Dogecoin

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Dogecoin
Dogecoin logo.png Dogecoin alternate logo.png
Official Logo Alternate Logo
Date of introduction 8 December 2013; 6 months ago (2013-12-08)
User(s) International
Inflation Approximately 100 billion coins to be mined by end of 2014. Thereafter, 5.2 billion new coins per year.
Subunit
 1/108 Koinu[1]
Symbol Ð[2]
Nickname Doge
Plural DOGE, Dogecoins

Dogecoin (/ˈdʒkɔɪn/ DOHZH-koyn,[3][4] code: DOGE, symbol: Ð[2] and D) is a cryptocurrency featuring a Shiba Inu from the "Doge" Internet meme on its logo.[5][6][7][8] It was introduced on December 8, 2013.[9] Compared to other cryptocurrencies, Dogecoin has a fast initial coin production schedule: there will be approximately 100 billion coins in circulation by the end of 2014 with an additional 5.2 billion coins every year thereafter. As of 30 March 2014, over 65 billion Dogecoins have been mined.[10] While there are currently few commercial applications for Dogecoin, the currency is gaining traction as an Internet tipping system, in which social media users grant Dogecoin tips to other users for providing interesting or noteworthy content.[11] Many members of the Dogecoin community, as well as members of other cryptocurrency communities, use the phrase "To the moon!" to describe the overall sentiment of the coin's rising value.[12][13][14]

Overview and history[edit]

A Dogecoin paper wallet

Dogecoin was created by programmer Billy Markus from Portland, Oregon, who hoped to create a fun cryptocurrency that could reach a broader demographic than Bitcoin. In addition, he wanted to distance it from the controversial history behind Bitcoin, mainly its association with the Silk Road online drug marketplace.[15] At the same time, Jackson Palmer, a member of Adobe Systems' marketing department in Sydney, Australia, was encouraged on Twitter by a student at Front Range Community College to make the idea a reality.[16]

After receiving several mentions on Twitter, Palmer purchased the domain dogecoin.com and added a splash screen, which featured the coin's logo and scattered Comic Sans text. Markus saw the site linked in an IRC chat room, and started efforts to create the currency after reaching out to Palmer. Markus based Dogecoin on the existing cryptocurrency, Luckycoin,[17] which features a randomized reward that is received for mining a block, although this behavior was later changed to a static block reward in March 2014. In turn, Luckycoin is based on Litecoin,[18] which also uses scrypt technology in its proof-of-work algorithm. The use of scrypt means that miners cannot use SHA-256 Bitcoin mining equipment, and that dedicated FPGA and ASIC devices used for mining are complicated to create. Dogecoin was officially launched on December 8, 2013.[19][20] The Dogecoin network was originally intended to produce 100 billion Dogecoins, but later, it was announced that the Dogecoin network would produce infinite Dogecoins.[21][22][23]

On December 19, 2013, Dogecoin jumped nearly 300 percent in value in 72 hours, rising from US$0.00026 to $0.00095,[24] with a volume of hundreds of Dogecoins per day.[25] This growth occurred during a time when Bitcoin and many other cryptocurrencies were reeling from China's decision to forbid Chinese banks from investing Chinese Yuan into the Bitcoin economy.[18] Three days later, Dogecoin experienced its first major crash by dropping by 80% due to large mining pools seizing opportunity in exploiting the very little computing power required at the time to mine the coin.[26]

On December 24, 2013, The Reserve Bank of India cautioned users of Dogecoin and other cryptocurrencies on the risks associated with them.[27] On December 25, 2013, the first major theft attempt of Dogecoin occurred when millions of coins were stolen during a hacking attempt on the online wallet platform Dogewallet.[28] The hacker gained access to the platform's filesystem and modified its send/receive page to send any and all coins to a static address.[29][30] This incident spiked Tweets about Dogecoin making it the most mentioned altcoin on Twitter.[31] To help those who lost funds on Dogewallet after its breach, the Dogecoin community started an initiative named "SaveDogemas" to help donate coins to those who lost them. Approximately one month later, enough money was donated to cover all of the coins that were lost.[32] By January 2014, the trading volume of Dogecoin surpassed that of Bitcoin and all other crypto-currencies combined.[33] As of 13 February 2014, Dogecoin has a market capitalization of USD$81 million.[34]

