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Will Dogecoin Replace Bitcoin?

Five years ago Saint Satoshi penned a brilliant idea. This idea was given freely to us. It has since fostered an arena where programmers cooperate, collaborate and compete to build viable alternatives. The latest entrant is Dogecoin.

Dogecoin began life as a sarcastic remark on Twitter: “Investing in Dogecoin, pretty sure it’s the next big thing.” After gaining traction online the idea became a reality. It has spread primarily through tipping on Reddit.

Dogecoin is a variation of the Bitcoin source code that, like Litecoin, uses Scrypt. However, with Dogecoin, the technical aspects are less interesting than the social. The technical aspects are familiar. The marketing, based on a popular meme series, is novel.

It has touched a nerve. Its value has soared and recently corrected. In a short space of time it has captured a large amount of value and the scenes imagination.

Despite this flying start Dogecoin is still just a puppy. Its future is uncertain. Of course, the same can be said for all alts and Bitcoin too, albeit to a lesser extent.

For now Dogecoin has been most successful in holding a mirror up to the community.  It is forcing us to reflect at a key point in this technology’s evolution. This article’s title is deliberately provocative. Dogecoin will be used as a conduit for a deeper analysis of how decentralised crypto-currency arrived at this point in history.

Bitcoin is entrenched. It is the original. All others spring from it. It is the base currency on exchange, with a multi-billion dollar market cap. It is the yardstick by which we measure the overall health of the space. It is king.

Dogecoin is the newest alt on the scene. It started life as a joke on social media. It takes a light-hearted approach to otherwise serious issues of value, finance and liberty. It is an unashamedly jolly prankster. It’s young, innocent and foolish. Dogecoin is a jester.

The two are seemingly worlds apart. But are they really so different? They are, after-all, the same core technology. Branding and marketing are where they diverge.

In a world of infinite possibility what does Dogecoin need to replace Bitcoin?

How to build a successful alt: just add water.

Peter Schiff and Erik Voorhees debated the viability of crypto-currency this November. During the discussion Schiff questioned whether Bitcoin would endure: a fair question. In response Voorhees pointed to the years and billions spent building the necessary infrastructure and architecture around Bitcoin.

Such infrastructure is key to the long-term success of any coin. But Bitcoin is not necessarily as far ahead as some would have you believe.

Bitcoin as a transaction network, up until six months ago, was very much a Satoshi Dice story. Some estimates have the game accounting for up to a half of all transactions on the blockchain. Satoshi Dice acted to drill the blockchain: testing its strength and viability as a global payment network.

In addition to Satoshi Dice and up until more recently, a significant number of Bitcoins were being transacted through the Silk Road. Estimates are rough and hotly debated. But the silk-road is certainly the marketplace where Bitcoin gained footing and gathered steam. The Silk Road showcased the potential of Bitcoin to the world.

Dogecoin would benefit from the addition of these two key ingredients. Indeed, there is already a Satoshi Dice clone for Dogecoin. A Silk Road clone is still lacking. One could imagine a Black Market that only accepted Dogecoin as capturing the world’s imagination and securing sustained publicity.

However, for a coin to have true long-term viability, still more is required. Dogecoin must foster a community around it: a clique of passionate individuals acting to build the necessary foundational layers on top of the protocol adaptation.

Going forward, varied implementations of the protocol are the primary foundational layer required to sustain any coin.

Currently there are approximately half a dozen well know implementations of Bitcoin. A healthy network requires diversity. Diversity helps to protect against vulnerability. For Dogecoin to have longevity then developers must work on implementing it. This foundational layer is fundamental to the architecture.

In the initial stages the rewards for such important code are not easily identifiable or guaranteed. So, to get even more reductive, Dogecoin must inspire.

Inspiration will be the lifeblood of Dogecoin. If individual actors are not inspired to work on the core code then a core group of dedicated and passionate developers will never form.

It goes deeper still. Individuals must be inspired to associate and cooperate to ‘evangelise’ the coin. Dogecoin will live and die by its ability to sell a raison d’etre: something above immediate profit that motivates people to action. This message must be capable of sustaining momentum over time.

