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New cryptocurrencies could be viewed as extensions of bitcoins, offering new capabilities to the BTC economy

With the digital cryptocurrency Bitcoin (BTC) evolving into a $8.4B USD (market cap) economy and drawing the attention of serious economists, other rival cryptocurrencies have tried to grab headlines of their own.
I. Bitcoin Rivals Emerge
Bitcoin came along unnoticed to most in 2009.  By contrast, these newcomers are off the ground and running.  Bitcoin uses proof-of-work on SHA-256 hashes to seed the market with coins (a maximum of 21M BTC will be produced).  Other rivals adopt similar approaches with small twists.  For example, Namecoin (NMC) serves the *.bit domain and uses its work to try to fight "censorship" of oft taken down websites (or promote illegality, depending on your viewpoint).  Launched in 2011, it is worth $31.8M USD at present -- about 1/200th of BTC's net value.
Then there's Peercoin (PPC) which adds proof-of-stake to the seeding process to add a small amount of inflation, which will allow it to have no real limit on the maximum amount of currency (unlike BTC and most other alternatives).  It has a market cap $66.4M USD. 2013's Primecoin (XPM) has a similar unlimited pool based on the 1CC/2CC/TWN algorithm.

Bitcoin's success has inspired a fresh legion of cryptocurrencies based on various encryption algorithms.
[Image Source: James Best Jr./NYT]

And there's Litecoin (LTC) and Ripple (XRP) -- the two most serious challengers of the pack.  Both Litecoin and Ripple drop BTC's SHA-256 based seeding for seeding by newer, and some would argue, more secure alternative cryptography functions. 
Ripple uses the scrypt (2012) algorithm and is worth $1.5B USD (but on the downside all its coins are seeded).  Litecoin is worth less ($0.5B USD), but has more room to grow as only about a quarter of its coins have been seeded by its underlying ECDSA (2009) algorithm.
Then there's Novacoin (NVC) (2013, scrypt), Feathercoin (FTC) (2013, scrypt), and Yacoin (YAC) (2013, scrypt).
II. Dogecoin (DOGE): The Meme Behind the Coin
But if you're pretty annoyed at this point and feel all these cryptographers and their want-to-be future currencies are a bit too much, there is one last cryptocurrency that might hold some appeal to you.  It's called the "Dogecoin".
Dogecoins are actually a real cryptocurrency, founded the same principles as the rest of the bunch, but as their name suggests, they have something to do with dogs.  And not just any dogs -- they're based one of the internet's most famous dog memes, the "doge".
Perhaps drawing its name from a 2005-era HomeStar runner video...

...according to a history compiled by Know Your Meme.
I've discovered that the next step in the evolution of the meme appears to have come on Mar. 3 2008 when LiveJournal user joseph "the quiddler" quade (bleak_) posted a blog containing the video below with the title ""lmbo look at dat f--en dog" (in all caps) of a dog jumping with the song "Pump it Up" by Noikokyphs Amyntaio.

This was reposted in Mar. 27, 2008 era post in the Something Awful (SA) forums (under BYOB Goldmine).  Entitled "lmbo look at dat f--en dog" posted by user DannoMack.  The theme stayed alive via a similar parrot-themed post "lmbo look at dat f---en parrot" on You're the Man Now Dog.

The rest of the history is written elsewhere -- on Oct. 18, 2010 a post entitled "LMBO LOOK @ THIS F--KEN DOGE" was added to the /r/Ads Reddit subpage by papajohn56.  The dog pictured this time around was a Corgi.  The original content is no longer available, but it's possible it was this video from daily Corgi.  Soon "doge" themed blogs starting popping up on tumblr. 

Doge hipster
A hipster "doge" shows the trademark stylings of the meme in its Shiba/e Inu themed iteration.
[Image Source: Reddit]

Then along came a tumblr about Shiba Inus (a breed of Japanese dog) entitled "Shiba Confessions", which focused the discussion on Shiba Inus speaking in humorous, at times cryptic Engrish, exploiting the fact that "doge" sounds a little like an Engrish spelling.

