Illustration showing a dogecoin.

What is Dogecoin (DOGE) and how does it work?

What is Dogecoin, anyway? From starting as a joke to getting Elon Musk’s support, this coin has quite the story.

6 min read

The following statements do not constitute investment advice or any other advice on financial services, financial instruments, financial products, or digital assets. They are intended to provide general information. The following statements do not constitute an offer to conclude a contract for the purchase or sale of financial instruments and financial products or an invitation to submit such an offer and to buy or sell any particular digital asset. Cryptocurrencies are subject to high fluctuations in value. A decline in value or a complete loss are possible at any time. The loss of access to data and passwords can also lead to a complete loss.

  • Dogecoin was initially launched as a joke that blended a popular meme with cryptocurrency, but the coin took on cult status thanks to backing from high-profile supporters like Elon Musk — it’s even accepted as payment by Tesla for merchandise.
  • Functioning on a blockchain without a maximum cap on its supply, Dogecoin differentiates itself from other cryptocurrencies by encouraging a "lighthearted and inclusive" community.
  • Despite its unserious beginnings, Dogecoin has evolved into a significant digital currency. It’s accepted as a form of payment at nearly 2,000 outlets, and many users consider it a viable type of investment.

As of May 2024, Dogecoin is one of the top 12 cryptocurrencies by market capitalization—not bad for a coin that started as a joke based on a popular meme! But what is Dogecoin? Classified as an altcoin, i.e. a coin that’s not Bitcoin it’s similar to other cryptocurrencies because it works on a blockchain and its pricing can be volatile.

However, unlike other cryptocurrencies, such as Bitcoin, there’s no limit to the number of Dogecoins that can theoretically exist. And according to one of its inventors, it has a “lighthearted and inclusive” community behind it. So, where did Dogecoin come from and what, exactly, is it?

Who invented Dogecoin—and why? 

Let’s start with Dogecoin’s origin story. Dogecoin has been around for a while. It was invented back in 2013 by two software engineers, Billy Marcus and Jackson Palmer, who initially came up with it as a joke. They paired two of the hottest trends that year—Bitcoin and the “doge” meme featuring a Shiba Inu dog—to come up with a new cryptocurrency. Marcus and Jackson wanted a coin that was accessible to the general public, so they built it with open-source software that allows anyone to view their source code.

From these humble beginnings, the coin gradually grew into one of the most well-known cryptocurrencies. Tweets from one of its most prominent supporters, Elon Musk, led Dogecoin’s price to skyrocket in early 2021. And in December 2021, Musk even announced that his company, Tesla, would accept Dogecoin as payment for some merchandise. This marked the coin’s transformation from ‘joke’ to major crypto player.

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How does Dogecoin work?

Dogecoin is a blockchain-based cryptocurrency with quite the pedigree. Dogecoin is a fork of Luckycoin—i.e. it’s a new cryptocurrency that split off from Luckycoin—which itself forked (or split) from Litecoin, which is a fork of Bitcoin. So, essentially, Dogecoin can trace its roots all the way back to Bitcoin, but it’s not the same coin. 

Dogecoin operates using a process called “auxiliary proof of work”, meaning crypto miners can work on certain other proof-of-work cryptocurrencies, primarily Litecoin, and also mine Dogecoin at no extra cost. In Dogecoin’s system, as well as other proof-of-work coin systems, miners compete to see who can solve complex mathematical problems to validate transactions the quickest in order to earn coins. For each Dogecoin block mined, miners earn 10,000 Dogecoins.

What can I buy with Dogecoin?

So, what is Dogecoin used for? As of Mai 2024, there are almost 2,000 places that accept Dogecoin as payment. Whether you’re after premium cars from or a holiday via, you can use Dogecoin to purchase all kinds of goods and services. You can even convert your Dogecoins into a prepaid Mastercard via Bitpay, which you can use anywhere that accepts plastic.

Should I buy Dogecoin?

Whenever you’re thinking of investing in a cryptocurrency such as Dogecoin, there are a few things that you should consider. Do you have a good understanding of how cryptocurrencies work, so you can make an informed decision? Crypto is often a risky investment, so would you be ok losing all the money you’ve invested? How much are you looking to invest in crypto and over what timeframe? Once you’ve thought through these questions, you’ll be in a better position to decide if investing in Dogecoin is right for you.

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Can Dogecoin reach $1?

The question of whether Dogecoin can reach $1 in value is still open, and there are a lot of factors at play. While Dogecoin hasn’t hit the $1 mark, it has seen remarkable price surges — largely driven by social media influence, celebrity endorsements, and a growing community of supporters. 

Here are several factors that could influence Dogecoin's potential to reach $1:

  • Market demand: Increased adoption and demand for Dogecoin, whether for transactions or as a store of value, could drive up its price. This could be influenced by more retailers, services, and platforms accepting DOGE as a form of payment.
  • Supply and inflation: Dogecoin has a unique inflationary model with no maximum supply cap — it adds 5 billion new coins to its supply every year. This constant increase in supply can exert downward pressure on its value, making $1 a challenging target without significant and sustained increase in demand.
  • Speculation and market sentiment: Cryptocurrency markets are highly speculative and strongly influenced by market sentiment. Positive news, endorsements by high-profile individuals, or viral social media movements can lead to price spikes, while negative news can lead to declines.
  • Broader cryptocurrency market trends: The performance of the broader crypto market, including leading cryptocurrencies like Bitcoin and Ethereum, often affects smaller altcoins like Dogecoin. A bull market in the crypto space could lift the prices of many cryptocurrencies, including DOGE.
  • New regulation: Changes in cryptocurrency regulation can have significant impacts on prices. Clearer regulation could encourage more investors to enter the market, while restrictive regulations could have the opposite effect.

Predicting the movement of cryptocurrency prices is notoriously difficult due to their volatility and the influence of unpredictable external factors. While reaching $1 isn’t impossible for Dogecoin — never say never! — it’s still speculative and subject to significant risks.

Continue your crypto journey with N26

So, we’ve answered “what is Dogecoin”—but whether you’re ready to buy Dogecoin or just dipping your toe into the world of cryptocurrency, there’s still plenty to learn. From how to set up a crypto wallet to getting started with crypto mining, there’s all kinds of ways to get involved, and N26 is here to help!

When was Dogecoin created?

Dogecoin was created in December 2013 as an open-source cryptocurrency.

What is a meme coin?

Meme coins are cryptocurrencies inspired by memes—such as Dogecoin and its derivatives Shiba Inu, Dogelon Mars, Samoyedcoin, and Doge Dash. Memes are typically humorous images that go viral on the internet.

What’s the deal with Dogecoin and Elon Musk?

Elon Musk has been a longtime supporter of Dogecoin—even tweeting that Dogecoin is a better option than Bitcoin for transactions. It’s widely believed that his tweets have caused major movements in Dogecoin's price. He is also believed to have a large holding of Dogecoin, with some speculating that he might be the Dogecoin ‘whale’ who owns around 36.7 billion Dogecoin (the equivalent of 28% of DOGE as of May 2021).

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