“Will dogecoin (DOGE) reach $1?” is a commonly searched question on google and also a commonly asked question in all crypto community forums.
Dogecoin was created in a couple of hours of forking and coding as per its founder’s claim. It was purely created as a fun project to start a meme or a joke coin, which now has everyone’s attention. Both in the crypto world and in the non-crypto world, everyone is talking about dogecoin.
In this article, we will look at how Dogecoin was started, its journey to becoming one of the most valuable cryptocurrencies in the world, and evaluate its potential to reach the 1$ milestone.
How did dogecoin start? A brief history of DOGE
Billy Markus and Jackson Palmer were working as software engineers in IBM and Adobe respectively. They wanted to create a peer-to-peer digital currency that could reach a broader demographic than Bitcoin and also remain away from any controversies around digital currencies.
It was Palmer’s idea originally, he bought the domain name dogecoin.com, and added a splash screen with some details. Markus saw this and liked the idea and joined hands with Palmer to create its PoW based protocol based on existing cryptocurrencies Luckycoin and Litecoin.
Markus added scrypt (a password-based key derivation function) technology in its proof-of-work algorithm. This restricted miners to use SHA-256 Bitcoin mining equipment, and instead forced them to use dedicated FPGA and ASIC devices for mining which are known to be more complex to produce.
On December 6, 2013, Dogecoin was officially launched and within 30 days the website reached over a million visitors.
On December 19, 2013, Dogecoin jumped 300% in value in less than 72 hours from $0.00026 to $0.00095. However, this was an unsustainable growth that happened during China’s first attempt to forbid Chinese banks from investing in the bitcoin economy. Dogecoin value crashed down to 80% because of this FUD.
On December 25, 2013, Dogecoin faced the first major hack. Millions of coins were stolen from the online cryptocurrency wallet platform Dogewallet. This event created a lot of social buzz on Twitter and Dogecoin community started an initiative named “SaveDogemas” and donated coins to those who had lost them in the attack. A month later all the losses were covered.
On Jan 7, 2018, during the peak of the cryptocurrency bubble, dogecoin reached an all-time high (ATH) of $0.017, putting its total market capitalization near USD 2 billion.
In January 2021, dogecoin started getting major attention and its price went up over 800% in 24 hours, attaining a price of $0.07. This happened during the Reddit and GameStop saga and partially due to Telsa CEO Elon Musk showered his love for DOGE.
In February 2021, Dogecoin hit another all-time high price of $0.08 following Twitter encouragement from Musk, Snoop Dogg, and Gene Simmons.
In March 2021, Dallas Mavericks owner Mark Cuban announced his NBA team would allow purchasing tickets and products with Dogecoin; within two days, Cuban had declared his franchise had become the top Dogecoin merchant, having carried out 20,000 transactions.
On 14 April 2021, the largest US crypto exchange Coinbase listed Dogecoin, Its price first reached $0.10 on April 14, before hitting a new all-time high of $0.45 on April 16 (up 400% that week), with a volume of nearly $70 billion traded in the preceding 24 hours. And at the time, Dogecoin’s market capitalization approached $50 billion, making it the fifth-highest-valued cryptocurrency in the world by Market Cap.
May 2021, has been a historical month in the dogecoin journey. On 4th May 2021, the value of Dogecoin first surpassed the symbolic hurdle of $0.50, a greater than 20,000% increase in one year. On 8th May 2021, Dogecoin reached $0.70 in expectations of reaching $1 given Elon Musk’s SNL event. But after the event, Dogecoin dropped 34% from $0.711 at the opening of the show to below $0.470 within 45 minutes. And later that week on May 9th, 2021, SpaceX announced a rideshare mission to the Moon completely funded by Dogecoin.
Will dogecoin (DOGE) reach $1?
Hell of a journey from being a joke coin to becoming a top 5 cryptocurrency by market cap. Despite all the odds, Dogecoin has shown that it has immense potential to become a valuable asset with a very strong and extraordinary community and support from well-known industry folks like Elon and Mark Cuban.
If we look at the total circulating supply of Dogecoin and multiply it by its target value of $1. It will come around ~$130 billion in total market cap. Now, this value is fairly possible given no more new coins to get added to the circulating supply. And that’s the tricky part here.
In February 2014, Dogecoin co-founder Jackson Palmer decided to completely remove the cryptocurrency’s supply cap, which previously stood at 100 billion coins, in a bid to encourage the use of the coin for tipping and dissuade people from holding it.
This means dogecoin has an inflationary supply and new coins are continuously pouring into the market. By contrast, bitcoin, the original and most valuable cryptocurrency, has a hard cap of 21 million units. This restricts Dogecoin from becoming a scarce resource with high demand and a rise in value. Because new coins keep getting added, even if there is a high demand, it gets fulfilled in some time frame limiting the value rise of the coin itself to a certain extent.
Dogecoin also lacks technical development support because Palmer walked away frustrated by the toxic crypto culture at that time. There has not been any major development activity post-2019 on the dogecoin project. Lack of development means, at some point the community will start leaving for a better alternative like Shiba Inu (SHIB) and the prices may go further down.
Another very disturbing fact about DOGE is that 10 wallets hold 44% of all dogecoin with the largest wallet accounting for 28% of the supply. It simply means that at any given time one of these whales could exit out the market and send doge prices tanking. Not to mention, they could easily use their huge positions to manipulate the market via stop-loss hunting, creating buy and sell walls, or employing other trading strategies to artificially raise or lower the price. This leaves every other dogecoin investor at the mercy of their trading activities.
Despite all the serious downside, Dogecoin has so far been able to overcome challenges and rise to become a valuable digital asset. However, the risks are pretty clear. Till the above risks are mitigated, Dogecoin investment will remain very risky even if the value of Dogecoin crosses the $1 milestone. Who knows the top wallets containing 44% supply are also waiting for the same moment.