III. From a Joke to a $130M+ Digital Fortune

Dogecoin was first conceived by a Sydney, Australia-based graphic designer/marketer named Jackson Palmer (@jacksonpalmer).  Mr. Palmer is relatively known for his day job in which he works at Adobe Systems Inc. (ADBE) marketing the company's "Business Catalyst" (BC) product.  Here's a video of Mr. Jackson published by BC Gurus:

Entertained by the public fascination with bitcoins, he decided to spoof them with one of his favorite memes ("doge"), tweeting that bitcoins were oh so très passé and that he suggested users instead invest in the "dogecoin":
Encouraged by friends who thought it was hilarious he photoshopped what a "dogecoin" might look like, and bought the domain name  At this point it was still a joke.

Ben Atkin (@benatkin) a student at Front Range Community College (FCCC) in Colorado encouraged Mr. Palmer to make it a reality.  He comments
He then posted to some dev buddies:
Doge Qt UI
The first iteration of the dogecoin Qt wallet/mining UI, featuring the trademark "doge-speak".
[Image Source: Billy Markus]

Mr. Palmer, encouraged, reached out to a Portland, Oregon dev. friend, Billy Markus (@BillyM2k):

Four days later they had a working mining client in Qt (Windows, Mac) and wallet app, and they announced their work. In a interview he explains:

The timeline was pretty quick. I tweeted at Jackson Thursday, finished the coin Saturday, then we released on Sunday.

"dogecoin" (DOGE) is the internet's first meme-based cryptocurrency. [Image Source:]

The "currency" took off after the url and an accompanying forum post in Bitcoin Talk became a fast-spreading viral metameme earlier this month.  Currently a DOGE is trading for 0.04 BTC (source) making it worth over $21 USD.

Mr. Markus has since taken on a new alias going by the name Shibetoshi Nakamoto (SHIBEtoshi -- get it?), a play on Bitcoin's shadowy, anonymous creator Satoshi Nakamoto.  Unlike the BTC creator, who people have been trying to guess at the identity of for some time now, the DOGE creator wasn't quite so careful at covering his tracks, leaving a bit less mystery.
There's still a bit of mystery as he isn't exactly a prolific online figure, however, his reddit account posting reveal that he was working as an engineer at International Business Machines Corp. (IBM) [post]:
Billy Markus beaverton

...and further evidence comes from his inquiries in whether Mozilla was hiring in Portland [post]:

Billy Markus Portland

It's possible he no longer works at IBM and is focusing solely on cryptocurrency as he was encouraging other cryptocurrency enthusiast to "quit their day jobs" in the chats on [thread]:

Billy Markus quit your day job

Also, if you search for his user name on Twitter, you can see that he's delete some tweets (perhaps in an attempt to offer a bit of mystery), but his account his actually quite old and contains much discussion of his interest in e-sports.  There's a cached version that matches up with his current professed interests, minus the dogecoin part.  I'm saving it here for posterity's sake:


So while Billy Markus may keep a low profile he does appear to be only thinly disguising his actual identity.
IV. What to Learn From the Internet Turning a Joke Into a $130M+ "Currency"
The DOGE does raise some interesting points.  Its humor-driven theme certain alludes to deeper questions about cryptocurrencies in general.  The biggest question is that if it took DOGE's creators just a few days to create their currency, what's to stop the cryptocurrencies from flooding the market?
The answer is unclear.
But perhaps the answer lies in DOGE, which went from unknown to worth around $134M USD in a single month.  Was it because it played off the popularity of the "doge" meme?  Of course, but because now that's been done, the next meme-themed coin won't feel quite as fresh.

dogecoin's meteoric rise in value, may lead to criticism and doubts of crpytocurrencies in general.
[Image Source: Mydogecoin]

So it seems more likely that the lesson learned is that the potential for new cryptocurrencies is infinite, but user interest is not.  Even with the crazy created by bitcoins, you must find a new angle to leverage -- a new algorithm, something humorous or attention catching.

Further, as most of the coins (like DOGE) are traded on the same exchanges as bitcoins, and since very few of them can be traded directly for (U.S.) dollars, they can be viewed as somewhat of an extension of the bitcoin.  That's actually good news for the Bitcoin as it means that its legacy -- as a family of cryptocurrencies -- can grow in any direction it needs to, to accomplish new objectives, capture publicity, and achieve financial stability/acceptance.

