In early 2021, dogecoin (DOGE), the memecoin represented by a Shiba Inu, was taking the cryptocurrency world by storm. In April, the price of dogecoin started soaring, with the coin hitting its all-time high on May 6, 2021, at just below 74 cents. Millionaires were made.
Since then, however, the price of dogecoin has plummeted, losing a good chunk of its value. As of July 12, 2022, dogecoin’s price was just above 6 cents. That’s quite a difference from just over a year ago.
So, is dogecoin dead? Let’s take a look at the history of dogecoin and consider whether there’s a future for altcoins like DOGE.
History of dogecoin
Dogecoin was created in 2013 by an American software engineer, Billy Markus, and Australian entrepreneur Jackson Palmer. They created dogecoin as a joke, based on a meme popular at that time — that of a Shiba Inu dog looking surprised yet delighted.
A gradual improvement on litecoin
Dogecoin was designed by copying the code of litecoin and was intended to be a faster payment processor than bitcoin. It takes approximately 10 minutes to mine a block on the bitcoin network, whereas it only takes about a minute on the dogecoin network.
Dogecoin’s mining code for discovering new blocks was based on the code offered by luckycoin. At first, the mining algorithm assigned random block rewards of zero to 10,000 dogecoins. Fearing that this random reward structure would frustrate miners, the founders created a schedule that rewarded successful miners a fixed 10,000 dogecoins per block.
What is crypto mining?The process of mining, or discovering new blocks, is a way for blockchain networks to secure and record transactions. A computer solves cryptographic puzzles, and the first to do so discovers a “block” using their computing power. That person then receives a reward in the form of cryptocurrency.
The rise and fall of dogecoin
The popularity of dogecoin grew among those who began using it as a tip system on Reddit and to donate to charity. The big boost for dogecoin, however, came in 2021. Dogecoin got a boost from a Reddit stunt to pump GameStop as excited investors began looking for “underdogs” to pump.
Tesla CEO Elon Musk also announced that the car manufacturer would accept dogecoin as payment for merchandise and the Dallas Mavericks began accepting dogecoin. Billionaire investor Mark Cuban has also commented about the value of dogecoin, leading to more interest in the memecoin.
However, by June 2021, the enthusiasm was wearing off, and DOGE began its crash. There have been bumps in price periodically, but so far, the trend line for dogecoin is heading down.
Why is dogecoin down?
So, is dogecoin dead, or is it just temporarily down? When investing money, it’s important to consider the underlying fundamentals. Let’s take a look at some of the reasons that the price hasn’t recovered so far.
Poor underlying coin technology
Creators Palmer and Markus stepped away from the dogecoin community years ago, citing its toxicity. Since then, the technology and the code have been sporadically maintained by volunteers. There was a code update in February 2021, when the price began rising, and people asked for updates. Prior to that, the last update was in 2019.
There is no use case for dogecoin beyond being a faster payment network than bitcoin. Basically, you can send money to others, but there’s not a lot else you can do with it.
Major selloffs in Robinhood
One of the reasons that DOGE was able to head higher was due to its addition to the popular trading app Robinhood. However, after a “Saturday Night Live” episode featuring Elon Musk joking that dogecoin was "a hustle," many people began dumping their dogecoin on Robinhood. Robinhood experienced a massive selloff in dogecoin, which in turn sent its price plummeting.
No limit on the supply of coins
One of the reasons that bitcoin is considered the most valuable cryptocurrency is its long-term scarcity. There will only ever be 21 million bitcoin entered into circulation. However, there is no cap on the number of dogecoins that can be produced.
How many dogecoins are there?There are more than 132 billion dogecoins currently in circulation, and the coin is inflationary, which means there could potentially be an infinite supply of them. This, combined with the limited use case, could lead to dogecoin’s price never recovering.
Rise of other memecoins
By their nature, memes follow trends and can be somewhat short-lived. This is a possibility with dogecoin as well. Other memecoins are also now having their day.
Shiba inu (SHIB), another coin based on the dog meme, saw some enthusiasm in cryptocurrency circles, with some calling it a dogecoin killer. However, SHIB never lived up to the hype. Although the memecoin spiked at $0.00008 USD in late 2021, it was down to $0.00001 USD as of July 12, 2022.
