What is Dogecoin?
This
brief will seek to answer some basic questions about cryptocurrencies. A cryptocurrency
is “a peer-to-peer form of digital money that uses cryptography to ensure
transactions can remain anonymous.” 1 The following questions are
addressed in this brief: What is dogecoin? Why does it matter? How does it relate to bitcoin? What are some
uses and problems associated with both?
These
questions will be explored topically: (1) bitcoin will be examined, (2) internet
memes will be defined and explained, (3) the doge meme will be addressed (4) dogecoin
and its origins will be analyzed, (5) issues will be discussed, (6) a unique
community will be uncovered, and (7) potential uses will be expounded on.
Bitcoin.
Bitcoin was created
in 2009 by a person (or group of people) using the alias “Satoshi Nakamoto.” 2
The bitcoin is a peer-to-peer currency and, much like downloading on a peer-to-peer
program utilizes multiple hosts for the sharing of a file, bitcoin has “miners”
confirm transactions as they are made. When a user sends a bitcoin to another
user, this transaction is sent to other bitcoin users. Bitcoin miners then
verify the transaction’s authenticity. To be verified, the transaction is
placed on the blockchain. These blockchains are then solved through a series of
complicated algorithms, each part of the chain being a “block.” Blocks are
often solved in pools or in other words a group of people working together. When
the block is solved the miner(s) who solved it collectively receive 25 bitcoins.
Modern bitcoin mining requires powerful application-specific integrated
circuits. As more miners approve the transaction being sent, the transaction is
recorded by more users, thus providing certainty that the money was indeed
sent.
In every functioning bitcoin
wallet, every transaction in the history of bitcoin is recorded there. Because bitcoin
is a peer-to peer currency, bitcoin has no central authority with a ledger
indicting who has which coins; rather, every wallet must first validate every
transaction that has ever been made. This in turn allows the community to know
who has how many coins; this knowledge is based on the public record of coins
received and sent under that address. 3 The image below is one of
the recognized symbols for bitcoin.
One should note that since bitcoins are not a physical object,
this and all pictures of “bitcoin” are just representations of the currency.
Figure 1
(Source: Bitcoin.org)
Figure
2
(Source:
blockchain.info Edit: by author)
This
chart depicts bitcoin as not being very stable. Other cryptocurrencies also
display similar patterns in fluctuations, or in other words the lack of
stability and discernable trends.
Meme. In
psychology, a meme is defined as a behavior that spreads from person to person
in a culture. However, when talking about internet memes, the term begins to
take a new meaning that falls within the context of psychology’s definition of
a meme. In The Gold Coast Bulletin, a meme is described as, “a visual medium
used to share ideas and relate to situations in a humorous way.” 4 In other terms, an internet meme is
generally a well-known picture that is captioned to fit the circumstances. An
example of this is Doge.
Doge. The
word doge was a title used for a type of medieval Italian elected official. The
word doge, as an incorrectly spelled term to identify a dog, was used in June
24, 2005 in an episode of Homestar Runner called “Biz Cas Fri 1.” Later, the
word doge became associated with images of a Shiba Inu. 5 In fact, the Shiba Inu pictured below is
the most common application of the meme.
Figure
3
As shown
in this picture, the picture of the Shiba Inu is generally accompanied by
multicolored comic sans font. 6 Further, the text will include phrases
such as “wow,” “excite,” or “amaze.” Two word phrases may also be used, using
the following modifiers: “much,” “many,” “so,” “very,” or “such.” These modifiers
must be used in a way that is grammatically incorrect in order for the meme to
be properly applied. 7 For instance, when creating this meme one
might say, “very business,” “much inform,” or “so bitcoin,” and this would be perfectly
acceptable.
Dogecoin. Dogecoin is, in essence, the marriage of bitcoin
and the Doge meme. While many of the differences between the two coins, such as
differences between SHA-256 and script mining, are too long and technical for a
brief of this length to discuss. 8
Many others differences between these two coins, particularly the community
surrounding both are quite interesting to look at. Previously, a picture of a bitcoin was shown;
if one were to transpose doge onto that coin, Figure 4 is what it would look
like.
 |
Figure 4
(Source:
Dogecoin.com)
|
Figure
4 is the image for dogecoin on
Dogecoin’s website. Here we can see the iconic picture of Atsuko Sato’s Dog,
with brows raised in concern.9 I think this picture captures both
backgrounds of the coin: its bitcoin origin and its doge meme silliness.