Sources:, BitCoin Talk [faq],

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wow, cryptocurrencies on crack
By milktea on 12/19/2013 1:45:06 PM , Rating: 1
I can't believe so many schemers trying to cash in on the cryptocurrencies. This has got to be one of the biggest/worst get rich quick scheme of the 21st century. :-s

RE: wow, cryptocurrencies on crack
By kleinma on 12/19/2013 1:51:51 PM , Rating: 2
People get scared they are missing the ground floor chance to get rich. Of course for most people this turns into the ground floor chance to lose money. Like everyone who lost half their bitcoin value yesterday.

RE: wow, cryptocurrencies on crack
By Solandri on 12/19/2013 5:21:54 PM , Rating: 2
Spoofer rediscovers why PT Barnum said "There's a sucker born every minute." Film at 11.

I suppose the knowledge that he was only taking money from stupid people helped assuage Barnum's guilt.

RE: wow, cryptocurrencies on crack
By snyper256 on 12/20/2013 9:06:23 PM , Rating: 3
The value is in the creative and passionate Humans working to make the market viable. It is only expanding for the foreseeable future.

BTC is not going anywhere.
The exchange rate is not even half the story.

Every time any nation has 'financial issues' from now on, cryptocurrency's benefits will become more well-known. Understand?

By The Von Matrices on 12/20/2013 1:15:38 AM , Rating: 3
People get scared they are missing the ground floor chance to get rich. Of course for most people this turns into the ground floor chance to lose money.

This is absolutely right. The market is filled with people chasing "the next big thing" without actually realizing what they're getting into. I am invested in Bitcoin, but I didn't do it without carefully reading and analyzing its strengths and weaknesses.

Like everyone who lost half their bitcoin value yesterday.

The market dropped ~30% yesterday, and it has mostly recovered today. The only people who lost money are those who panic sold. Anyone who expected the Chinese government to embrace Bitcoin (let alone any threat to its power) was insane. Many of the larger investors were not surprised at the announcement; the question was when rather than if it would happen. The drop in price occurs as the Chinese wake up and sell their coins, and the price rebounds when the West wakes up and buys all the low priced coins.

Bitcoin still has a very positive outlook. will be phasing in the use of Bitcoin next year, and the momentum is only growing.

By EricMartello on 12/24/2013 12:13:19 PM , Rating: 2
Lost their "bitcoin value"?? What value? You can't lose that which never existed.

Bitcoins are little more than a ponzi scam. The "market cap" (lol, nice try to make it sound legit) is not liquid; the exchanges have nowhere near that level of real currency and are therefore insolvent.

Bitcoins are like a casino chip to a bankrupt casino and every moron "investing" in them deserves to be screwed over. If you're just getting into failcoins now you are not one of the few who will be cashing out in the black.

RE: wow, cryptocurrencies on crack
By JasonMick on 12/19/2013 7:07:25 PM , Rating: 3
I can't believe so many schemers trying to cash in on the cryptocurrencies. This has got to be one of the biggest/worst get rich quick scheme of the 21st century. :-s
It worked for Bernie Madoff didn't it? :{P}


Jokes aside, I think your comment hints on a deeper point

Interestingly for all the concern about "big evil gov't" the developers and early adopters are essentially acting as the politicians as they dictate the amount of currency, the algorithms to control its seeding, and whether it will stay static over time or grow the pool to flight deflation.

I think the latter inflation-equipped currencies (NOT bitcoin or dogecoin) have the best potential to actually be a useful thing societally, potentially with the mining algorithm eventually replaced with quantum encryption or something, once quantum computing makes standard encryption quickly crackable.


The reason why is that without inflation, early adopters will inevitably wind up holding most of the coins.

While this most certainly gives the chance to "get rich" it also creates another interesting problem -- if early adopters dump to much currency for goods or USDs, they're only able to cash out a small part of their holdings at a time, as current deflated values, they would crash the market if they sold off all their holdings.

