Great article, but I disagree with one point. I do believe the value of one Doge will reach one dollar.
A 100 billion market cap is just ~8 times that of Bitcoins. If Doge succeeds at its goal of being the tipping currency for the internet it will reach at least one dollar.
Update:
To expound on my point, I think Dogecoin solves the single biggest crisis the Internet has created, and that is "How do we compensate people who create digital works that are infinitely reproducible?"
This is Jaron Lanier's beat. Has the internet delivered in broadening the middle class? No, it has threatened the middle class.
When people work for Likes, or reputation, instead of cash, they become impoverished.
Dogecoin can solve this problem by being a viable micropayment system. It can bring a currency layer to the internet, undergirding everything. As coders, Doge allows us to work with currency as easily as we work with an API.
The economic security of creators depends on being able to extract revenue in amounts greater than what advertising provides but less than what credit cards are capable of. All of the micropayment companies so far have failed. The prize is huge.
I bought into Dogecoin because I was vexed by the problems Lanier pointed out to me and I saw it as a micropayments solution that has gained explosive traction in just six weeks.
This is coming from someone whose HN comment history has been very down on cryptocurrency. I now have the fanatic zeal of a convert.
Yes, and to be more concrete, the idea of micropayments as a way to keep the media/journalism industry alive was something that was essentially dropped in favor of pay-walls. I don't think anyone considers the latter solution to be wholeheartedly successful. If ƉOGE tipping can finally make micropayments a reality, it's going to get a lot of attention.
I like post-work currency. Automation induced under/unemployed millenials living at home posting content to Twitter/Facebook deserve to be compensated for their work. They helped create $100 billion in value for FB shareholders at IPO. I hope they will be compensated in Doge.
I also have hated on Bitcoin (less so on Litecoin). Nonetheless, I'm significantly more open to the idea of using Dogecoin, if only for the absurd numbers they have. (I can give you 1000 DOGE and everyone feels good about it)
You have your numbers a little bit wrong. The total number of coins is what you are referring to. There will only be 21 million bitcoins and 100 billion dogecoins.
The market cap is their value measured against the US dollar. Bitcoin is at 10 billion at the moment http://coinmarketcap.com/ If dogecoin rose to 100 billion ~10 the size of bitcoin each coin would be worth a dollar.
You are right in that market cap means total value... however, in the context of the article and the comment I was replying to, they meant total coins (where else would the 100 billion number come from?)
Wait... now that I read the above comment again, I think you may be right... they are saying that it would only take the total value (market cap) of dogecoin to be 8 times the current market cap of bitcoins for the dogecoin to be worth at least $1 a coin.
So nevermind, you are right and I was wrong. In my defense, the original comment was a little unclear about what they meant.
Indeed, with today's $940 Bitcoin, a $1 Dogecoin would that the Dogecoin market would be worth over 5 times the current Bitcoin market.
I don't see it happening, and I don't even see the Dogecoin market cap even reaching the Bitcoin market cap, at least not unless Bitcoin itself becomes a major currency, and Dogecoin becomes the official joke currency.
it would probably be a lot clearer if you spelled out "capitalization" instead of using "cap", in a context where there are also maximum values restricting things.
The people who created this were not idiots, they learned by looking at previous coins.
1. more coins for larger transactions instead of fractions
2. faster block rate (one a minute)
3. faster difficulty adjustment time (4 hours vs days or weeks)
4. faster halving time (every other month or so)
5. faster time to last block (mid 2015)
6. faster confirmations
The random payout on a block is a neat idea. I think they borrowed it from lottocoin or luckycoin.
It doesn't have to hit a dollar to be successful, even if it hits a penny USD, it will generate a ton of activity and "wealth".
The only big problem they have is their blockchain is going to be insanely huge in a year, like staggeringly unmanageable.
Weren't idiots? They accidentally hard forked their own currency without realising what they were doing by changing a transaction limit. The developers have no idea what's going on and it's readily apparent.