Dogecoin has been successful in doing this already. While conceived in jest, Dogecoin has a serious intention. As David Gilbert of the ibtimes notes “Dogecoin is envisioned as an anti-bitcoin” now that bitcoin is increasingly “seen as the plaything of serious investors and businessmen such as the Winklevoss Twins.”

This comical approach to an otherwise serious technology is where Dogecoin has found its niche and gained traction. As Gilbert notes further, “It’s not taking itself as seriously, it’s not being used by people worrying about whether they’ll become rich.”

The long-term potential of this message remains to be seen. However, at this early stage, it has already showed a clear ability to inspire. Clarity of purpose is slowly and organically forming around Dogecoin. The core fan base already exists and social media traction has been achieved. A strong spring-board for next level growth now exists.

Dogecoin’s core supporters must be so inspired by this message that they go forth and inspire others. Network effects will eventually take hold. A Dogecoin Jesus will certainly be required.

A community driven by a broad unity of purpose will foster network effects that necessarily create brand recognition. Brand recognition for Dogecoin will lead to acceptance in trade. The market mechanism will then see entrepreneurs build payment processor companies. Such companies are necessary for interaction with Dogecoin.

The Recipe for Success

Dogecoin, to replace Bitcoin as the leading cryptocurrency, will require: 1 Satoshi Dice clone, 1 black market, 1 Dogecoin Jesus, 2 payment processors, a cohesive raison d’etre (smothered lovingly with inspirational rhetoric), 3 oz. of infrastructure, a pinch of core developer talent and a splash of evangelical zeal. Place in the oven and bake at 250 degrees for 5 years. Oh yeah, don’t forget to add water.

Of course, all this assumes that Dogecoin needs to follow precisely in Bitcoin’s footsteps to replicate its success. This is not necessarily true. It could blaze its own trail. However, with an analysis of the budding Bitcoin ecosystem, a formula emerges. Dogecoin would do well to follow this formula. The path has been beaten, so why not? And may this recipe inspire one thousand other tasty alts to rise.

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  • http://ice3x.co.za/ Tristan Winters

    Feel free to tip Dogecoin coin too. I guess it’s appropriate here: DQHJsUtSFoFykCuPCc8K7LPHrHVdWc91Cj

    • Kyle MacDonald

      you should really ammend the original article to include DOGE tips….you’ll get WAY more that way for sure

    • Ian Battles

      not a bad idea

      DJ7mGfHknASMno2o2o48fYui7C65JL93My

  • https://twitter.com/btcbase Peter Greyman

    In my humble opinion, nobody wants Bitcoin to be replaced by anything. Dogecoin has a good chance to become an “Internet money”, something you can use for micropayments, and will actually be widely used for this purpose. It seems to me that Bitcoin and Litecoin didn’t achieve this – while it is possible, most BTC and LTC holders just don’t do it. It is used more as an investment or “serious cryptomoney”. But DOGE still has a chance to be viable micropayment currency.

    • Chris

      Why isn’t the same being said for PPC or XPM both of which have been around a lot longer. Why this sudden hype on dogecoin? Am i missing something?

      • http://ice3x.co.za/ Tristan Winters

        it’s novel in that it is based on a meme series etc…Don’t want to get too precious about my work, but starting to wonder if anyone got further than the title. I thought the point was pretty clear. Apologies if you did read it btw. Some of these comments are just odd.

        • Zak

          I’m a slumdog millionaire…I have 1.7 million of these things.

          • Derek Pater

            yeah I love them to and have them also

      • pillybilly

        Because it is only marketing, who knows PPC and XPM and LTC? the people behind Dodgecoin had the idea to use a Internet meme to spread around young people. Can sound stupid but a lot of young guys are using right now this coin to exchange games and various stuff on Internet. It will be a good currency for micro-payments, though i am not sure about his value in the future. The power of Bitcoin will finish when all the money will be mined(soon) and overall now it has the bad fame of his illegal use.