There are also other memecoins that are trying to edge out dogecoin by offering a use case. For example, floki inu (FLOKI) offers non-fungible tokens (NFTs) and gaming in the metaverse. Likewise, roboape meme token ($RBA) focuses on community and an NFT marketplace.
These memecoins could potentially provide extra perks for those who want to build community. However, that remains to be seen, as dogecoin is still the most popular memecoin with the 10th highest market cap as measured by CoinMarketCap.
Crypto remains down
Another reason that dogecoin remains depressed in price also has to do with the fact that crypto, in general, is down. Major “blue chip” cryptocurrencies such as bitcoin (BTC), ethereum (ETH), and litecoin (LTC) are all down right now.
The ongoing crypto crash in all digital assets is affecting most cryptocurrencies and NFT projects. Dogecoin isn’t immune from the current climate. The only question is whether dogecoin will be one of the cryptocurrencies that will survive this crash.
Is dogecoin dead?
There’s no way to predict whether dogecoin is truly dead. It remains the most well-known of the memecoins, as a way to send money to others. Although there are only a handful of merchants that accept dogecoin for purchases, the memecoin could remain viable, though it might not ever reach the same price level.
Another issue with dogecoin is how concentrated the ownership is. One wallet reportedly owns 28% of all dogecoin. Nine wallets together account for more than 40% of dogecoin. This could heighten the risk of manipulation in the cryptocurrency market.
On the other hand, if enough people decide to buy the dip, or if the idea of owning dogecoin remains attractive, it could remain a part of the cryptocurrency landscape. Additionally, ownership can be diluted at the rate of mining and the reward that comes with it. If more people decide to mine dogecoin, then ownership will be less concentrated.
WarningIt’s important for you to consider your own risk tolerance when asking yourself if dogecoin is a good investment.
How to buy dogecoin
When learning how to buy cryptocurrency, there are different paths you can take. This includes buying on an app, exchanging on a peer-to-peer basis, or using an exchange. If you decide that you want to buy dogecoin, you can do so in two main ways:
- Investing apps: Many of the best investing apps such as Robinhood, Webull, and Binance offer you the ability to gain exposure to dogecoin.
- Cryptocurrency exchanges: Many of the best cryptocurrency exchanges offer access to dogecoin. DOGE is listed on Coinbase and Crypto.com, as well as other exchanges.
Both of these routes make it relatively easy to buy dogecoin using fiat currency. Additionally, crypto exchanges may allow you to trade some of your existing crypto for DOGE. It’s also possible to engage in a direct exchange with another person.
Learn more in our how to buy dogecoin guide.
Does Dogecoin have a future?
Dogecoin has a potential future as a fun memecoin and payment option. However, it’s impossible to say whether it truly has staying power. The current crypto crash could finish any number of coins, and no one can be sure which will survive.
Dogecoin likely also needs a dedicated team of developers to fix underlying infrastructure and code issues for it to become a true contender.
Will Dogecoin ever get to $1?
Although some fans point to the idea that dogecoin could surge in the future and potentially reach a dollar, others are more skeptical. Some, like New York Times bestselling author and investor Neil Patel, point out that it can never reach $1 because too much of the dogecoin price prediction is based on hype, primarily through social media.
For now, looking at the DOGE price history, it doesn’t appear that DOGE will reach $1. However, it can’t be ruled out, especially if there’s a resurgence in popularity and demand.
How many Dogecoins are left?
There is no upper limit to dogecoins in circulation. As a result, the supply is potentially infinite. Currently, dogecoins are being mined at a rate of about 5.2 billion per year.
Dogecoin remains a speculative digital currency for many people. Even though there were dogecoin millionaires made at the height of the frenzy, those that didn’t take profits and cash out have seen big losses.
Rather than assuming that any memecoin, including dogecoin, will make you a millionaire, consider looking into diversifying your portfolio. The fate of any cryptocurrency is uncertain right now, thanks to concerns about the long-term viability and widespread adoption of blockchain technology, as well as regulatory concerns.
For now, it might make more sense to build a more traditional portfolio and use dogecoin and other memecoins as speculation, investing no more than you can afford to lose.
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