Fundraising[edit]

2014 Winter Olympics[edit]

The Dogecoin community and foundation have encouraged fundraising for charities and other notable causes. On January 19, 2014, a fundraiser was established by the Dogecoin community to raise $50,000 for the Jamaican Bobsled Team, which had qualified for, but could not afford to go to, the Sochi Winter Olympics. By the second day, $30,000 worth of Dogecoin was donated,[35] and the Dogecoin to Bitcoin exchange rate rose by 50%.[36][37][38][39][40][41] The Dogecoin community also raised funds for a second Sochi athlete Shiva Keshavan.[42]

Doge4Water[edit]

Inspired by the Winter Olympics fundraiser and smaller charity fundraising successes, the Dogecoin Foundation, led by Eric Nakagawa, began collecting donations to build a well in the Tana river bassin in Kenya in cooperation with charity: water. They set out to raise a total of 40,000,000 ($30,000 at the time) Dogecoin before World Water Day (March 22). The campaign succeeded, collecting donations from more than 4,000 donors, including one anonymous benefactor who donated 14,000,000 Dogecoin (~ $11,000) in what news media dubbed "the most valuable tweet in history".[43]

NASCAR[edit]

On March 25, 2014, the Dogecoin community successfully raised 67.8 million Dogecoins (around $55,000 at the time) in an effort to sponsor NASCAR driver Josh Wise. Wise ran with a Dogecoin/Reddit-sponsored paint scheme at the Aaron's 499 at Talladega Superspeedway.[44] On May 4, 2014, Wise and his car were featured for nearly a minute, during which the race commentators discussed Dogecoin and the crowdfunding effort, while finishing 20th and narrowly avoiding multiple wrecks.[45] On May 16, 2014, Wise won a spot at the Sprint All-Star Race through an online fan vote beating household name Danica Patrick, largely due to the efforts of the Dogecoin Reddit community. He finished the race in 15th.[46][47] The following race in the Coca-Cola 600, Wise debuted a Dogecoin/Reddit.com helmet.[48] Wise later announced he would run the car again at the Toyota/Save Mart 350[49] and GEICO 500. The developer of the NASCAR '14 video game announced that they are looking into adding the Dogecar as a drivable car in an upcoming DLC.[47][50]

Use and exchanges[edit]

Several online exchanges offer DOGE/BTC [51] and DOGE/LTC [52] trading. Three exchanges, Renminbi, Bter and BTC38, offer DOGE/CNY trading.[53][54] On January 8, 2014, AltQuick.co was the first exchange to launch DOGE/USD exchange.[55] On January 30, 2014, Canada-based exchange Vault of Satoshi also announced DOGE/USD and DOGE/CAD trading.[56][57] On February 2014, Hong Kong-based exchange Asia Nexgen announced that they would support the trading of Dogecoins in all major currencies. China-based exchange BTC38 also added their support on the Dogecoin exchange, boosting the market capitalization over 24 hours.[58][59] In the first day of trading, Dogecoin was the second-most traded currency on the platform, after BTC.[60]

On January 31, 2014, trading volume across the major exchanges was valued at $1.05 million USD. The market cap was USD$60 million. Three exchanges accounted for the majority of volume: Bter (60%), Cryptsy (23%), and Vircurex (10%). The most traded currency pairs were DOGE/BTC (50%), DOGE/CNY (44%) and DOGE/LTC (6%).[61]

Trading physical, tangible items in exchange for DOGE takes place on online communities such as Reddit and Twitter.[62][63] On December 23, 2013, Tristan Winters of the online journal Bitcoin Magazine discussed what was needed for Dogecoin to replace Bitcoin.[64]

The first Dogecoin ATM was demoed at Coinfest in Vancouver in February 2014.[65] Two Bitcoin ATMs supporting Dogecoins and other altcoins opened in Tijuana, Mexico on March 17, 2014.[66]

On March 17, 2014, an anonymous benefactor donated 14 million Dogecoin to a campaign for providing drinking water to parts of drought-stricken Kenya as part of World Water Day, March 22, 2014. It was done publicly via a Twitter-based tip service, and was proclaimed as the "most valuable tweet in history".[67] In total, over 40,000,000 Dogecoin was raised for World Water Day by the Dogecoin Foundation.[68]

Dogecoin has also been used to sell a house,[69] and has been used in the poker[70] and porn[71] industries.