      • Bradley Scarbrough

        You know, I’ve never been into Bitcoin or Litecoin or any crypto currency, but something about Dogecoin really struck me. It is funny. It’s cute, sweet, ironic, dumb, lovable. I’m sold.

  • FreeJack

    Like all internet memes, it will be forgotten in six months when something new takes hold on forums and social media. I can’t believe anyone would think this would have any shot at supplanting either Bitcoin or Litecoin. The only crypto-currency with any chance of competing for widespread adoption is Litecoin, in my opinion. The infrastructure is the key…Litecoin’s is growing exponentially, on a similar curve to Bitcoin. Suggesting Dogecoin could overtake Bitcoin OR Litecoin is like suggesting Chuck-E-Cheese tokens could replace US quarters.

    • http://ice3x.co.za/ Tristan Winters

      Quite sure I never suggested it would. Did you read the article or just the title (which incidentally was a hypothetical question)?

  • Kalx

    is this some kind of fucking joke?

    • http://ice3x.co.za/ Tristan Winters

      Dogecoin started life as a joke, yes.

      The article pays homage to that genesis by using a tongue-in-cheek style for a deeper analysis of how decentralised crypto-currency arrived at this point in history.

      I’m guessing most people are just reading the title and not the actual piece. Or just plain missing the point. Or both.

    • supersajin

      Still a joke to me….no thanks!!

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  • lionsuar77

    Psychologically, the little man rather own 50,000 Doge than .1 Bitcoin. Bitcoin is becoming very much like gold in the 1800s. Very valuable but not very distributed. Bitcoin & Litecoin will be your savings (gold and silver) and doge will be what’s in your wallet. I have all 3 coins.

    • sadasd

      I agree with this, you need a “reserve” coin, a coin that has a fixed value in some taxable currency (bitcoin is somewhat pegged to the dollar)… its an exit point for people using other alt coins.

      But now imagine if Amazon made an Amazon coin? a coin spendable on Amazon, that coin would fluctuate in value based on the market price for goods on Amazon.

      This is the future of credit, the old banking system is going the way of the Dino, its only a matter of time now, world wide everyone knows the current banking system is a fraud, but we put up with it because we had no alternative…. now we have a real solution.

      • tom

        holy crap this is amazing

      • Well…

        Amazon does have Amazon coins. They’re just not a cryptocurrency.

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  • Philipp Knirck

    another blabla article, It would be nice if you put some more meat vs just opinion in ypur article. How about some numbers, or charts, where can we buy it, or learn more about what it us etc. You just wasted my time saying nothing on several pages.

    • Derek Pater

      buy on vircrex, cryptsy and coinedup

  • fred

    if it ever reaches $1 / coin I will kill myself

    • pillybilly

      why?
      If it reaches only $0.1/ coin a lot of people can stop their job.

    • GarethB1

      Well, you have about eighteen months to live then…

      • Derek Pater

        LOL

  • Guest

    I smell a crypt-trojen horse in Dogecoin

  • supersajin

    I smell a crypto-trojen horse in Dogecoin

  • mielebauknecht

    at least dogecoin is not SHA256 based so the NSA cannot use its backdoor to freely mine as much as they want.

  • Mik_RX_honda

    Quarks are a significant threat to become number one and you (rightly so) exhaustively analyzed potential weaknesses (though reading through the analyses and investigating a little further) you just managed to point out the flaws in all alt currencies. And then you turn around and praise dogecoin and accept donation in this currency?!!? What type of bias is at play here??? Why not accept donations in quark??

    • http://ice3x.co.za/ Tristan Winters

      No bias. I love quark. Feel Free to send me quark: QhNPLbVjf2h3oMWvWoWqtMbxaAKGzbdaRm

    • snowden_farted

      We need a Satoshi Dice clone for Quark…I like the idea of drilling the block chain.