Boy, I really wouldn't want to work with you. The unfortunate situation to which you're referring was the result of trying to mitigate a microtransaction attack that was happening on the blockchain. It was a rock and a hard place situation, and because the community was still relatively small and focused, the devs tried to get everyone to upgrade simultaneously. They chose to risk a fork rather than risk effectively dead-ending the blockchain with dust. There was no good solution that didn't come with risks, but it certainly wasn't a result of "idiocy" as you flippantly imply.
No it did not. Bitcoin has trouble because there was a parameter in Berkeley DB that nobody thought would ever be hit (the number of locks associated with a particular table). They'd tested against this and believed the value to be enough, except that in very rare cases when values outside what they thought possible caused some nodes to reject a particular block. With a portion of the network seeing the block as invalid, the consensus was broken and the chain forked.
There were test cases, peer review and discussion about the potential problems. None of those occurred with dogecoin, who had a rabid developer changing values without understanding what they did.
Which is fine, because Dogecoin is not designed to be a longterm store of value.
As far as I'm concerned, Dogecoin having more Transactions / day makes it far far more successful than BTC. BTC, despite being a better store of value, is literally affecting fewer people, because everyone is so obsessed with hoarding the dang thing.
Dogecoin takes the whole approach and makes a joke of it... and that is why it will be a perfectly fine transaction medium.
Yes. The author changed a value in an updated client that caused half of the network to see one chain as valid, and the other half to make scores of sub chains on the side. The value of the transaction was not the issue, but the developer not understanding how to maintain a consensus over hard forking changes.
If I am not mistaken, I think there was an emergency release because someone was flooding the blockchain with micro-transactions as an attack on dogecoin and they had to raise the transaction fee/minimum transfer.
Either with that or around that time they also had to do a patch to raise the transaction limit.
Both issues were hard to anticipate and I guess if you have to cause a fork, at least it happens while the chain was "young".
There was nothing hard to anticipate about the dogecoin fork; literally hours after the commit making it possible was made I heard from Litecoin/Bitcoin developer Warren Togami among others that the Dogecoin devs were idiots who had just set themselves up for a fork. Similarly the micro-transactions flood was something people had predicted would happen well in advance.
To outsiders this stuff may seem mysterious and hard, but to people with real experience in this field it's easy to see that the Dogecoin team don't have a clue.
I patched dogecoin to fix the transaction limit to prevent dust.
What I am realizing is that dogecoin, by virtue of being not so serious, is gaining more developer mindshare who want to experiment and learn. That's what makes it fun, and what gives it potential.
What makes you think those arguments are coming from the good Bitcoin devs/theorists? That community - I'm a part of it - thinks altcoins are valuable testing grounds for ideas and have used Litecoin for testing out new ideas in the past.
But Litecoin has the very competent Warren Togami as lead dev right now; if dogecoin had competent devs maintaining the client they'd get some respect. But they don't.
Before Charles Lee started Litecoin he created Fairbrix, a re-branded and tweaked version of Tenebrix. If you know anything about what happened to Fairbrix it is clear he was learning on the job (not a "competent dev" by your standards). Looking down your nose at Dogecoin's devs because they are still learning the codebase is pretty hypocriticial.
That's why I specifically said Warren Togami - he's taken over from Charles Lee as the main driver of Litecoin development and has done an excellent job at that.
Believe me, I know. I've written a few times now to the non-dogecoin communities that attacking dogecoin would just make it stronger; even a successful attack won't do anything because doge doesn't actually need to work to grow their community.
It's much more useful to us to watch Dogecoin fork and get more valuable data on how forking events happen to crypto-coins.
It's a pity that Dogecoin uses such an out of date codebase - having it more up-to-date would give a nice target with real economic value and importantly transaction volume for testing out exploits. (for crypto-coins "exploits" can mean economic design issues which can't necessarily be fixed with code changes) The very short block interval makes attacks like selfish mining easier to try out for instance. Similarly because they kept the 1MB blocksize limit, but with a 10x shorter 1m interval, it gives insight into what Bitcoin would look like if the blocksize limit was raised.
