|pic credit: coindesk.com|
Memecoins have taken center stage in recent months, and while the DeFi explosion is credited with kicking off this current bull market, it could be argued that meme coins have brought it back in. Of course, if you had invested in most coins at the start of 2020, you would have witnessed significant gains since then.
Memecoins, on the other hand, have been shown to be one of the quickest ways to make a 1000 percent return on investment in 2021. We’re going to talk about the granddaddy of all meme coins today. Of course, we’re talking about Dogecoin.
Dogecoin has been around since the crypto dark ages, starting off as a joke in 2013, but it has found new life with the most recent wave of crypto hysteria. Originally created by software programmers Billy Markus and Jackson Palmer to mock the 2013 crypto market’s crazy speculative pricing. The trouble with Dogecoin is that it shouldn’t be able to do what it has been doing technically.
We can instantly perceive an unsettling scenario when examining Dogecoin’s tokenomics. Every minute, 10,000 Dogecoins are created. This equates to nearly 14 million Dogecoins per day or around 5 billion Dogecoins per year. Ethereum has value because it is used as digital gas to pay for transactions on the Ethereum network, similar to how Bitcoin has value because of its limited supply.
Dogecoin, on the other hand, isn’t rare and isn’t being used to pay for transactions on their network. This rate of generation should eventually depress a token’s value, but this hasn’t been an issue for Dogecoin, which has exceeded Bitcoin in terms of raw percentage since 2013.
But how does Dogecoin work exactly?
Dogecoin started off as a fork of the now-defunct Lucky Coin, which was itself a fork of Litecoin. While Litecoin isn’t a hard fork of Bitcoin, it was bred to function on the same original code as Bitcoin with only a few small changes, making Dogecoin’s protocol similar to Bitcoin.
Dogecoin has been in a merge-mining relationship with Litecoin since 2014. The fact that it was created as a joke had several drawbacks, such as who wants to host or mine a joke coin that is more likely to lose value than gain value?
Fortunately, Dogecoin initiated a merge-mining connection with the much larger and more sustainable Litecoin to prevent a 51 percent attack, in which 51 percent of the functioning nodes are run by the same people and are thus able to carry out fraudulent transactions.
Allowing Dogecoin miners to get Litecoin at the same time. One of the biggest advantages of mining the Dogecoin network is that meme coins usually include the phrase “mine it, don’t purchase it.” While purchasing meme coins is always an option, they often require far less computing power to mine than most cryptocurrencies, making them suitable for individuals just getting started with cryptocurrency mining.
In most cases, you just get the coin you committed to mine. As a result, receiving a second, more legal cryptocurrency at the same time is a compelling reason to run a node for this project. Dogecoin currently uses a more energy-intensive proof of work algorithm.
Unlike normal PoW, DOGE uses an extra proof of work variation, which was the first consensus method to support merge-mining. Given that Dogecoin never had an official whitepaper or a development team working on the project until lately, finding updates on the project can be difficult.
This year, however, the Dogecoin Foundation had considerable activity for the first time in years. Now that the Foundation was up and running again, Vitalik Buterin, the founder of Ethereum, was appointed as an advisor.
In addition, Max Keller, the original core DOGE developer, returned as a technical advisor, and Billy Markus, the co-creator, returned as the community and memes adviser. People began to wonder if a switch from PoW to PoS was on the cards after seeing Vitalik associated with the Foundation, a topic that is still highly disputed today.
Though accurate information about Dogecoin is often difficult to come by, it appears that something must happen in order for Dogecoin to overcome its existing system of crippling tokenomics. While there is no official announcement on this, our expert believes Dogecoin will undergo some sort of change in order to remain relevant and capitalize on its new brand recognition.
The Dogecoin community has a long history of philanthropy, with notable achievements include sending the Jamaican Bobsleigh squad to the 2014 Olympics and assisting in the delivery of potable water to a rural African village.
So it wouldn’t surprise us if Dogecoin included a charitable component in their new network. In recent months, Dogecoin has also become a sleeve sponsor for Premier League club Watford and sponsored a NASCAR driver at the Talladega Superspeedway, indicating that something is certainly beginning to take form behind the scenes. After talking about the dubious tokenomics and the dedicated community supporting the initiative.
What does this mean for the price?
Initially, Dogecoin entered the markets at $0.0004 in December 2013, before peaking at $0.001 by February 2014. From there, the price would slide before ultimately reaching its all-time low of $0.00008. By November 2017, DOGE had managed to recover to around $0.001.
Though not satisfied with this growth, by January 2018, Dogecoin had finally done the impossible and became worth $0.01. Unfortunately, this impressive growth would peak a month later, where DOGE stopped at $0.017 before entering a brutal recession.
The joke seemingly ended there, with Dogecoin only again being valued at only $0.001 by March 2020. Yet, as we are now mostly all aware, DOGE wasn’t done just yet. January 2021, Dogecoin had 4x to $0.004, which is already a substantial return on investment, though within only 5 months would see itself being valued at $0.73, marking its all-time high.
Since then, Dogecoin has had a hard few months, with subsequent meme coins like Shiba Inu threatening to overshadow the original hype master.
What does the future hold for this supposedly unkillable joke money in this light?
We don’t see Dogecoin reclaiming its all-time high this year, which is bad news for short-term investors. With an active foundation behind the project and prospective updates, we believe this coin has a bright future. Unless Elon Musk starts tweeting again, 2022 does not appear to be a good year for DOGE.
We could see Dogecoin recovering $0.50 if Bitcoin reaches $100,000, but we do not expect it to break $1 this year. The year before a Bitcoin halving is traditionally a bad year for the cryptocurrency market. If the current trend continues, Dogecoin might plummet to roughly $0.05 during this time.
The good news, though, comes back here. Dogecoin has a huge following and a huge number of token holders. As a result, we anticipate that during the next crypto bull run, DOGE will ignite the hype engine and drive to new all-time highs.
We believe Dogecoin can theoretically reach $1 in 2024, though some modification in the block production rate appears to be required to achieve this. Whether it’s through cost-cutting or the creation of a network around the cryptocurrency.
Dogecoin will reach $1.50 in 2025, according to our forecast. While this may appear bullish, this level of market capitalization is still less than half of Ethereum’s current market capitalization. Its value might potentially be $0.01 if the Dogecoin foundation does not make the necessary changes, albeit this is not a guarantee.
Doge, on the other hand, has more token holders and brand awareness than most cryptocurrencies could ever hope for if it makes the necessary modifications to survive. While it’s easy to dismiss Dogecoin as a joke, it’s managed to see a price increase in each of the three crypto bull runs so far.
There aren’t many cryptocurrencies with the same amount of success as Bitcoin. But now we want to know if you think the joke will end when Elon Musk goes on to new things, or if you believe Dogecoin has a place among the top cryptocurrencies.
Disclaimer: We are not a registered investment advisor. All articles on this website are provided “as is,” with no express or implied guarantees of any kind, including warranties of accuracy, completeness, or fitness for a particular purpose. This is not trading advice, and we are not responsible for any losses made as a result of using it. I recommend speaking with your financial advisor and conducting your own research before investing in cryptocurrency.