  • juanpaul26

    IMHO Dogecoin will do well. Following the online wallet theft it has created a large amount of publicity…as you all know bad publicity is not necessarily bad. Possessing a great deal of likability is a major factor in anythings success. Yes with all due respect, BTC and LTC are the more established programs and will continue to well. I feel that Dogecoin will follow suit but never surpass the other 2 in value.

    • Derek Pater

      more people follow dogecoin, then all the others combined

  • Xam Takorian

    Can someone please address why Dogecoin needs a 100BILLION market cap? I am wondering why they chose this number? BTC is 21million, LTC 47million QRK 247million…all of these denominations seem reasonable but 100 BILLION?

    • Chobrut

      Yes, I’ll tell you.

      In fact the 100B is just an estimate of the first year. After that 5.2B will be mined annually. In a few years, this puts the inflation rate under that of the USD. Back to the 100B number. The makers had the foresight to see that the average user is psychologically motivated to deal more in integers than in decimals. Similar to how every price in a grocery store ends in $0.99, it is psychologically more pleasing not to deal in 4-5 decimal places (more if btc grows in price). At 100B doge has a ways to come before it is even equal to $1 USD. Also, BTC has a hard cap, Doge does not have a cap, this will increase the supply and keep the currency relevant for years to come. BTC will have to add more and more decimal places until the only way to deal with it will be in scientific notation (1E-14 BTC?). You can see how that will not make the average person happy.

  • need dogecoin

    pls….donate me
    DDmbwhwXvKS9N7wiJYqwrYS5sZKXrUVt7F

  • john

    lost 21k cause I put my coins in an online wallet.
    DogeWallet got hacked :/

  • john

    lost 21k cause I put my coins in an online wallet.
    DogeWallet got hacked :/

    Throw a few my way
    DRMvjtBK3F2AijvdWbxjohe1UuJqsRB6zV

  • asdasdasd

    With bitcoin covering larger transactions, I could see Dogecoin being used to cover smaller transactions, for artists, musicians and others.
    Bitcoin could become “the rich peoples crypto” while Dogecoin could be the “peoples currency” of sorts, for people who just wana move 10 ~ 20$usd around.

    In a way 1 Doge has a lot of potential value, think of how many Us dollars are out there??? trillions? quadrillions? 40 billion ~ 100 billion doge is nothing in comparison….. in reality which currency is more scarce? dollars or doge?
    Buying 20,000,000 Doge could net someone a LOT of USD in 2~ 5 years.
    or it could net them a fat loss, only time will tell.
    Best thing to do would be to buy a few million on a paper wallet and tuck it in a safe somewhere as a “wild-card” investment ;p why the hell not? corporations have no more upside potential the stock market isn’t going to go much higher (probably down-hill from here)…………….. Dollars and Doge sounds like a sure thing to me if there ever was one.

  • Giovanni

    thirsty for dogecoin send much blessing to you
    we get rich together no
    ciao

    DBJmsec6KbGAGhuNo97Pb45awYFVitM7Zy

  • mateart

    faucets are emtpy :( please, sent me some doge hau wow DLNsEyyFmH3FWd4pfLk5Es6Vfoh98JWUrw

  • Chobrut

    I think the growth will be faster. Doge has a lot of positive energy, charitable causes that don’t make people feel like their on the fringe of a black market. BTC is very dry by comparison, using it requires you to go to 3-4 decimal places for low-level transactions. And while numbers are just numbers, it doesn’t sell well to tell someone they only got 0.0324 coins. After all, the real value of these currencies is directly proportional to the number of people that want to use them. Doge may have the right combination to function at scale with a variety of different users.

  • Chuck_Bartowski

    great article, please keep up the good work, i really do like your blog, not only its informative but also fun to read. :)

    please donate if someone can afford , one is a poor shibe.

    D9wFHu9qpV3SvzWnrQBi8rwbCYRL2tjPcY

  • Jonny

    Bitcoin hoarding creates the classic economic bubble. Bubble bursts when everybody thinks it is grossly inflated & no buyers are in sight.

  • https://www.wheelofdoge.com Wheel of Doge

    Such article. So controversy.