Keep in mind that most people in the crypto-coin dev/theory community don't actually own that many coins, and in any case are insiders that can easily move their coins to whatever crypto-currency is most likely to grow. The smart people aren't wedded to any particular currency, but rather the growth of crypto-currencies in general. Understanding how they fail is essential to making crypto-currencies succeed in the long run.
As a techie who's been following bitcoin and disapproves of their libertarian ideology, I like the Dogecoin attitude. It's all a joke. It's like it's not serious. It's like people know that you're not going to replace all the money.
Funny enough, that attitude may make it more successful in the long term. History has shown many times that it's not always the 100% dead serious who make it, but those who are just, well...making it up as they go along.
Lots of truth to this from a brand perspective, but the underlying technology of Dogecoin is pretty serious, it just happened to be deployed in a playful way. Not unlike the way that gaming technology or 4chan’s infrastructure is serious.
we can have serious hearing in Senate on BTC with outcome rules [almost] killing or seriously affecting it. Having a hearing and SEC/FBI enforcement on Doge? With Doge as a witness. Put you paw on the Bible and repeat after me ...
Well...there's that one operating system out there that got pretty popular after some guy in Finland posted it online. Name escapes me at the moment, though.
Crypto-currency is not decentralised by nature. Bitcoin, dogecoin etc. are just one model. There are other models for crypto currency that involve issuing banks and have other advantages - offline transactions and no crazy waste-of-electricity hashing races.
For BitCoin, it'll be transaction fees. In order for your transaction to be proceeded (which requires a form of mining), you'll have to pay a small fee.
...says the crazy communist. Certamen ad hominem in infinitum, ac vicit nemo (or some such). According to the dictionary ( http://thesaurus.com/browse/libertarian ) we could go on for a while, it's just utterly pointless. Rather than pointing fingers (babies can do that much), I'm merely asking a simple question why said libertarians would be crazy. FMR
The fascinating thing about DOGECOIN, is the vast majority of the internet judge it purely based on its aesthetic and name. Take away the "DOGE" and it still has one of the most supportive, charitable, and active communities. All three of those are important to have a successful currency because that community grows.
People call it a joke or parody purely based on its name, and don't have the mental fortitude to think beyond the DOGE aesthetic which was intended as a spark to get the engine going.
DOGE could become the de-facto internet tipping protocol if they go that route.
Hell, they could even change the name and shut everyone up too... and then I wonder if people would still call it a joke currency or parody? Hmmm..
Just a random comment on the whole "community raised 25k"
In fact one self identifying bitcoin speculator contributed $20k of that after moving some bc>doge all to drive speculative in doge through the assured free press (and wrote about his intent on reddit).
That seems like the sort of market manipulation that you used to be able to do in equity markets before the SEC stepped in and at least made it difficult.
I believe the problem they describe is both real and somewhat frivolous at the same time.
The minimum transaction amount that does not incur fees is currently .01 BTC, so I think there is an actual issue for micro-transactions as things stand now.
However, the smallest indivisible unit of a bitcoin is 1 satoshi (1e-8 BTC), and if the bitcoin fanatics are to be believed and 1 BTC will be worth anywhere from $40,000 to $1,000,000 in the future, it makes sense to deal in the smallest possible denomination that can show up on the blockchain. A 200K satoshi tip sounds a lot better than a .002 BTC tip, or even 2mBTC (hope I got those decimal places right!)
I got into Doge when it was about a week old, stupidly bought like 1000 DOGE for 0.001BTC (there wasn't yet an exchange), which was way overvalued at the time. Then I setup cpuminer on my computer and let it run for a week and watched as 10,000 DOGE was added to my wallet. And then my mining pool shutdown. Just setup a mining pool account again this week and now my projections are looking more like 1000 DOGE every couple of weeks. ughhh
I completely agree though, feels so much better to have 10,000 DOGE than 0.01 BTC. And makes for a much better tipping experience
Agreed. I was mining primecoin to get bitcoin, and noticed this new thing called doge. Since I like the idea of having 10,000 of something I exchanged for it instead.
You know what? I have had more fun with that then any of the bitcoin I have. I have been playing with day trading, tipping people online and buying things from people.