Further, this means that without inflationary algorithms (e.g. proof-of-stake) to counter the deflation over the seeding, the early adopters will eventually be able to cash out if the currency becomes popular and heavily used, however, it is highly probable they'll only receive a small fraction of the net value.


Rather it creates a golden-handcuffed, digital-age plutocracy of such, in which their heirs will inherit their holdings and slow liquidate them into material goods and/or traditional currency. This is obviously anti-capitalist and problematic, and ironic in the sense that financial manipulation is one of the key things bitcoin was supposed to help PREVENT. Instead it's just entrusted the plutocracy (algorithmically, instead of politically) new a new group, ironically recreating the root problem of the overzealous nationalism it was reacting to.


By contrast a WELL MADE cc with a well-tuned inflation and sufficient pool (e.g. not BTC or DOGE) could help society moved towards meritocracy BOTH by reducing the amount that early adopters' holdings will be worth in the long run, and by reducing the risk of currency manipulation that national currency bring -- both of which risk the creation and/or preservation of meritless plutocracy for the controlling interests.

RE: wow, cryptocurrencies on crack
By milktea on 12/19/2013 9:19:51 PM , Rating: 2
Totally agree with your comments about plutocracy. That's how our society is founded upon. And it's hard to change that.

But aside from that, the idea of 'decentralized' currency in itself is flawed, IMO. A decentralized system is very rewarding in the beginning, but in the long run, it would get out of control, becomes unstable, and crashing down in the end. There are many physiological and psychological factors effecting our global enconomy. The only way to ensure stability in the system (in the long run) is to have a 'centralized' authority regulating it.

Moreover, Bitcoin in itself is self conflicting. Its intention was to achieve a decentralized system. But when the time comes where the developer calls for a need for a protocol change, who has the say to make that change? That decision for change/update would become a 'centralized' decision, which is in conflict with the principle of Bitcoin.

By The Von Matrices on 12/20/2013 1:23:04 AM , Rating: 2
There is no developer controlling Bitcoin who can come back and change the protocol alone.

The Bitcoin protocol is completely democratic. Anyone can campaign for a change in the protocol. However, that change only gets implemented if over half of the miners "vote" for the new protocol by adopting it. Otherwise, the old protocol remains.

RE: wow, cryptocurrencies on crack
By JasonMick on 12/20/2013 10:02:59 AM , Rating: 3
But aside from that, the idea of 'decentralized' currency in itself is flawed, IMO. A decentralized system is very rewarding in the beginning, but in the long run, it would get out of control, becomes unstable, and crashing down in the end. There are many physiological and psychological factors effecting our global enconomy. The only way to ensure stability in the system (in the long run) is to have a 'centralized' authority regulating it.
I disagree with you on just this one point.

I think that there are three key economic/social debates that have been debated historically:

Centralization vs. Decentralization
Nationalism vs. Provincialism (vs. Anarchy)
Exclusivism versus Choice

Centralization vs. decentralization is essentially the debate of globalism vs. isolationism. In a global economy, whether it's digital or non-digital free trade weakens the control of any one nation, assuming that there's a balance of power.

It's true there's trade barriers and such. But the U.S., Britain, and others who at one point believed in economic isolationism lost that battle long ago when they started allowing foreign investment.


In many ways the new debate is free vs. encumbered trade, which lies midway between the nationalism vs. provincialism debate and the centralization debate, in the sense that nationalism is typically used to justify encumbered trade, and provide a small resistance to decentralization the benefits a small wealthy elite.

Such trade barriers are antithetical to the spirit of capitalism. Capitalism seeks to establish a meritocratic free market system in which excellence is rewarded. Trade barriers generally do nothing except to manipulate trade to the interests of a small controlling elite, while raising cost of goods for the public.


Nationalism vs. provincialism is perhaps the most important debate.

Most of the worst acts of the twentieth century were instigated by cleverly crafted nationalist hyperbole and fascist (in the general sense of the word) transfer of power and money to a small elite who invariably the nationalist state blindly entrusts power to.

By contrast provincialism -- while also exploitable -- is far less so as it operates on a smaller scale. This makes corruption more visible, and politicians more sensitive to the well-being of their constituency.. And also, simply put, there are less people to rob from, so even if there is some level of unfairness, money does tend to flow back into the local economy versus in the nationalist state where money tends to be horded by the plutocracy.

