Since 2009 when Bitcoin came into existence, numerous crypto came and vanished. So far, Bitcoin is the most widely known in the world. In this in-depth article, we will discuss why Dogecoin will not fail.
When crypto started, a lot of people made fun of it. In fact, Dogecoin was started as a joke and to make fun of the cryptocurrency.
Over the years, many cryptocurrencies were created and vanished even before becoming mainstream. However, Bitcoin, Ethereum, stayed strong.
Dogecoin is unique in the crypto world. As it was created as a joke, over the years, a community grew up surrounding it. Though Dogecoin never crossed $0.01/coin until 2021, the Dogecoin community never gave up this crypto.
The current Crypto world is the real wild west. Numerous actors are trying to promote their coin and profit from it. So, one crypto community doesn’t like another cryptocurrency because of their vested interest.
However, almost all communities hate Dogecoin. As Dogecoin gains popularity, some crypto communities become agitated. They argue that Dogecoin is a joke, has no use case, and has an unlimited supply. Therefore, there’s no way it will take off.
However, people fail to realize, Dogecoin survived all these years even though it had no monetary value. It did not even have a value of 1 cent per coin until 2021. So, from the start, people are in Dogecoin not for money but for the community.
Over the years, many cryptocurrencies failed because the community abandoned them. Most people want to make money. So, generally, they buy crypto and hype it. When the price goes up, initial investors bail out and go to another crypto.
In the early days, people did it with Dogecoin too. However, later Doge managed to create a strong following. Since then, people are in it for fun, not for money.
Because of this vibrant community, Dogecoin survived and will survive.
If you search the internet, you will find that Dogecoin is the second most popular coin after Bitcoin.
Several years ago, Facebook bought WhatsApp for billions of dollars. You may ask why pay billions of dollars to purchase a messaging company? Why not create a similar app to compete with WhatsApp?
The answer is, WhatsApp messaging technology is not that hard to replicate. Facebook could make copycat apps within months. However, the real value was in the user. In reality, Facebook did not pay for WhatsApp technology; they paid for users.
Similar to TikTok. Anyone can create a copycat app identical to TikTok. However, most of them will fail to gain a significant user base. For this reason, Google Plus failed.
Anyone can create a cryptocurrency. But the real challenge to convince people to adopt the crypto. The Dogecoin community was strong even when the coin had no real monetary value at all. It’s why the hatred for Dogecoin in other crypto communities is perplexing. Because they don’t see any economic value in it, but they fail to realize that money is not everything for the Dogecoin community. They are in it for fun.
The main criticism of Dogecoin is that it has an unlimited supply. That’s why it is inflationary currency, thus, valueless. But it’s an incorrect argument.
Let’s compare Dogecoin with Bitcoin.
Bitcoin has a limited supply. The cap for Bitcoin is 21 million. Until today, around 19 million Bitcoins have been created. It’s estimated that the last Bitcoin will be created around 2040.
This perception of limited supply gives Bitcoin inherent value. Every day more and more people learn about Bitcoin and want a piece of this coin. But as the supply is limited, the price will keep going up. It’s like the diamond industry. Even though diamonds are not that rare, their price is high because of artificial scarcity.
People in the Bitcoin community don’t even hide it. They want the price to go up to make a profit off it. The Dogecoin was created to mock this artificial scarcity.
Dogecoin is not wildly unlimited. It has a cap of 5 billion Dogecoin creations per year. As of writing this article, there are around 135 Billion Dogecoin in circulation. At the rate of 5 Billion coins/year, it would take another 27 years to double this amount; then, it would take another 54 years.
In the fiat currency world, inflation varies wildly. Here is a table that shows the inflation of USD.
|Year||USD inflation rate|
On the other hand, Dogecoin has a fixed currency creation rate of 5 Billion Dogecoin/year. Therefore, each year the inflation rate goes down. Here is a chart that shows the Dogecoin inflation rate over time.
|Year||Estimated Dogecoins||Inflation rate|
As you can see, though Dogecoin has an unlimited supply, the actual inflation rate goes down, making this coin deflationary. So, those who criticize Dogecoin for having an endless supply are wrong. They are missing the bigger picture.
Why Unlimited Dogecoin Supply?
The creators of Dogecoin chose unlimited 5B/year coin supply for a few reasons.
Bitcoin was created with a cap limit. It has several negative implications that Dogecoin solves.
It is estimated that until 2021, almost 20% of Bitcoin is lost forever. In the future, we will lose more coins. There’s no mechanism to replace those coins. So, what would happen after 50 years? As there will be only 21 million Bitcoins and billions of people worldwide, is there any possibility that Bitcoin will ever become mainstream?
When we buy something from a store and pay with our bank card, money from our bank does not go directly to the store. It goes through a payment processing network such as Visa, MasterCard, Amex, or Visa. The network charges a transaction fee to facilitate this payment service, typically from 1% to 3.5%.
Typically the shop owners absorb those fees. Sometimes, users also pay these fees. For example, if you pay your property tax, your county or city may charge you extra for the online service fee.
In the crypto world, there are no centralized systems. Instead, thousands of powerful computers set up by individuals process crypto transactions. These individuals spend a lot of money to set up and run those powerful computers. These individuals and computers are collectively called miners.
So, why will miners process Bitcoin transactions? It’s because they have several incentives.
- Bitcoin senders pay transaction fees to miners to process bitcoin transactions.
- Miners get rewards in Bitcoin from the network for completing their work measured in blocks. (simple explanation)
As time passes, processing Bitcoin transactions would become harder, would require more powerful computers and electricity. On the other hand, Bitcoin block rewards will decrease to zero when the Bitcoin number reaches 21 million.
The Bitcoin mining revenue is already negligible. What will happen when the reward goes to zero? At the time, the only revenue source for Bitcoin miners would be transaction fees.
Over the years, the Bitcoin transaction fee has increased steadily. The cost is already high. In the future, it will be prohibitively higher. As a result, it would be harder for Bitcoin to become a mainstream daily driver cryptocurrency. Think about it, would you pay a $15 transaction fee to buy a $1 coffee.
On the contrary, Dogecoin miners will always get rewarded from the network’s 5 billion coin supply. As a result, Dogecoin has a far lower transaction fee compared to Bitcoin.
Moreover, Dogecoin transactions are faster than Bitcoin. On average, the Bitcoin network takes 8 minutes to clear a transaction, whereas the Dogecoin network takes less than a minute.
Bitcoin is rare. Most of the cryptocurrencies are designed this way. It’s a rare collectible. As a result, it encourages hoarding. People buy and hold Bitcoin in hopes that the price would go up. Then they can sell it for a profit.
On the other hand, Dogecoin is designed for spending. Though it’s deflationary in the long term, still because of the short term inflation, it encourages spending. Therefore, Dogecoin is a better cryptocurrency than Bitcoin for real-world usage.
For example, instead of keeping money in a bank account, most people invest that money. As a result, more significant economic growth comes from those investments. People do it because of USD inflation. At the same time, people buy and hold Gold in hopes that the gold price would go up. Similarly, Dogecoin encourages spending, whereas Bitcoin encourages hoarding.
The Dogecoin community grew not because of greed but because they believe in it. We believe Dogecoin has a higher probability of becoming mainstream currency because of all the reasons discussed above.