You won’t believe which was one of the (relatively) most successful cryptos in the last 12 months. As I wrote about the inflation of the main cryptocurrencies some days ago here, I was wondering how could be Dogecoin overperforming in this group. For example, while Bitcoin dropped 36, Ether 66 and Steem 84 percent in 365 days, Dogecoin only 26.6 percent.

But Dogecoin started as a joke in the first larger Bitcoin-hype, end of 2013. Based on a popular "Doge" meme with a Shiba Inu dog. What is happening here?

(Youtube)

More value than Steem?

At time of writing, Dogecoin has a capitalization of 345 million dollars. (That means, all Dogecoins in circulation have a total value of 345 million on actual market price.) Steem, only 135 million dollars. We find Dogecoin on place 26, Steem, on place 53 on Coinmarketcap.com. How is that possible? What’s happening here? Are people totally crazy and fooled?

(Chart: Coinranking.com. Click for higher resolution.)

But don’t just chatter and complain, let’s make some research. Which news were there ultimately in the press, related to Dogecoin? About two weeks ago, Tesla’s chief executive, Elon Musk called Dogecoin his favorite crypto on Twitter. Musk is famous for his strange tweets, he had heavy problems earlier with that. (Even with the US securities supervisor authority, the SEC.)

Smoked Doge

We don’t know if he was joking, drunken, smoked something or what happened. Musk also named himself “CEO of Dogecoin” on his Twitter page. But after his tweet, the Dogecoin price skyrocketed, jumped 58 percent in three days. Many people thought Elon Musk’s Twitter account may have been hacked, but no such notice was issued later. Dogecoin price fell since then, but it is still relatively high. (See the charts.)

(Chart: Coinranking.com. Click for higher resolution.)

But Dogecoin’s ROI (return on investment, yield) is 418 percent from its launch. (By Coinmarketcap.) In case of Steem –32.65 percent. That means, one Dogecoin is four times more worth now than in December 2013, and Steem lost a third of its value from the start in April 2016. There must be some long term benefit of Dogecoin to make it relatively valuable.

Based on the popular "Doge" Internet meme and featuring a Shiba Inu on its logo, Dogecoin (DOGE) is a cryptocurrency that was forked from Litecoin in Dec 2013. Dogecoin has been used primarily as a tipping system on Reddit and Twitter to reward the creation or sharing of quality content. Dogecoin was created by Billy Markus from Portland, Oregon and Jackson Palmer from Sydney, Australia. Both had envisaged Dogecoin as a fun, light-hearted cryptocurrency that would have greater appeal beyond the core Bitcoin audience. (Coinmarketcap)

An article of Coinsutra in autumn pointed out that Dogecoin has a serious, numerous community supporting it. (On Bitcointalk, Reddit, Twitter etc.) “Dogecoin is actually being used in commerce and fundraising” – they wrote. But other conclusions were more pessimistic:

• The continued inflation is not good from an investment standpoint.
• The father of the project has left the cryptocurrency world
• The development community hasn’t done anything for the past 2 years.
• The community activity is rather stagnating or decreasing.

I measured 4.44 percent of inflation of Dogecoin in my post mentioned above. That is only slightly higher than inflation of Bitcoin (3.93 percent between April 2018 and April 2019). But Dogecoin has no limit of supply, like Bitcoin, Dogecoins can be inflated forever and endless, in theory.

“Why Developers Won’t Let the Joke Currency Die?” – asked Coindesk two years ago. It’s not even clear if a cryptocurrency can be killed if there are at least some people supporting it.

… if two nodes began running the client and were able to connect with one another. With the right software, they could mine each other’s transactions, pocketing thousands of albeit valueless tokens. Cryptocurrencies are “a bit zombie-like” (Ross Nicoll, developer, said). “It’s very, very hard to kill a cryptocurrency.”

In reality, you can find hundreds of “dead coins” here.

(Chart: Coinranking.com. Click for higher resolution.)

Conclusion?

The conclusion of the article of Coindesk was that the developers are keeping the network “running for the community – as long as there are people that want to learn about cryptocurrency via experimentation, or more serious users that still purchase digital goods and items on Steam, a marketplace for PC games”.

My conclusion? I suppose Dogecoin survives and sometimes grows in value because there are many supporters, and it is user-friendly, easy to handle (they have mobile wallet, for example). Steem system is very complicated (STEEM, SBD, STU, Vests…), and is regularly disappointing most new users. (It is promising rewards for their content, but in reality, it is difficult to earn here.) Hate me if you want but I think we could learn some things from Dogecoin fun-fan community.