Federalism is being recrafted and misrepresented to be nationalism. Rather it's a framework of strong civil rights and free trade protections that a group of states (provincial constructs) adhere to, such that they can guarantee free trade and mutual security from outside forces with different philosophy.

Federalists may have fought with those who wanted no such framework, but in a modern context that debate has little to do with the bloated nationalist regimes that have arisen in the twentieth century (including in the U.S.)


Lastly there's a debate over exclusivism versus choice.

Plutocrats always gravitate to exclusivism, because if they're the ruling nationalist state, if they can not only pillage their own land, but the world then they're the leech of all leeches -- the ultimate league of tyrants.

The Roman Empire and the British Empire for a time both looked to make their currencies and policies THE money and voice of the world. But they failed.

Now they U.S. is trying to do the same thing. But it's fading economically, at least in comparison with China.

As China flexes its muscle it may look to become the next global empire. But as others failed China will too.


Returning to bitcoin, I don't think the issue is one of exclusivism or centralization.

Inherently, as I said, all currency is relatively decentralized.

Rather it promotes a breaking of nationalism (to the benefit of provincialism) IF and only if it does not build a new plutocracy.

Further, it eliminates the trade barriers that are restrict a truly free, global economy.

There's no reason to fear cryptocurrency will promote exclusivism either. This multiple competing currencies. If my hypothesis regarding the importance of inflation to prevent early adopter power grabbing is correct, more will likely take to currencies with careful, responsible inflation schemes.

In such a more enlightened time, there will be many choices currency wide, all of which will be internationally usable and available. This will help ensure free trade and global stability.

And it will break the backbone of the dying nationalist movement, which seeks to divide mankind, when educated humans want the same universal protections and freedoms worldwide.


You look at the EU's governing documents, Canada's, and our own Constitution and they really have quite a bit in common, civil liberties and trade-wise.

I hope that some day, when nationalism and plutocracy lay on their deathbed, after much strife, that we may realize that what it REALLY means to be Americans, Canadians, Europeans, etc. is a love for freedom, and that the world can adopt a global pact, akin to the Star Trek "United Federation" sort of treatise, which will guarantee a narrow set of globally recognized civil rights and provisions to prevent trade barriers within the states and provinces of the world.

At the same time provincial governments will continue to make sure that local interests are maximized and that slight differences in governance and social philosophy don't ruin the global league.

In such a future I predict that cryptocurrency and physical currency will merge, in the form of privately created physical currencies with digital means onboard. That way you will have the benefits of "real" money (harder to lose, etc.) but the perks of well-constructed cryptocurrencies (harder to manipulate, globalist, security, etc.).

RE: wow, cryptocurrencies on crack
By milktea on 12/20/2013 12:26:53 PM , Rating: 2
Thanks for your brief but insightful comments. I have no doubt that you strongly believe in your believe. But I still have my reservations in decentralization. Simply because we don't live in an ideal world. So such topic is still very debatable.

With regards to the existing cryptocurrencies, IMO, they are just casualties of what the future global currency would become.

RE: wow, cryptocurrencies on crack
By purerice on 12/23/2013 2:19:38 PM , Rating: 2
was brief sarcastic? :P

I agree on cryptocurrencies but about decentralization let's take two examples from real life.
Centralization of Germany has prevented German kings from ordering Germans to kill each other, but has also allowed an Austrian lance corporal to take over Germany and murder millions of non-Germans.
Decentralization prevented the Indians from establishing a unified voice to demand their rights against the early English and post-English settlers in the US, but also allowed India, South Africa, and Australia to gain relative independence from the British crown (they are still in the Commonwealth).

In short, centralization seems good for societies with primitive technological communication. As technology advances the risks of a highly centralized state outweigh the risks of a highly decentralized state. Likewise the benefits of a highly decentralized state outweigh the benefits of a highly centralized state.

RE: wow, cryptocurrencies on crack
By TSS on 12/20/2013 12:54:37 AM , Rating: 2
It's just ye olde ponzi scheme. Set up something with high rewards at first, rewards decline as usage goes up, and never offer users something that actually has intrinsic value like a product.

