Not Just a Joke: Understanding Dogecoin

Dogecoin

What started out as a joke has rapidly become serious business. By all accounts, Dogecoin’s viral blend of cuddly and crypto is going to the moon.

A month and a half after it was unleashed upon the world, the fortuitous digital currency based on the Shiba Inu-inspired Internet meme is now the third most valuable altcoin (sporting a market cap of $53 million) and has improbably become a killer app in driving mainstream cryptocurrency adoption.

Where Bitcoin is intimidating and complex, obfuscated by ideology and legitimate finance, Dogecoin is all fun and games, says Ben Doernberg, a board member of the Dogecoin Foundation. The result is an inviting educational tool for newbies, who, drawn by the community’s accessibility, are eager to participate and learn about a potentially revolutionary innovation through first-hand experience.

“What we’ve discovered from Dogecoin is that there are billions of people out there who can and will benefit from cryptocurrencies, and for whatever reasons, there are barriers preventing them from participating,” Doernberg said. “A lot of people in the bitcoin world were aware of the technological and regulatory obstacles. What people didn’t recognize was that the human factor is probably the biggest one.”

Promoting a culture that is “user-friendly, unintimidating, and welcoming” has been “immensely powerful,” says Doernberg, who, as a moderator of the shibe-money subreddit, has watched /r/Dogecoin reach a userbase of over 65,000 in less than two months. At the current rate, the community could overtake /r/Bitcoin in a matter of weeks.

The message is clearly resonating, one that’s attracting a whole new crowd—more Buzzfeed than Hackernews—and introducing them to a technology that has traditionally been difficult to decipher. Doernberg cites the adoption curved popularized by sociologist Everett Rogers in his 1962 book Diffusion of Innovations.

Dogecoin Adopters

“The people who created Bitcoin are definitely the innovators, 2.5 percent of the population, according to the graph,” explained Doernberg. “Dogecoin looks like the early adopter crowd. It’s a more diverse group than Bitcoin tends to be. It’s for people who are just looking to send their friend a couple bucks or tip Lady Gaga for her latest album.”

According to Doernberg, the community is filled with gamers and college students, like the brazen undergrad who set up a Dogecoin mining operation using Harvard’s research computing facilities. Over two hundred Dogelovers attended the first dogecoin meetup in New York City earlier this month. “Unlike most event we’ve attended for virtual currencies, the atmosphere was exuberant, warm, and inspiringly youthful,” reported Motherboard (VICE).

Most significantly, this new breed of crypto-fan is actively participating, whether it’s mining—you can still mine dogecoins with your personal computer—or simply sending money to a friend. Indeed, giving someone a few hundred DOGE has become synonymous with an Internet high-five.

Much of this is by design. Unlike many of its crypto-peers, Dogecoin is slightly inflationary. While this theoretically hurts its investment potential—a steady flow of coins keeps DOGE prices down—the knowledge that dogecoins will be worth less over time discourages hoarding. An academic report concluded last year that 64 percent of all bitcoins have never been spent.

There’s also the psychological impact of Bitcoin’s price rise, says Doernberg. “Getting a few hundred DOGE is more satisfying than a tiny fraction of a bitcoin even if they’re mathematically equivalent,” he said. And since each dogecoin is only worth $0.00096, “when someone gives you 500 dogecoins, you’re more likely to try it out and return the favor” rather than saving it.

These factors have propelled Dogecoin past its original open source inspiration in daily transaction volume throughout most of its brief existence.

BTC/DOGE

Photo: BitInfoCharts

And beyond just usage, Dogecoin is making a significant social impact, proving that digital currencies are an effective way to raise money and awareness for worthy causes.

The community’s first charity project helped send the Jamaican bobsled team to the Sochi Winter Olympics, raising $3,000, says Doernberg. Soon after, $25,000 was raised for a charity that trains service animals that aid children with disabilities. Further initiatives are in the pipeline and will be spearheaded by the foundation, an organization created by founders Jackson Palmer and Billy Markus to “make sure that Dogecoin continues to be a force for good in the world and continues to embody the ideals of the community.”

“Dogecoin has had a couple major impacts, one of which is that all the other currencies are now competing in terms of ease of use but  the other is charity,” said Doernberg. “After we started, Litecoin started a project in Africa and Quarkcoin is working on something, too, which we think is awesome. If the cryptocurrency that wins is the one that does the most good in the world, then that’s excellent.”

As the vibrant meme-coin continues to spread, now traded on major exchanges like San Francisco-based Kraken and BTC38 in China (as well as on the Ripple network through Peercover), Dogecoin’s brand of meaningful inclusivity and international philanthropy has made it a bit of a cultural icon, earning it a trendy introductory video, courtesy of always current Taiwanese Animators.

“They nailed it on marketing distribution,” said Asheesh Birla, Head of Product at Ripple Labs. “From sponsoring the Jamaican bobsled team to engaging their community on Reddit, they’ve developed the perfect tongue-in-cheek persona.

Birla references the American sitcom Full House: “If Bitcoin is the somewhat serious Danny Tanner, Dogecoin is the happy-go-lucky, caring Uncle Joey Gladstone.”

Photo: YouTube