The Unintentional Success Of

In this article, we are covering the general movement of one of the most extensive alternative coins in existence, which is DogeCoin. Some of you that are reading this either subtly heard about this currency within the media, while others may already assume what the currency is based on the meme that the token itself is based on, which is the 'Doge' meme.

After a photo was taken in the apartment of a Japanese blogger by the name of Atsuko Soto in February 2010 of a Shiba Inu dog by the name of Kabosu, this quickly led to the popularity of what is known today as a ‘meme’, an indirect art form that can be shared with others and related to without needing to have specific context of the subject at hand at necessity. Since cultures sometimes combine, particularly during unforeseen moments in internet history, the picture itself was conceptualized shortly after its rise in popularization during 2013, establishing itself as DogeCoin.

This coin, in particular, was simply a fork of Bitcoin, where two software engineers from separate companies, Billy Markus and Jackson Palmer, came together based on a quick conversation that took place on X (formerly known as X), joking about the idea of creating such a project. Although it began as a moment of internet humor, the conversations about the potential project turned it into an existing currency, which today values up to a market capitalization of 10 billion$.

With the initial supply initiated by Markus to be 100 billion tokens, cryptocurrency miners from across the world embraced the rising popularity of the currency while also maintaining caution over its potential disadvantages at the same time. Keep in mind, this currency is only based on a ‘meme’, which makes it instantly an altcoin since there is no particular asset behind it, it solely relies on how much people discuss it and whether or not it’s positive or negative.

If it’s positive, usually the positive uprise in demand surpasses what’s being negatively discussed, yet the risk is equally detrimental when a particular person, especially with that of a major reputation, ties in their entire commentary on the currency more than everyone else. Before I generally expand upon this, it’s essential that I cover the major gaps in the history of this currency. As it’s generally meant to not take itself seriously, it still remains as a financial powerhouse for early investors and mining pioneers of the network, though not so much for late contributors that have only found out about DogeCoin as of now or a few years ago.

Generally speaking, in the world of cryptocurrency, the cheap route to take when it comes to being involved with currency, especially regarding the purchase of tokens is that you may either mine the currency with a base level of equipment that sources appropriate computing power, or you purchase a specific part of the coin itself. Taking the mining route does indeed benefit those who want to be rewarded for generating new blocks within the chain, yet, unironically the intention was to create the altcoin that would exactly do that.

Before the introduction of DAOs (Decentralized Autonomous Organization), the sole reason as to why PoS (Proof of Stake) became the next best solution to solving excessive energy use within blockchain networks, the PoW (Proof of Work) mechanism was enough to drive the early uses of mining at the time when Bitcoin was still a relatively new concept amongst those just entering the financial world. Needless to say, there is a bar of entry, not necessarily for those who made early investments, but surely for those seeking to profit off of something with an incredibly high risk of losing value in an instant.

This general principle of risk and reward imbalance happening within a randomly generated currency is called the low volatility anomaly. In this particular case, a currency that is unlikely to change unpredictably on a large scale over time will likely give greater returns, hence why stablecoins generally do better than altcoins for this reason alone. Of course, since this is loosely based on the efficient market hypothesis (EMH), which states that the prices of shared assets within a market are reflective of all information relating to it or other products in the long run.

Now, the important aspect of this is that the merged instance of DogeCoin between finance and popular internet culture is not the only indirect combination that happens on the internet, since other related aspects of the financial sector such as stocks, which are codependent on demand and word of mouth at the time since they directly are affected by the performance of companies. This adds to the financial movement behind DogeCoin, since all the money that is invested into its market supply gets circulated beneath other corresponding elements of the market as well, which adds to the efficient market hypothesis already.

As the cycle of alternative coin prices is incredibly volatile under these regulations, the next examples I’ll be mentioning relate to how community collaboration applies to the dictation of these tokenized values, which is guaranteed not to be on the developer's side. Because market timing is a major part of making investments with high returns, the predictions of DogeCoin can be made directly yet indirectly from those largely influencing its changes, at which in this case the most powerful and only driver is social media.

In this particular situation, the person who was most responsible for DogeCoin, especially after the absence it was given by its developers in the year 2015, especially with the lack of updates put onto the currency itself, was the co-founder of Tesla Elon Musk. Seeing the currency as a vantage point, he was the first billionaire in the world to ever give unprecedented attention to it and was doing so by speaking about it on Twitter.

This is also a major example of how decentralized currency has a central role in the control of its demand, which is influenced by the Web 2.0 applications such as Twitter, creating a collision between two worlds at which some aspects of control are still idealized. By speaking about the currency with his millions of followers, the major impact of the currency itself just from one person was already affecting those who were investing in the tokens early-on, creating a ripple effect in the measured volatility at the time.

