps.

But is it really that simple? Read on.

UPDATE: Jun. 28, 2022, 1:43 p.m. EDT Article was updated to reflect changes in Dogecoin's price, market cap, development activity, and community, among other details.

The history of Dogecoin

It started as a joke. Bitcoin, the original cryptocurrency, was an impressive technical innovation that let anyone exchange digital money at low fees and without the need to ask for anyone's permission. But Bitcoin was also open source, meaning everyone could copy it, and at one point, everyone did, with clones such as Litecoin and Peercoin popping up everywhere.

Dogecoin is the funny answer to this trend. Created in December 2013 by software engineers Billy Markus and Jackson Palmer, it's a copy of Bitcoin (more precisely, Litecoin, which itself is fairly similar to Bitcoin) that features the Shiba Inu dog and is almost always referred to in silly language that abounds with dog- and moon-related metaphors.

Almost from the get-go, Dogecoin garnered a devoted following. It attracted people who liked the idea of crypto but wanted to make fun of Bitcoin. It attracted people who liked dogs. It attracted anyone who wasn't particularly serious about crypto, but still wanted to participate.

Much wow. Credit: yuriko nakao/gettyimages

Not everyone gets it. Even its co-founder Palmer washed his hands off it — in 2018, he said that the skyrocketing price of Dogecoin was a signal that the crypto market was overheated. "I think it says a lot about the state of the cryptocurrency space in general that a currency with a dog on it which hasn’t released a software update in over 2 years has a $1B+ market cap," he said in January 2018 — and sure enough, the crypto market suffered a horrible crash a few days later.

But Dogecoin persevered. Partly, most likely, due to the fact that it doesn't require a lot of active management, and partly due to the crypto space recovering tremendously in 2020, Dogecoin has become bigger than it ever was.

Is Dogecoin technically sound?

It's getting better. It started out as a copy of Litecoin, which is fairly technically sound. It's a cryptographically protected online network that lets one user send DOGE to another in a permissionless way. It works, though it's not nearly as secure or decentralized as Bitcoin.

SEE ALSO: How to buy, use, and spend Bitcoin

But Dogecoin was never particularly innovative. Sure, there are some differences — it has a shorter block time than Litecoin's. Unlike Bitcoin's, its supply isn't limited — currently, there are 132.6 billion DOGE in existence, and more may be minted. But the biggest difference is that Bitcoin and Litecoin are actively managed, and frequently updated to address bugs and shortcomings. Dogecoin does get updated occasionally, but sometimes years pass before a new version comes out.

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(Dogecoin development picked up a little after this article was originally written, though it's still miles behind, say, Ethereum. A big update is coming, bringing numerous fixes and improvements).

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Dogecoin has also picked up in terms of usage. Besides being used for tips on Twitter (and if Twitter gets acquired by Elon Musk, it might become even bigger on Twitter) and elsewhere, DOGE can now be used to buy Tesla merchandise and at some Supercharger stations.

A community effort to bring all important DOGE-related information can be found here.

Elon Musk

Elon Musk likes silly stuff, and Dogecoin is plenty silly, and...you see where we're going here. The CEO of Tesla and SpaceX has voiced his admiration for Dogecoin on numerous occasions, mostly on Twitter, with his tweets often propelling the price of Dogecoin to new heights — at one point, the price went up more than 100 percent following a Musk tweet.

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In a Clubhouse interview in February, Musk explained why he likes Dogecoin. "Arguably the most entertaining outcome, the most ironic outcome would be that Dogecoin becomes the currency of Earth of the future," he said.

When it comes to actual business, Musk is a far bigger fan of Bitcoin — after all, Tesla recently bought $1.5 billion worth of the currency, not DOGE. But Twitter and memes are one thing, and Tesla's balance sheet is another. For now.

By the way, Musk isn't the only celebrity endorsing Doge. Rapper Snoop Dogg is also on board, as is Kiss singer Gene Simmons.

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How do I buy a Dogecoin, and should I?

For years, Dogecoin wasn't as ubiquitous on crypto exchanges as Bitcoin, but things have improved recently, with Gemini listing DOGE in May 2021 and Coinbase listing it in June 2021. Today, most major exchanges, including the world's biggest exchange, Binance, do offer support for Dogecoin.

Once you buy DOGE on an exchange, it's similar to owning any other cryptocurrency: You can either keep your coins on the exchange, or transfer them to your own wallet software — an official wallet is offered on the project's website, dogecoin.com.

Will Dogecoin hit $1?

Ah, so you've seen the price soaring, and you think it may be a good investment? Hold on for a second before you take the plunge.

While Dogecoin has a massive fanbase and the support of one of the world's richest people, there's no denying that the project isn't as technically interesting as other major cryptocurrencies such as Bitcoin and Ethereum.

Think of it as stock of a company that isn't making a lot of money, but has a really cool dog logo — and people, for some reason, really, really love it. Could the price of the stock go up? Sure. But it could also go down, all the way to zero, because...why not?

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Here are a few numbers. The price of DOGE at the time of writing was $0.26. A year ago, it was around $0.002, making this a 13,000 percent price increase.

(The original version of this article was written in April 2021; the price of DOGE dropped by a lot since then; it currently sits at $0.0719 and its market cap on June 28 is roughly $9.5 billion).

With a circulating supply of more than 132.6 billion coins, the market cap (total price of all DOGE that currently exist) is now roughly 9.5 billion dollars. You'll often see proponents saying that DOGE must reach $1 at some point. If that happens the market cap will be $132.6 billion. Everything is possible, but you have to wonder, how far can the joke go?

It boils down to this: If you're a professional or at least a very seasoned trader and you know what you're doing, you might make money trading DOGE. But if you're not, then you're just gambling, and you should never gamble with money you cannot afford to lose.