Along with the other virtual currencies Bitcoin and Ethereum, Dogecoin– a cryptocurrency started in 2013, have surged in value this week.
Context
Along with the other virtual currencies Bitcoin and Ethereum, Dogecoin– a cryptocurrency started in 2013, have surged in value this week.
What is Dogecoin?
- It is a digital token that was created in 2013 by software engineers Billy Markus and Jackson Palmer as an alternative to Bitcoin.
- It was started as a satire or just for ‘fun’ on the numerous fraud crypto coins that had sprung up at the time.
- It takes its name and logo from a Shiba Inu meme which was viral several years ago.
- It does not have an upper limit unlike Bitcoins, whose maximum number is fixed at 21 million (by 2040). Dogecoin number is already reached to more than 100 billion.
What is the reason behind Dogecoin’s rise?
- The main reason is believed as this week’s listing of Coinbase, the most popular virtual currency exchange in the US.
- Coinbase’s market cap briefly hit $100 billion and brought surge in Bitcoin, Ethereum and Dogecoin value.
- It has also been promotional advantage by the big names such as Tesla CEO Elon Musk.
- Enthusiasm among the business groups regarding the cryptocurrencies.
Bitcoin
- Bitcoin is a cryptocurrency that wasinvented in 2008.
- It was generated by an unknown person or group of people with the name Satoshi Nakamoto.
- It is a decentralized digital currency that is without a central bank or single administrator.
- It can be sent through user to user on the peer-to-peer bitcoin network without any need for intermediaries.
- Transactions are verified with network nodes by cryptography and recorded in a public distributed ledger that is called a blockchain.
Ethereum
- It is the second-largest cryptocurrency by market capitalization which comes after Bitcoin.
- Ethereum is the most actively used blockchain.
- Ethereum was proposed in 2013 by programmer Vitalik Buterin.
- Its development was crowd funded in 2014.
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Concerns over its use
- Dogecoin’s rise would lead to a bubble, as buyers do not see any meaningful value of digital token and only attracted towards it when its value get surged.
- They are highly volatile and may crash soon.
- They are susceptible to sudden to the manipulation by small groups who hold large numbers of the virtual currency in circulation.