Transactions[edit]

See also: Bitcoin network

Like Bitcoin and Litecoin, Dogecoin functions using public-key cryptography, in which a user generates a pair of cryptographic keys: one public and one private. Only the private key can decode information encrypted with the public key; therefore the keys' owner can distribute the public key openly without fear that anyone will be able to use it to gain access to the encrypted information. All Dogecoin addresses are public key hashes. Unlike Bitcoin addresses, which are 27 to 33 characters long, Dogecoin addresses are a string of 34 numbers and letters (both upper and lower case), starting with the letter D. A public key is the Dogecoin address to which other users can send Dogecoins. A private key, however, allows full access to the Dogecoin wallet; it must be kept secret and secure.

Mining parameters[edit]

Dogecoin's implementation differs from Litecoin by several parameters. Dogecoin's block time is 1 minute as opposed to Litecoin's 2.5 minutes. The difficulty retarget time is once per block and the reward is fixed based on the block schedule listed below. However, when dogecoin was first introduced, the difficulty retargeting was once every four hours, and the reward was a random number between 0 and a maximum defined by the block schedule. Under the system in which a random amount of coins were distributed, reward was calculated using Mersenne Twister pseudo-random number generator.[72] While the original implementation of Dogecoin meant for there to be a fixed number of coins per block from block 600,001 onwards only (providing 10,000 coins per block),[9] the algorithms in Dogecoin were changed beginning from the 145,000th block so that a fixed reward was always given (providing 250,000 coins per block until block 200,001).[73]

On 12 March 2014, version 1.6 of the Dogecoin client was announced. Along with allowing for there to be a fixed reward per block, the new client update also introduced a new difficulty algorithm called DigiShield. The main goal of the new difficulty algorithm, adopted from the Digibyte altcoin, was to prevent multipools from being able to mine (and thereby profit) off the coin, reducing the price of the coin drastically, along with forcing single-coin miners to deal with the rise in difficulty the pools left in their wake. Thanks to the algorithm's near-instant change in difficulty, any multipool entering the Dogecoin network will immediately leave, as the difficulty of mining will spike upwards severely, causing for a drop in profitability and, ultimately, an absence of multipools.[73]

Several cases of using employer's or university computers to mine Dogecoin have become known.[74][75]

Block schedule[edit]

Block numbers Per-block reward First block Expected coins produced (approx) Expected total circulation (approx)
1-100,000 0-1,000,000 (random) 8 December 2013 [76] 50,000,000,000 50,000,000,000
100,001-144,999 0-500,000 (random) 14 February 2014 [77] 11,250,000,000 61,250,000,000
145,000-200,000 250,000 (fixed) 17 March 2014 [78] 13,750,000,000 75,000,000,000
200,001-300,000 125,000 (fixed) 28 April 2014 [79] 12,500,000,000 87,500,000,000
300,001-400,000 62,500 (fixed) 14 July 2014 (estimated) 6,250,000,000 93,750,000,000
400,001-500,000 31,250 (fixed) 9 September 2014 (estimated) 3,125,000,000 96,875,000,000
500,001-600,000 15,625 (fixed) 18 November 2014 (estimated) 1,562,000,000 98,437,500,000
600,001+ 10,000 (fixed) 26 January 2015 (estimated) 5,200,000,000 per year No limit

Currency supply[edit]

Unlike deflationary cryptocurrencies (like Bitcoin), there is no limit to how many Dogecoins can be produced. This puts Dogecoin in the same league as other inflationary coins. According to the current production schedule, approximately 98 billion coins will have been released by January 2015, when block 600,000 is mined. Thereafter, approximately 5.2 billion more coins will be produced per year, in perpetuity. During December 2013 and January 2014, Dogecoin's developers discussed in public forums whether this should be changed,[22][80] and, on February 2, 2014, Dogecoin founder Jackson Palmer announced that the supply of coins would remain uncapped.[81]

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External links[edit]