Dogecoin: The Multi-Billion Dollar Joke

From being based on a meme and developed as a joke to having a peak market capitalization of a staggering USD 93 billion dollars and becoming an accepted form of payment to SpaceX, such has been the journey of a cryptocurrency called Dogecoin. Before we get into what led to this stellar rise of Dogecoin or even what cryptocurrency is, let us take a step back and define what currency means.

Currency is a medium of exchange for goods and services. In short, it's money, in the form of paper or coins, usually issued by a government and generally accepted at its face value as a method of payment. ~Investopedia

Simply put, currency is some inanimate object that is backed by a certain authority and can be used to pay for goods and services. None of these things have any intrinsic value, the 500 ₹ note is not worth 500 ₹ by itself but when it gets backed by the Indian Government and is declared as legal tender it becomes worth the number. It might surprise one to know that the governments of the world are not the only people that can create a currency, any and everything that can be exchanged for a good or service is a currency. Be it the Rupee note, shells, cocoa beans, a gift voucher, cryptocurrency or even monopoly money, as long as it is backed by an authority and you can buy something with it, is currency.

Bitcoin was the worlds first cryptocurrency and is based on the blockchain technology with every transaction being recorded on a public ledger. Bitcoin was designed to cut out the middleman from transactions. At this point one might wonder, who backs these Bitcoins? the answer is simple, the people do. The validity of Bitcoin is given by the community of people that mine it and yes, it holds value. The day people decide that bitcoin is worthless, the cryptocurrency will loose all of its value and will be nothing more than a bunch of data.

The good people that made Bitcoin also made its code open source which led to several other cryptocurrencies like Ethereum, Litecoin and Cardano each having a slightly different code from the other but built on the same technology. Making a cryptocurrency simply involves writing the code, putting it up online and hoping that enough people will run it and give it the backing that it needs to become a currency. Much like Bitcoin these new cryptocurrencies are only valuable as long as people see value in them.

Dogecoin started its journey when an Adobe employee, Jackson Palmer, tweeted saying “Investing in Dogecoin, pretty sure it’s the next big thing” as a jest based on the then prevalent doge meme. After some encouragement he bought the domain dogecoin.com and along with Billy Markus set out to make this a reality. Upon launch, the cryptocurrency rapidly spread across social media. Within months, it hit a multi-million dollar market capitalization.

Dogecoin took off as a tipping system on sites like Reddit where people could send small amounts of it to reward content creators and led on to sponsoring the Jamaican bobsled team, a NASCAR driver and wells in Kenya. Tesla CEO Elon Musk has jokingly said that Dogecoin might be one of his favorite currencies and has now declared that he will accept payment in Dogecoin for SpaceX' next lunar mission Doge-1. Headed for the Moon, who knows what heights Dogecoin and its lovable mascot might reach in the future.