Cryptocurrencies and I have a sordid history. It began with me comparing BitCoin to a pyramid scheme, pointing out the issues that were obvious to many casual observers and receiving some good feedback in the process. Over time I became more comfortable with the idea, although still lamenting the volatility and obvious market speculation, and would go as far to say I was an advocate for it, wanting it to succeed in its endeavours. Then I met the community, filled with outright hostile individuals who couldn’t tolerate any criticism and acted like they were the victim of the oppressive government regime. I decided then that I wouldn’t bother blogging about BitCoin as much as I had done previously as I was just sick of the community that had grown around it.
Then came Dogecoin.
Dogecoin, for the uninitiated, is a scrypt based cryptocurrency (meaning that it’s a memory-hard based currency, so the ASICs and other mining hardware that BitCoiners have invested in is useless for mining it) which bears the mark of the Internet meme Doge. The community that sprung up around it is the antithesis of what the BitCoin community has become, with every toxic behaviour lampooned and everyone encouraged to have fun with the idea. Indeed getting into Dogecoin is incredibly simple with tons of guides and dozens of users ready and willing to help you out should you need it. Even if you don’t have the hardware to mine at a decent rate you can still find yourself in possession of hundreds, if not thousands, of Dogecoins in a matter of minutes from any number of the facet services. This has led to a community of people who aren’t the technically elite or those looking to profit, something which I believe led to the other cryptocurrency communities to become so toxic.
I myself hold about 20,000 Doge after spending about a week’s worth of nights mining on my now 3 year old system. Whilst I haven’t done much more than that it was far, far more than I had ever thought about doing with any other cryptocurrency. My friends are also much more willing to talk to me about Dogecoin than Bitcoin with a few even going as far to mine a few to fool around with on Reddit. Whether they will ever be worth anything doesn’t really factor into the equation but even with their fraction of a penny value at the moment there’s still been some incredible stories of people making things happen using them.
For most of its life though the structural issues that plagued BitCoin where also inherent in Dogecoin, albeit in a much less severe manner. The initial disparity between early adopters and the unwashed masses is quite a lot smaller due to Dogecoins initial virility but there was still a supposed limit of 100 billion coins which still made it deflationary. However the limit wasn’t actually enforced and thus, in its initial incarnation, Dogecoin was inflationary and a debate erupted as to what was going to be done. Today Dogecoin’s creator made a decision and he elected to keep it that way.
One of my biggest arguments against BitCoin was its deflationary nature, not because it’s not inflationary or whatever argument people think I have against it, more that the deflationary nature of BitCoin encouraged speculation and hoarding rather than spending. Whilst the inflation at this point is probably a little too high (I.E. the price instability is mostly due to new coin creation than much else) it does prevent people attempting to use Dogecoin as a speculative investment vehicle. Indeed the reaction from a lot of those who don’t “get” Dogecoin have been lamenting this change but in all honesty this is the best decision that could be made and shows the Dogecoin creators understand the larger (non-technical) issues that plague BitCoin.
Will this mean that Dogecoin will become the cryptocurrency of choice? Likely not as with most of these nascent technologies they’ll likely be superseded by something better that addresses all the issues whilst bringing new features that the old systems simply cannot support. Still the fact that there has been an explosion in altcoins shows that there’s a market out there for cryptocurrencies with feature sets outside of what BitCoin provides. Whether they win out all depends on where the market wants to head.