"The price doesn’t even matter," they say about their pet project. But behind the bark, there's byte.
Scrooge McDoge riding the Dogecoin wave, by /u/entosse
By now, you’ve probably heard of Dogecoin, the confusingly popular cryptocurrency that uses a regal looking Shiba Inu as its mascot and has a strict style guide of Comic Sans MS for absolutely everything. In a few short weeks, Dogecoin has gone from being an incredibly silly attempt at a cryptocurrency, to one of the most unlikely contenders in the burgeoning digital money realm—simply by being attached to an addictively cute meme.
The doge meme is based on an obscure short video from Homestar Runner, an early internet repository of viral comedy videos, in which a puppet version of Homestar Runner spells dog as “doge.” Years later, the spelling was revived on reddit, ported to Tumblr, and eventually developed into the Shiba Confessions blog, which Know Your Meme says popularized image macros of "shibes" with their thoughts pasted on top in Comic Sans.
Now the aesthetic has been used for currency. Using a Shiba Inu as Dogecoin's figurehead instead of, say, the boring ol’ Queen or some dead president, has clearly worked. Not only has this seemingly farcical currency been covered by Bloomberg Business Week, Business Insider, the Washington Business Journal, and other ostensibly “serious” publications, Dogecoin already boasts a vibrant community of users who are bullish on the currency even if each dogecoin is still worth fractions of a cent.
To make more sense out of this phenomenon, I got in touch with Dogecoin’s creators, Jackson Palmer, a marketer at Adobe, and Billy Markus, a software developer at IBM. Markus told me Dogecoin was made “without much real thought.”
Palmer, who says he follows cryptocurrency closely, took notice of the sheer amount of altcoins that have popped up in an attempt to take a bit of market share away from Bitcoin. Megacoin, AnonCoin, SexCoin, WorldCoin, DigitalCoin, GoldCoin, BBQCoin… these are all “real” virtual currencies on the market right now. So, on November 27th, Palmer tweeted jokingly that he was “investing in Dogecoin, pretty sure it’s the next big thing,” to which some of his friends encouraged him to actually make it happen. So he did.
As Palmer told me, “one night after work, I sat down with a beer, I had too much time on my hands, and I bought Dogecoin.com. Then I Photoshopped the logo onto the coin and put it up there.”
When Palmer published that simple website less than a month ago, he didn’t have any of the software written that would have made Dogecoin an actual currency. Then Markus found the early Dogecoin website and reached out to Palmer.
“I was tinkering with a coin that I had already made called ‘Bells,’ based off of Nintendo’s Animal Crossing, that wasn’t particularly successful," Markus said. "I was mucking with it and I figured out how to change all the fonts to Comic Sans MS, then thought, ‘oh ok, this could be funny.’ So I had a mockup of the client with the Dogecoin picture Palmer made, and I just wanted to show that I wasn’t a n00b and I could actually make coins… This wasn’t some weird master plan that we had.”
Once Markus proved to Palmer he could turn Dogecoin into a functional virtual currency, Palmer was ready to go. “After he sent the screenshot to me, we got in touch over email and thought: ‘Let’s push this thing out,'" he said.
While I assumed that Markus and Palmer must be rolling in Dogecoins right now, apparently that isn’t the case. Cryptocurrency is generated through a process called mining, where the computers on the currency’s network are paid to decode “blocks” that help the network verify transactions. Given that Markus and Palmer were the first people on the Dogecoin network, it would follow that they would be able to get a ton of Doges—because no other mining computers would be competing with them for blocks at the time—but Markus told me Dogecoin gained popularity so quickly he was unable to collect a significant stash of virtual dog money.
The quick growth of Dogecoin speaks to the power of memes more than anything else. As a Litecoin clone, the currency's major difference from a number of other altcoins is its marketing. According to Palmer, having a fluffy dog as a mascot is indeed the key.
“A lot of cryptocurrency—namely Bitcoin, with its history with Silk Road—has been sitting in the shadows. It’s associated with the dark web," Palmer said. "So I think by combining a coin with a meme, which is something that people see spammed to hell on their Twitter and Facebook feeds every day, I think it adds a face, the Doge face, and makes it more accessible. It’s something people can get behind. It’s no longer this shady thing that geeks in basements use."
"It’s important to note that this wasn’t some master plan, it was just the two of us throwing a few emails back and forth before we pushed it out there," Palmer continued.
"The amount of people who are rooting for this and have some Doges and are really good natured about it is amazing."
The crucial struggle for Bitcoin, and cryptocurrency at large, is getting people to understand what it is, how it works, and how it can be useful to them. People are curious about cryptocurrency, but they don’t understand it. While Dogecoin still has a much smaller market cap than Bitcoin, anecdotal evidence suggests its meme-based accessibility is helping attract new users.
“In hindsight it was obvious that cryptocurrency was ready for something that was more accessible, and a meme is obviously really accessible," Markus said. "Everyone recognizes the doge meme. It’s based on a dog, and everyone loves dogs. It was a perfect storm.”