As time went on, Elon Musk slowly became what the internet coined as ‘The DogeFather,’ which would only fulfill the opposite intentions of the coin's valued control, making it more central to the voice of one influence rather than that of the combined community. Other instances only made this more powerful, such as the fact that there was a declared ‘DogeDay’ on Twitter that would take place on November 2nd, making up a bigger hike in its value, followed by shorter market crashes right after. There was also a major example of Musk himself being held for $258 billion in damages, as his acts included making references to the coin itself during an SNL skit, as well as changing the entire button icon of the newly purchased X (formerly Twitter) website, for which about 31% of the site's users had noticed at the time.

Once again, going from talking about a Web 3.0 generated product within a Web 2.0 social media platform, in this particular situation, control was established due to its demand-fueled nature, at which other aspects of that very same platform and its references to the application only further prove control over its valuation.

Referring back to how one alternative to earning DogeCoin instead of buying it for large expenses is mining it, relates also back to the market volatility position it holds, especially under the low volatility anomaly principle. In this case, when an average crypto miner is rewarded for helping to generate a new block within the network, there also takes place a secret transferral in the currency itself which can all of a sudden generate profits.

This method relies on the mechanism behind crypto mining itself, which is using computing power to solve mathematical problems identified under the Scrypt algorithm, which similar to the SHA-256 algorithm that Bitcoin uses, rewards the corresponding currency’s tokens when the equation is solved with the right computing power, though is also held in common with Litecoin. In this case, when there is lower volatility within DogeCoin market movements for higher returns, the miner tries to seek these token rewards yet can instantly switch to Litecoin using the exact same algorithm if the risk is lower than the return compared to the previous coin itself, hence creating transparency in quick transferability based on the code behind the network itself.

If there was a cyclical way of explaining it without over-emphasizing on the financial terminology, currency volatility is split between two cycles, the ‘Flywheel Up’ cycle and the ‘Flywheel Down’ cycle. In this case, especially for crypto miners, the price of Bitcoin may go up, urging more people to buy it in the instant which defines the upward trend of the market, yet the opposite being the ‘Flywheel Down’ principle, is that the price drops suddenly urging people to sell large quantities of it. This is why making correct predictions between either cycle is important, otherwise, the likelihood of significant losses taking place turns more into a gambling activity than that of a reasonable investment itself.

However, this only increases with the unlimited supply that the coin itself holds, yet only widening the gap for a lower barrier of entry, yet increased volatility since more people are risking finances during this cyclical period of buying high and selling low, something that’s practiced in popularity within general finance. Despite these concurrent pricing activities happening simultaneously, the currency did still manage to become a major investment eye-opener in 2018 when, three years after the coin's absence by the developers, it reached a new market capitalization of 2 billion$.

The only currency ever having reached such a value, it has made positive impacts from years before to keep up its relatively wholesome image, these examples being their fundraising towards a Jamaican bobsledding team as part of the 2014 Sochi Winter Olympics, which went up to a maximum of 30,000$ USD at the time. Companies have also come to accept it as a payment currency, such as the cinema chain AMC Entertainment Holdings Inc. allowing people to spend the currency towards digital gift cards, as well as its payment method being popular within Tesla itself to no surprise.

The word ‘doge’, in of itself, originated from the cartoon series Homestar Runner, which had already birthed the popular culture from the beginning, creating a shared community that is only held liable for its popularity and nothing more to it. In addition to all of this, DogeCoin had also adopted the nature of ‘tipping’, which is essentially rewarding DogeCoin to people who particularly do a specific favor. This can be thought similarly with airdrops when free currency is earned for performing a particular task.

With the general culture of ‘tipping’, not entirely connected to the extensive payments a waitress receives during her shift, instances have taken place where NASCAR in of itself has been offered the currency in exchange for the meme-inspired car itself, which was largely promoted on the very platform that it was valued with to begin with, this being X. As can be seen, demand trickles into every part of culture where the word ‘influencer’ is also involved, making the cycle of investing profits and losses always coincide with the digital interactions that drive the flow of the token's brand to begin with.

Overall, it’s fair to say that this particular alternative coin, amongst millions of others, has held more of a cultural impact on the blockchain rather than a financial meritable one, only driving the conclusion that we’ll be expecting more unexpected combinations of finance and almost unrelated internet conversations for the future, which can simply fall under the hood of the ongoing spur in collaboration that the application-based network holds to this day.