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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.

Cryptocurrencies
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 dogecoin.com.  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 Spelunk.in interview he explains:

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

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

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 spt.vircurpool.com [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:

BillyM2k

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
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: dogecoin.com, BitCoin Talk [faq], Spelunk.in



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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.


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