Spotlight on: Dogecoin
Tuesday 14 April 2015
Spotlight on… takes a closer, slightly nerdier look at crypto terms, technologies and services, and their significance.
You may have heard of Dogecoin and wondered what it was all about. The coin, the meme, the language… the Jamaican Bobleigh sponsorship. Hopefully, today’s interview with Patrick Lodder, one of Dogecoin’s core developers, will clear up a few things.
How long has Dogecoin been around?
Dogecoin was introduced on December 8, 2013 and it started as... a joke. The goal was and still is to be a very accessible coin (and community) for newcomers to cryptocurrency.
As a developer, what got you into Dogecoin?
I got in because I was looking for a new project (I was building services on another coin before that) and when I was running some tests on Dogecoin, purely out of interest, I found some issues. From one thing came another and I found myself actively contributing to the Dogecoin Core (Reference client) project. The reason why I stayed is because of the people involved with it: There are a lot of people with a drive to ‘do good’ with Dogecoin and it's been an awesome experience to be part of that.
How does DOGE differ technically from bitcoin?
The biggest difference technically is that Dogecoin proof-of-work is performed with scrypt instead of SHA-256. Dogecoin is also an inflationary coin; we are currently in a state where ‘initial’ subsidy is completed and are generating 10,000 DOGE per block, or approximately 5.2 Billion DOGE per year, infinitely. Other core parameter differences are our 1-minute block schedule and our extremely low fees of 1 DOGE per kilobyte, equivalent to 50-60 satoshis at current exchange rates.
What innovations does it offer?
Dogecoin is not an extremely innovative coin in the technical sense, by choice. We try to stay as close to the Bitcoin protocol and functionality as we can right now, to ensure relatively easy implementation for merchants and service providers. We have implemented auxiliary proof-of-work, though we did not invent that ourselves, which helps the network to stay secure because every scrypt miner can, regardless of the coin they mine, also submit their work against our chain. According to CoinGecko, the hardware cost to obtain 51% of the Dogecoin hashrate is currently over two times our total market cap; we really excel at that particular metric.
What technical developments are on the horizon?
Besides our ongoing efforts to stay in sync with Bitcoin's developments, we are looking at some fee structure improvements to encourage spending small unspent outputs. Right now, it's uneconomical to spend a lot of small units because of the impact on transaction size, and with that fee. It would be better for the network health if those were spent, as it reduces the amount of memory required to run a full client.
It's also worth mentioning that a project has been launched to implement colored coins on Dogecoin, which will enable shibes (that's what we call good-hearted Dogecoin users) to get familiar with smart assets in a non-obtrusive way and one of our core developers is working on a project to facilitate atomic cross-chain coin swaps in an automated way (see https://github.com/rnicoll/cate).
What is unique about DOGE?
Dogecoin is fun and because of that an ideal way to learn about cryptocurrency (see for example http://www.reddit.com/r/dogeducation). We have an amazing community on Reddit that is about positivity, giving, tipping and generally caring about people instead of the exchange rate and making a profit. The power of this community has manifested itself on numerous occasions; fundraisers have been organized to help others such as providing water supplies in African villages and helping with disaster relieve on several occasions. We've also been making some ideas reality: the community has co-sponsored the Jamaican bobsled team to go to the Sochi Winter Olympics and sponsored a NASCAR team for a couple of races.
What are its particular use cases?
Because it's about having fun and learning, in combination with our low network fees, the main use cases for Dogecoin today besides introducing people to cryptocurrency are micro transactions and tipping. The charity use case is manifesting less than before at the moment, but efforts are underway to give new impulse to that too.
Where do you see the future for DOGE?
Before I get into the future, I am convinced that Dogecoin does not really compete with Bitcoin for market share because we're serving a different audience, call it a separate niche. We're not so appealing to the corporate world where there the need for alternatives to Bitcoin is low, but much more so in the personal atmosphere.
I see a bright future for Dogecoin expanding into education. Think young children learning about cryptocurrency the same way we all got our first bank account. Many of the people involved in Dogecoin have proven skilled at making complex technical concepts approachable for anyone, so there's a very good match there.
That said, Dogecoin is open source and even though I see a trend of people playing with ideas to expand into education, we might end up somewhere different. We've grown past the point where most users reside on Reddit and adoption is currently growing fastest outside of the Western world; we see rapid growth of our userbase in Russia, Ukraine and Indonesia, where the coin is used mostly in personal micro-transactions and for faucet/micro-job payouts as a supplement to salary.
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