The physical representation of the Dogecoin cryptocurrency is photographed for an illustrative photo in Krakow, … (+)
Two weeks after the US presidential election, cryptocurrency markets are experiencing an upward trend. The sector reached a record market capitalization of more than $3.4 trillion, while bitcoin shattered expectations by surpassing $98,000, according to Coingecko. Amid this enthusiasm, some coins are rising above the pack, and Dogecoin (DOGE) is one of the standout performers.
The oldest memecoin has risen 150% since Election Day, buoyed by promises from President-elect Donald Trump and the growing political influence of Elon Musk. Indeed, Musk has been a long-time supporter of Dogecoin, calling himself “The Dogefather” and regularly praising the memecoin on Department of Government Effectiveness (DOGE), a newly created agency that Musk co-leads alongside Vivek Ramaswamy, this connection has taken on new dimensions.
Dogecoin, created as a satire of the cryptocurrency frenzy and social media hype, has long been dismissed by “serious” crypto-finance players as a frivolous fad. Yet memecoin has evolved to thrive on its hype, now boasting a market capitalization of $58 billion, on par with some of the largest companies in the world.
This raises a key question: is there untapped value in Dogecoin beyond the hype? Or has he just mastered the art of monetizing hype? Dogecoin’s unique journey challenges conventional notions of value and utility, making it a phenomenon that investors (and skeptics) can no longer ignore.
What is Dogecoin?
Dogecoin was born in 2013 as a light-hearted parody of the rapidly growing crypto market. Inspired by the viral meme of a Shiba Inu dog, software engineers Billy Markus and Jackson Palmer created Dogecoin to poke fun at the hype and speculation surrounding it.
Technically, DOGE is the native cryptocurrency of the Dogecoin blockchain, which is a fork of Litecoin, itself a fork of Bitcoin. Like Bitcoin, Dogecoin operates on a proof-of-work consensus mechanism. Unlike Bitcoin, it uses the Scrypt hashing algorithm rather than SHA-256. This algorithm is designed to be less dependent on specialized ASIC miners, making it more accessible to general-purpose hardware like CPUs and GPUs. This democratized approach to mining has earned Dogecoin the nickname “the people’s currency.”
Dogecoin blocks are created approximately every minute. This makes Dogecoin transactions faster and cheaper than Bitcoin (33 transactions per second versus 7). Yet some argue that this figure is still too low, especially compared to the Lightning Network’s potential for millions of TPS.
In terms of tokenomics, Dogecoin uses a fixed reward system. It grants miners 10,000 DOGE per block, adding around 5 billion DOGE to the supply each year. This results in a stable inflation rate that declines over time as total supply increases. As of November 2024, Dogecoin’s inflation rate stood at approximately 3.4%, with a circulating supply of approximately 146 billion DOGE.
Dogecoin can be described as a cheaper, faster but less secure alternative to Bitcoin. However, unlike Bitcoin-inspired blockchains like Litecoin and Bitcoin Cash, it has not faded into obscurity. Its strength lies in its community, which has made it successful and given it a lasting identity.
The power of the Dogecoin community
The Dogecoin community is known for its coordinated actions. It uses collective energy for both charitable and disruptive causes. In 2014, Dogecoin enthusiasts raised $30,000 to help fund the Jamaican bobsleigh team’s trip to the Winter Olympics. The same year, they made headlines again by raising $55,000 to sponsor NASCAR driver Josh Wise. Another memorable initiative was the “Doge4Water” campaign, which raised over $30,000 to build clean water wells in Kenya.
On the disruptive side, the Dogecoin community has played a notable role in the GameStop short squeeze of 2021. Dogecoin holders joined forces with GameStop retail investors on Reddit and drove GameStop’s stock price higher. This triggered a massive short sale that resulted in significant financial losses for hedge funds betting on the stock.
The dog’s father
In 2019, tech billionaire Elon Musk began supporting Dogecoin on social media and on television. Musk’s involvement went beyond tweets and memes. He claimed that Dogecoin could become a viable currency for everyday transactions. Later, Musk’s Tesla company allowed its customers to purchase select goods (but not vehicles) with memecoin. SpaceX followed suit by announcing the DOGE-1 mission to the Moon, the first space mission fully funded by Dogecoin.
The “Dogefather era” reached its peak in 2021. Elon Musk’s tweets helped drive the price of Dogecoin from $0.01 to an all-time high of $0.65, a staggering increase of 6,400% in just five months. Although the coin’s value fell during the ensuing bear market, it stabilized at a new higher base of $0.07.
Musk’s acquisition of Twitter – the leading social media platform for the crypto space – has further strengthened his influence over Dogecoin. Twitter even temporarily changed its logo to the iconic Doge meme in April 2023, triggering a 30% rise in the price of DOGE.
Elon Musk’s ambitions have since extended to the political sphere. A strong supporter of President-elect Donald Trump, Musk has gained significant influence in Washington, DC. He was also named co-leader of the new agency aptly called DOGE, or Department of Government Efficiency. Dogecoin price responded by surging 150% and reaching $0.42 at the time of writing.
However, Musk’s deep association with Dogecoin has not been without controversy. In 2023, a group of Dogecoin investors filed a lawsuit accusing Musk of manipulating the price of the coin for personal gain. They alleged that his tweets, media appearances and even changing Twitter’s logo were coordinated “public stunts” aimed at profiting from insider trading. Reuters reported that the trial ended last week, with the judge ruling that investors “could not prove securities fraud based on Musk’s tweets.”
DOGE as currency
With good technology, community support, and celebrity endorsement, does Dogecoin have what it takes to become a real currency? This question has no simple answer. Basically, a currency has no value in itself; its value comes from the collective belief in its ability to facilitate exchanges and store value. The more people share this belief and use the coin, the closer it gets to functional currency status.
By this measure, Bitcoin – with 822,000 unique active addresses per week – has already crossed the threshold to becoming a “real currency”. Dogecoin, however, is lagging significantly, with just 80,000 unique active addresses per week, according to data from In the block. Additionally, Dogecoin’s heavy reliance on controversial figure Elon Musk poses additional risks. Although Musk’s endorsement has boosted Dogecoin’s profile, this reliance on a single, hype-driven personality creates significant uncertainty.
Despite these limitations, Dogecoin is used as currency. It may not rival Bitcoin as a global currency, but it has already carved out a niche for itself as a community currency. Its future success will largely depend on the ability of its community to reduce its dependence on Elon Musk and overcome the media buzz. Without this development, Dogecoin risks remaining a community memecoin, attracting more short-term speculators than real users.
Dogecoin’s journey has been remarkable. Eleven years after its inception, what began as a satire of social media and crypto hype has harnessed the very power it once mocked to evolve into a legitimate community currency. This challenges the traditional financial perspective which often views hype as irrelevant or unsustainable. The Dogecoin community has redefined it, making it a culturally significant phenomenon.
In this sense, Dogecoin is more than a memecoin: it is a case study. It shows how decentralized communities and cultural movements can influence modern finance. Whether Dogecoin becomes more widely adopted or stays in its niche, it has already proven the power of collective belief and action.