To be honest I just winged the whole thing. Did all the trading on bter.com which I am a fan of.
I know nothing about trading at all. Well nothing beyond random reading. Hence the appeal of trying it out with inconsequential sums of money like dogecoin. After all 20000 Dodge is cheap but enough to have fun with on the exchange. I got to experience the rush of a pump with unsustainable grow followed by a crash. All the while trying to increase my holding. I also had a ball doing so. The fun value I got out of Dodge easily exceeds anything I got in the bitcoin world.
This is a little absurd. It's like hearing that people living near the beach just started using shells as money all of a sudden. Except without even the inconvenience of physical shells.
The Lotto is "absurd" but I still play it when it reaches those ridiculously high levels. Spending[1] $400 on CandyCrush is "absurd". The $999 iOS app "I'm rich" was "absurd". The idea such a thing as bitcoin, from an anonymous dev, somehow reaching $1,000 each is "absurd" .....but here we are. :)
As much as I thought Dogecoin was ridiculous, I now know that I better go get some... just in case.
Heh, okay. So I take it you're a millionaire because when you first heard of bitcoin you were like "That's a great idea!!!" and minded/purchased millions of them. Or if you missed that train, you got onboard Litecoin when it was less than $5... or Namecoin when it was less than a dollar but shot up to $15 during November 2013....
Not a millionaire in USD because even though I did hear about Bitcoin very early and I did think "That's a great idea!!!" (I was lucky enough to have studied a bit of cryptography just before hearing about Bitcoin), I wasn't able to buy much because I live in a country that suffers one of the very problems Bitcoin was created to fight (capital controls). Using my laptop to mine was out of question, losing it would have meant also losing my job and become homeless, so it wasn't a risk I could afford to take. Having said that, I'm way wealthier than I could have expected to be at my age and general situation, thanks to Bitcoin.
Litecoin wasn't a great idea, just a copycoin. It wasn't even innovative on the scrypt part, they just copied Tenebrix and changed the branding. So it's the same crap as Dogecoin.
Namecoin is a great idea, and we definitely need to decentralize the web, but I don't see it taking off soon.
Whether a copycoin's price goes up a lot or not does not tell us anything about whether it was a great idea or not. You seem confused on that part.
Can anyone comment on the profitability of mining Dogecoins vs bitcoins? It seems weird that mining one crypto currency would be more or less profitable (in dollars per watt terms) than another. Rational miners seeking to optimize profits would tend to mine the more profitable coin which would drive up the supply and drive down the price until an equilibrium is achieved.
edit: While we are at it, does anyone know how many dogecoins can you expect to mine per kilowatt-hour?
There are mining pools available that automatically switch all miners to the highest profitability coin. People who utilize these pools will typically immediately cash out to less volatile options, either to BTC or fiat. (Multipool.us and Middlecoin.com are just 2 examples)
Some miners aren't in it for the immediate profitability though; While you may be able to mine .025 BTC worth of AltCoin A per day pretty regularly, I may choose to mine the much less profitable AltCoin B that only nets me .01 BTC each day because I believe holding it will make it much more valuable N months from now.
I'm currently CPU-mining (and one crappy nvidia gpu),which would net a few dollars a day at current rates. If I had serious hardware, I would imagine it would be quite profitable. I'm currently just holding onto it and tipping with it occasionally, as I find the whole thing kind of entertaining.
Think about it this way. I want to turn my electricity into dollars by mining crypto currencies. I mine some coins and then sell them to lock in the profit. Putting my freshly mined coins on the market increases the supply of coins available for purchase (and it should marginally drive down the price).
The increase in supply is fixed by the algorithm, so you're really just increasing the difficulty and making it less profitable to mine. If more people decide to buy at an exchange instead of mining, it would tend to increase the price.
Dogecoin is one of those things that is right on the border of insanity and genius. The brand might give it such momentum and it could fit in as the internet tip karma. Reddit gold, gittip, doge, types of coin have social merit for sure and a bit of monetary reward.
Great post. Also perfectly explains why the idea that bitcoin will rule the world is nonsense; there's infinite competition from other fad currencies.