It's a more inventive way sure. But it's still the oldest trick in the book.

By The Von Matrices on 12/20/2013 1:27:57 AM , Rating: 2
Dogecoin is a bubble; however, it's not a Ponzi scheme. A Ponzi scheme has one person (or group of people) controlling the payouts. The creator of Dogecoin had no control over the amount of payouts received; its value was only determined by the market. It was sheer luck on his part that it blew up into a massive "success" and he was able to cash out.

RE: wow, cryptocurrencies on crack
By snyper256 on 12/20/2013 9:02:21 PM , Rating: 2
This is awesome!

I hope things like this continue to happen. :)

RE: wow, cryptocurrencies on crack
By snyper256 on 12/20/2013 9:03:12 PM , Rating: 2
More and more frequently.

Every sort of person deserves this kind of opportunity.

Rival cryptocurrencies could assure persistence
By lol123 on 12/19/2013 5:13:05 PM , Rating: 2
This sounds great to my ears. I might be missing something, but the appearance of a multitude of rival cryptocurrencies (especially with one of them being backed up by IBM) seems to be the best way to assure that the idea of a decentralized currency, where transactions can't be monitored by governments or companies, won't be something that hinges on Bitcoin itself and might go away with it in case that particular system should fail or in some way be shut down by governments.

RE: Rival cryptocurrencies could assure persistence
By milktea on 12/19/2013 8:48:06 PM , Rating: 2
Just in case you haven't heard... BTC China was ordered to stop accepting deposits in Chinese currency. Bitcoin value plummets more than 40% after the news, just one day ago!

By The Von Matrices on 12/20/2013 1:29:43 AM , Rating: 2
And it completely recovered in one day as well.

By snyper256 on 12/20/2013 9:11:05 PM , Rating: 2
They think it matters when it goes down temporarily, it's downright adorable :3

By Fritzr on 12/24/2013 8:06:16 AM , Rating: 2
Reread the article. The private individual who created that crypto-currency looks to have been a former employee of a large corporation and is seeking work with another large corporation. The currency developed by the private individual is connected in no other manner to the corporations.

By techxx on 12/19/2013 12:42:08 PM , Rating: 5
Much article.

RE: Wow.
By Da W on 12/19/2013 1:17:04 PM , Rating: 2
Was he on crack or somethin?

ticking time bomb
By purerice on 12/23/2013 3:03:19 PM , Rating: 3
The irony of CCs is that as with so many other bubbles, the people caught up in the bubble get downright angry when you just suggest that the FUTURE value of the item in question may not be as high as they grandeurously expect it to become. Don't even entertain the thought of the value dropping.
I've dealt with this type collecting comic books in the 90s, stock in the late 90s, other valuables in the early 00s, houses in the mid 00s, stocks again later, and now BC/CC/DC in the early 10s. What is even more sad is that it is often the same people who got caught in the last scheme that get caught in the next scheme.
For thousands of years, only one strategy has ever been applicable to the general public:
Work hard,
Spend to save,
Save what is extra from spending,
Invest what is extra from saving,
Be happy with what you have.
I know 3 couples very well who make over $200,000/year and yet live paycheck to paycheck. One bought a new truck and boat to tow it days before being foreclosed on an investment house $300,000 underwater. They owe more in monthly credit card bills than their net salary. Despite that, they asked if buying BC on credit card would be a good idea, that they were $2k below their limit and wanted to buy a couple of coins. Another couple makes over $400,000/year yet can't afford the down payment for the 3.5% down on a $400,000 home, even after 10 years of "saving". Yet they got a new car. They asked about BC as well.
Something tells me that if these people had their finances in order they wouldn't care about Bitcoin either.

By middlehead on 12/19/2013 1:19:10 PM , Rating: 2
Definitely the worst recent mem.

wow! :O
By Lazlo Panaflex on 12/19/2013 3:50:44 PM , Rating: 2
Dogecoin such moon! very money! WOW!


dogecoin is my fault
By bleak on 12/23/2013 1:22:19 AM , Rating: 2
where are my millions obama

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