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Wednesday, 18 Aug 2021
Crypto Notes
A weekly newsletter decoding crypto, blockchain and the entire ecosystem.
By Rohas Nagpal

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All about Dogecoin

Over the past few weeks, we have discussed many basic issues for crypto investors. From this edition onwards, I am going to go deeper into selected cryptos. Make sure you re-read these three before you proceed:

What do you get when you buy cryptos?

Metrics every crypto investor should know

How to keep your crypto safe

What better crypto to start with than Dogecoin.

Let me begin with a confession. I have always felt that Dogecoin and other "meme coins" are an embarrassment to the crypto community! But hey, if crypto has a market cap over $40 billion and supporters like Elon Musk and Mark Cuban, then it has to be taken seriously.

Note: The data below is as per CoinMarketCap and Messari.

Did you know?

Dogecoin is the 7th largest crypto in the world.

An unlimited number of Dogecoins can be created.

Over Rs. 476,392,456,403 worth of Dogecoins have changed hands in the last 24 hours. That's over Rs. 47,000 crore!

A couple of quick news bites before we dive into Dogecoin.

Coinbase, one of the most popular crypto exchanges, posted Q2 profits of $1.6 billion. This is an increase of 4,900% compared to the $32 million recorded in Q2 of 2020.

According to a Blockdata report, 55 out of the top 100 banks in the world have some form of blockchain or crypto exposure in their portfolios.

Now let's dive in.

1. What is Dogecoin?

Name: Dogecoin

Symbol: DOGE

According to its official website, Dogecoin (DOGE) is "an open-source, peer-to-peer digital currency, favoured by Shiba Inus worldwide". If you are not much of a dog lover, Shiba Inu is a breed of hunting dog from Japan.

Dogecoin is often described as a "playful" cryptocurrency that uses the Shiba Inu internet meme as its mascot.

DOGE has an interesting history. In 2013, Jackson Palmer, an Adobe Australia employee, tweeted that he is "investing" in imaginary crypto called Dogecoin. Some of his friends actually encouraged him to create it as real crypto. Jackson booked the domain name dogecoin.com and partnered with Billy Markus to make the crypto.

This was around the time when Bitcoin was highly criticized for being favoured by criminals and dark web platforms such as Silk Road. The creators felt that a light-hearted cryptocurrency around a meme dog would be a good contrast to the negative image of bitcoin.

The co-founders left the project several years ago.

Dogecoin starting picking up in 2020 primarily because of TikTok influencers. Then in 2021, it got a lot of attention from the Reddit community. Then came Elon Musk and his tweets, especially this one:

To see a list of places where Dogecoin can be used, see: https://spendyourdogecoins.cf/

2. Token economics

Dogecoin (DOGE) was launched on 6 December 2013, with no "premine" or "instamine".

Premining is the mining/creation of a number of coins before the crypto is launched to the public. Instamining happens when a large number of coins come into existence at once. This does not happen on proof-of-work cryptos like Bitcoin.

When it was originally created, the DOGE maximum supply was limited to 100 billion DOGE. But in early 2014, this cap was removed.

Dogecoin is inflationary crypto because an unlimited number of DOGE can be created.

3. How are Dogecoins created?

Dogecoins are produced by mining. Miners are rewarded with 10,000 DOGE per block, and one block is mined every minute.

This means that 10,000 DOGE are created every minute. Compare that with Bitcoin's current creation rate of 6.25 per 10 minutes, and you will understand why DOGE prices are less than a dollar!

4. Family & pedigree

Dogecoin has an impressive family tree.

Her great-grandmother is none other than Bitcoin! Let me explain how. Dogecoin is based on Luckycoin, which is a fork of Litecoin, which is a fork of... you guessed it - Bitcoin.

5. Technology

Dogecoin uses a type of proof-of-work consensus mechanism that makes it costly for hackers to perform attacks on its network.

Unlike most popular cryptos, Dogecoin has no formal white paper.

6. Metrics

As of 17 August, its core metrics are:

Price

DOGE price is Rs. 25.

DOGE hit its all-time high value of Rs. 54.76 on 8 May 2021, and its lowest price so far was Rs. 0.006345 on 7 May 2015.

Below is the graph for DOGE prices (all time):

Below is the graph for DOGE prices (YTD):

Supply

Circulating supply: 130.90 billion DOGE

Total supply: 130,895,788,234 DOGE

Maximum supply: Unlimited

Marketcap & Volume

Market Cap: Rs. 3,176,188,836,800

Fully Diluted Market Cap: Rs. 3,194,905,677,917

Volume: Rs. 476,392,456,403

Its market dominance is 2.13%, market rank is seven and volume/market cap ratio (VMR) is 0.1501.

Others

Its one-year Sharpe Ratio, which measures the excess return for a given level of risk, is 1.89.

Its one-year Volatility (the annualized standard deviation of daily returns) is 4.43.

Its Vladimir Club Cost (cost of owning 1% of 1% of an asset's "eventual" supply) is about Rs 11 crore.

7. Wallets

The simplest way to hold DOGE is on a crypto exchange. But this also means you have very little "control" over your crypto.

There are two wallets that you could use - MultiDoge and Dogecoin Core.

MultiDoge is a "light" wallet that syncs with the blockchain by "skimming" through it and providing fast sync times.

Dogecoin Core is a "full" wallet that syncs by downloading the blockchain.

Next week: Binance Coin Do you’ve any questions? Send them to rohasnagpal@gmail.com

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Rohas Nagpal is an author, an amateur boxer, a blockchain architect, a Tintinologist and a retired hacker.

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