Whatever benefit you think bitcoin has or will have - WHATEVER benefit - someone will make another currency that does it better and cooler, and then no one will have any reason to have bitcoins, and then your life savings evaporate.
Social networks, teen pop music bands, internet currencies - all follow a nice, predictable rise and fall arc. We can't exactly predict how high the rise will be, or exactly when the fall will come, but we know it's coming.
You know, it's probable that someone will invent an automatically diversified wallet that tracks the market cap of cryptocurrencies overall. Rise and fall of new cryptocurrencies would be of interest only to speculators.
Instead of trying to set the value of each denomination of a currency to a certain amount why don't we use SI prefixes for them? Making very large and small numbers more relatable is what SI prefixes are designed for.
Instead of talking about $DOGE 700 = $BTC 0.001, why not say $DOGE 700 = m$BTC 1?
This solution would work even if the currency drifted further from the value of the dollar, just start using u$BTC, n$BTC, or k$DOGE etc.
That has sort of happened. People discuss dogecoin in terms of xxx satoshi where 1 satoshi is .00000001 BTC. So dogecoin is currently ~170 satoshi or .0000017 BTC
That's the thing - my karma is high enough that I know what not to post. Generally speaking. Every once in a while though, I get tired of pretending that I don't also have a goofy sense of humor and stuff like this slips through. Oh well.
Comes up in share grants as well. A 10,000 share stock award sounds a lot more impressive than a 50 share stock award, even if the former company has 10,000,000 (0.1%) shares and the latter 10,000 (0.5%).
It's interesting when you look at 42/BTC/LTC/DOGE. It seems the common denominator is rarity. The less rare, the less value, the more the higher the value. Sounds similar to something. DOGE are the pennies of cryptocurrencies. Just two cents, or two DOGE? I'm not sure anymore.
You need to buy Bitcoin first. Once you have $20 of Bitcoin load it into an exchange that takes Bitcoin and trade. Apparently cryptsy is bogged down with orders, so I would suggest http://bter.com/ which has been working quite well.
I view Bitcoin as being more like "gold" and Dogecoin as more like "change in your pocket". As it is even with the recent runup in price, the value is not even 1 penny USD per Doge.
Gold is more valuable, but in terms of actually changing hands (I am not talking about trading paper gold) the daily volume is low. Meanwhile lots of people use coins every day.
I think it's ironic that 'Small Numbers' in now #2 with 23 points and 2 comments (well, 3 now). The HN penalty regex isn't fine tuned. Also, ironic, that much of reddit has a financial incentive to promote it. Can I promote real estate and bulletin board stocks if I give it a tech slant?
My general thought, at least thus far, was/is that the "mainstream" crypto currency market will be a winner-take-all kind of market. But maybe there will indeed be one crypto currency for big transactions and one for small. It will be interesting to see how this plays out. As an insurance policy of sorts, I've acquired my first-ever Dogecoin. I am guessing others will as well. Hmm.
A 100 billion market cap is just ~8 times that of Bitcoins. If Doge succeeds at its goal of being the tipping currency for the internet it will reach at least one dollar.
Update:
To expound on my point, I think Dogecoin solves the single biggest crisis the Internet has created, and that is "How do we compensate people who create digital works that are infinitely reproducible?"
This is Jaron Lanier's beat. Has the internet delivered in broadening the middle class? No, it has threatened the middle class.
When people work for Likes, or reputation, instead of cash, they become impoverished.
Dogecoin can solve this problem by being a viable micropayment system. It can bring a currency layer to the internet, undergirding everything. As coders, Doge allows us to work with currency as easily as we work with an API.
The economic security of creators depends on being able to extract revenue in amounts greater than what advertising provides but less than what credit cards are capable of. All of the micropayment companies so far have failed. The prize is huge.
I bought into Dogecoin because I was vexed by the problems Lanier pointed out to me and I saw it as a micropayments solution that has gained explosive traction in just six weeks.
This is coming from someone whose HN comment history has been very down on cryptocurrency. I now have the fanatic zeal of a convert.