Dogecoin is back in the news and everyone’s remembered there’s a coin with a dog on it. The attention is awesome, but underlying all the jokes and fun, we have a cryptocurrency that has been intentionally designed to be both fast and cheap, and I wanted to talk about why Dogecoin is also a serious payments system. If you like your posts light and fluffy, you may want to skip this one, it’s very much serious hat on time.
GDAX have published guidelines they consider for evaluating digital assets, and I’m going to base this post on that framework, in no small part because hey I’d like to see them list Dogecoin.
The short version of this, though, is we have one minute block times, compared to Bitcoin’s ten minute block times, giving us far faster initial confirmations and around ten times the theoretical throughput. Contrasting with other cryptocurrencies which are now significantly limited by their initial scale and have extremely high transaction costs as a result, the value of a more functional P2P payment platform should be apparent. The RPC interface, as well as much of the implementation, is intentionally similar to that of other leading currencies to enable drop-in compatibility. Libraries are available in a number of languages, with libdohj having become the standard for Java altcoin support libraries (it ships with Litecoin and Namecoin support).
Enough preamble, lets get on with the case.
Digital Asset framework: Dogecoin
1 GDAX Mission & Values
Dogecoin Core is an open source (MIT licensed) Bitcoin-derived cryptocurrency platform. Dogecoin improves on Bitcoin in three core ways:
- Significantly shorter block generation times while maintaining block size leads to both a more responsive network and higher throughput.
- AuxPoW/merged mining enables it to make use of all actively deployed Scrypt mining hardware. Specifically it is economically sensible for miners to mine Dogecoin along side any other Scrypt cryptocurrencies they are mining, and virtually all do so. By reusing work that was being performed anyway Dogecoin also minimises its environmental impact.
- It has a dog on it.
A native Android wallet is available, and example libraries provided in several languages (Java, Ruby, Python) for integration with other projects.
2.1 Security & Code
Code is available from the (Dogecoin organisation)[https://github.com/dogecoin/]’s Github repositories. All contributions to Dogecoin Core are reviewed by at least one other developer before being merged. Security advisories from Bitcoin Core are actively monitored and fixes deployed. Dogecoin Core was one of the first cryptocurrencies to make an update available after announcement of [CVE-2015-3641(https://cve.mitre.org/cgi-bin/cvename.cgi?name=CVE-2015-3641), both to address the underlying issue and later ship a complete 0.10.2 derived client (Dogecoin Core 1.10).
Dogecoin is a fully decentralised project and is formed of several loosely coupled groups:
- Founders (primarily Jackson Palmer, but also Billy Marcus)
- Developers (most visibly Ross Nicoll, Max Keller, and Patrick Lodder)
- Reddit moderators / website
- IRC/other community leadership
These groups generally operate as a single entity, however their loose coupling encourages a mutual checking process, and ensures that no single party has unchallenged control of Dogecoin.
The developers all have significant experience, including one of the few Computer Science PhDs working in cryptocurrency, and at least 4 years working with blockchain technology, each.
In case of conflict over major changes, currently Max has final decision making power within the developers, with Jackson having veto power. In the vast majority of cases however community members (including developers) present the case for/against a change and discussion continues until an agreement is met naturally. This is resource intensive however fits the decentralised model.
Funding is via voluntary donation, for example tips to the reddit moderators or payments to the (developer fund)[https://chain.so/address/devfund], and is generally intended to subsidise hosting costs or time taken away from paying work, rather than conventionally fund work via salaries.
Scalability follows a Bitcoin-like model, starting with a 10x throughput base. Long term integration of Lightning Network or similar is anticipated to manage demand. Dogecoin has been in practical use for over 4 years, and is accepted by a number of stores and payment processors as a valid cryptocurrency.
3 Legal & Compliance
It is not anticipated that Dogecoin is classified a security, and significantly it’s use as a payment system is actively encouraged over use as an investment scheme.
4 Market Supply
Dogecoin has maintained a top-40 cryptocurrency market cap over its lifetime, and although currently at the lower end of that range it has recently regained a top-30 ranking for a period of time. Around 4% of the current total supply is traded daily. It’s supply is uncapped and the supply schedule well published (most notably in the reference client documentation).
A wide variety of markets are available for Dogecoin, primarily DOGE/BTC pairs but also DOGE/USDT as well as some more esoteric crosses: https://coinmarketcap.com/currencies/dogecoin/#markets
5 Market Demand
A significant, growing and enthusiastic community has formed around Dogecoin. The market cap recently hit an all time high, exceeding $2bn USD, and while it has dropped as part of a wider sell-off in cryptoassets, significantly exceeds its valuation as recently as mid-December 2017.
Node deployments are being expanded currently to manage increasing demand from the community.
6 Crypto Economics
Not applicable as Dogecoin is not a token and had no sale period (all coins have been mined).