Issues. A big issue with these cryptocurrencies is they absolutely
lack intrinsic value. In other words, the only value these currencies have is
the value placed in them by people.
In his article, “Why Bitcoin Has Value,” Van Alstyne asserts that bitcoins have value because people accept
bitcoins. He explains that this acceptance is the reason any currency has
value. He goes on to explain, “‘Money’ is a medium of exchange, a store of
value, and a unit of account.” He claims bitcoin meets all three of these
criteria. Specifically, he attacks the assertion made by some that to have
value, a currency needs to be supported by a government body. He uses the
example of Iroquois Native Americans to destroy this idea. He cites that this
tribe of people used beads (wampum) to settle debts. He also uses the Weimar
Republic in Germany as an example. In his example, marks were printed too fast
and thus they were not accepted. 10
Clearly, not all government-printed
bills will be accepted in all circumstances. However, this doesn’t make the
converse necessarily true either. The example of the Iroquois is a powerful one
however. That is simply, value is given to things that people value, and even a
government doesn’t necessarily create value.
Community. People often value community. Arguably, dogecoin
has value in its sense of community, which is magnified because of the novelty
of both the coin and the community. One example of this novelty in the community
is the name it has branded itself with for its members, shibes. Perhaps, like a
well-crafted bead, the doge is a well-crafted meme with a currency. Perhaps
simply people valuing the dogecoin is sufficient to qualify it as a currency. I
think that this sense of community amongst shibes helps give value to the coin.
And, at the very least, both the coin and community are quite entertaining.
Because of this meme, an active culture and community surround the
coin. Here, two particularly noteworthy phrases are used. The first is “to the
moon,” which refers to the price of dogecoin skyrocketing. This expression is
used to rally dogecoin users and encourage people to invest. The second
expression is “1 Doge = 1 Doge.” This phrase is often used when the price of
the coin drops. This expression serves as a reassurance to others that the
price of the coin in US dollars doesn’t really matter; rather, the community as
a whole is what truly matters. These ideas seem a bit contradictory.
Uses.
These coins have many potential applications. One application is
mass fundraising. For instance the Jamaican Bobsled Team lacked enough money to
go to the Sochi Olympics. When the dogecoin community heard of this need they
created a fund raiser for the Olympic team. The dogecoin community gave the
team money in the form of dogecoin, which was then exchanged for more
traditional currencies to get the team to Russia. Cryptocurrencies allow this
kind of fund raising by many people. 11 The closest comparable service to this is
PayPal, which has much higher fees. Dogecoins transaction fees are less than a
penny per transaction.
Another application is as the tip system
of the internet. The dogecoin community is a very generous one. They have a culture
of giving tips whenever something amusing is said, or something that is
agreeable. This is possible due to the low transaction fees. It is also
noteworthy that many other currencies have similar low fees, but the culture of
tipping is not prevalent.
Closing.
Despite having shortcomings and issues, cryptocurrencies
also have many uses. While they are not “investments” despite some popular
belief, cryptocurrencies are an interesting way to exchange money, and one would
be foolish to pass them off as nothing. The dogecoin, specifically, has had
some big impacts on the world; one impact that was particularly visible was
during the Sochi Olympics in which they helped sponsor the Jamaican Bobsled Team.
Cryptocurrencies continue to have a diverse impact on the world.
Endnotes
1. Adam Greenberg. 2014. "The Value
of Bitcoin." SC Magazine 25 (5): 33-35.
2.
Rajiv Prasad. 2014. "FBAR and FATCA Compliance in the Age of Digital
Currencies." The Tax Adviser 45 (5):
3. Ibid.
4. "It's All About Meme Naomi
Hockins Asks What All the Fuss Is About with Internet Memes." The Gold
Coast Bulletin, Jun
29, 2013 .
6. Ibid.
7. Gretchen McCulloch. “A Linguist Explains the Grammar
of Doge. Wow.” The Toast. February 6, 2014.
http://the-toast.net/2014/02/06/linguist-explains-grammar-doge-wow/
8. Rajiv Prasad. 2014. "FBAR and
FATCA Compliance in the Age of Digital Currencies." The Tax Adviser 45
(5):
10.
Marshall Van Alstyne. 2014. “Why Bitcoin Has Value.” Communications
of the ACM 57: 30-33.
11. Erika Engle.2014. "Dogecoin Users Try to Widen
Cybercurrency's Acceptance." Honolulu Star - Advertiser, Feb 17. http://search.proquest.com/docview/1498823165?accountid=4488.
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