And there's hard evidence that Dogecoin is working at least a bit outside the Bitcoin sphere: when Bitcoin suffered a 50 percent price decline last week, every altcoin crashed right along with Bitcoin—except for Dogecoin, which jumped up 14 percent. (The bubble popped this last weekend, but Dogecoin appears to be on the up again.)
“Cryptocurrency has a lot of growing to do, and it also has a lot of stabilizing to do," Palmer said. "If all we’ve done with Dogecoin at the end of the day is grow awareness in a decentralized currency such as Bitcoin, then I think we’ve done a good job, because for a lot of the people who are using Doge now, it’s their first cryptocurrency that they’ve ever used, and they’ve started mining. They’re learning, and I think it’s great that people actually want to learn about it because it’s associated with this doge meme.”
Essentially, Dogecoin’s Shibe is the Trojan Horse through which Palmer and Markus have introduced cryptocurrency to a growing audience. Currently, Dogecoin is bouncing between the 10th and 14th spot for the world’s largest cryptocurrency in terms of market cap, it is being searched on Google more than Litecoin, the supposed silver to Bitcoin’s gold, and the Dogecoin subreddit is one of the fastest growing conversation boards on Reddit itself.
Of course, this rapid growth is based on almost nothing at all, given that there is no real means to exchange it for goods and services, besides tipping fellow Dogecoin enthusiasts when they make a funny Dogecoin picture or video, or by giving someone Dogecoin to buy you a pizza. If Dogecoin stays popular, real-world applications will appear here and there. For example, there's a martial arts school in California, called Kuk Sool Won, that accepts Dogecoin as payment, and there's talk of starting an online foundation for dog shelters that accepts Dogecoin donations.
Still, Dogecoin is more than likely just a crazy internet fad that will dissipate into nothingness in the next three months. But what if it doesn’t? Adoption is key. Last week, when Dogecoin was introduced to a popular (and infamous for its many technical errors) cryptocurrency exchange called Cryptsy, Dogecoin’s value quadrupled. For a currency that many people think is a “stupid meme coin,” that's noteworthy.
By no means does the Dogecoin community seem to have any grand delusions about the future of their beloved Shibe-dollar. “The price doesn’t even matter,” said Markus. Palmer agrees.
Reddit user SameTree posted this pic with the caption "After spending a weekend mining, this is what I see when I close my eyes in bed."
“The money doesn’t matter, it’s more: ‘I’m getting something out of this, I’m understanding how cryptocurrency works, I’m learning, I get to tip other people with it, I get to make other people’s days,'" he said. "In terms of the future of the currency, where I’d like to see it is tipping. I think the success of the Dogecoin tip bot on Reddit is testament to that."
The tip bot Palmer is referring to is a simple script that’s built into the Dogecoin subreddit that allows users to tip other users in Doge if they say something smart, post something funny, or provide them with a service. It’s a micro-economy in the most micro way, but considering its scale, it’s been incredibly popular. Markus told me the tip bot’s coder reported 7,200 users used the tip bot in one week, for a total of 10,000 tips that totaled 20.6 million Doges, or about $8000 at current rates.
Palmer is a big fan of the giving community that Dogecoin has. “It’s brought out the good nature of folks on the internet, and that’s something I really like to see," he said. "People are being generous, they’re not being negative, and I think that’s what’s key to this community, and I think it will into the future.”
Given that the success of Dogecoin seems to be, by all accounts, an accident, Palmer and Markus seem dedicated to taking care of the currency. "I do feel responsible for this currency even if it started as a pet project, it’s a really good learning experience for me," Markus said. "The amount of people who are rooting for this and have some Doges and are really good natured about it is amazing. Even though it just crashed, they’re still saying: ‘That’s ok, we’re still going to the moon!’ I really want to make this a good currency.”
Whether or not Dogecoin will succeed beyond the coming weeks will be largely up to the community. If it's able to help spread a wave of adoption while creating services that take Dogecoin for goods and services then, who knows, the world might have a sizable Dogecoin economy on its hands. In the meantime, I asked Palmer and Markus where they think virtual money in general will be heading.
Markus told me it would be great to see a currency that when mined, instead of just sucking down electricity for no reason, did something useful in the way SETI@Home uses a distributed network to aid the search for intelligent life or how Folding@Home helps doctors and scientists fight disease. “I think what everyone wants is a coin where the mining process is actually useful," he said.
Palmer just wants to buy a soda. “My opinion with crypto is that a lot of it does require mainstream adoption, and that’s happening and it will happen," he said. "I think the start for that probably is more along the lines of microtransactions, or transactions where it’s not a big purchasing decision. So, if I’m going to buy a bottle of Coke and a vending machine started accepting Bitcoin, then that’s something I wouldn’t think twice about. If it could be integrated on that level that would really help the crypto community in general by building the awareness that Bitcoin lacks today.”