COLUMBIA — When the Jamaican bobsled team fell short of funds to go to the Winter Olympic Games in Sochi, the team turned to electronic fundraising.
You're probably wondering: What is Dogecoin, and how does it work?
Dogecoin was officially created in early December, along with the promotional video that features the coin's slogan "To the moon!"
Initially conceived as a joke, Portland programmer Billy Markus and Australian marketer Jackson Palmer needed a symbol of philanthropy and jest to exemplify their vision of the Internet.
The cryptocurrency is characterized by the amiable dog — a Japanese breed called shiba inu — on its face. In Internet meme form, Doge features a word cloud of intentionally rearranged phrases superimposed on the face of the dog.
What the canine-inspired coin community lacks in venture capital investors and blue chip financial status, it makes up for in fiscal fervor – constantly finding new mechanisms of exchanging coins and raising money for philanthropic pursuits.
Bitcoin is a another digital currency that can be transferred between parties without a bank, credit card or other centralized authority.
Here's what you need to know about these currencies:
What are cryptocurrencies?
Cryptocurrencies, such as Dogecoin and mainstream competitor Bitcoin, act as an electronic means of exchanging funds. While normal fiat currencies such as the U.S. dollar can also be exchanged electronically, cryptocurrencies have the distinct characteristic of being nearly untraceable.
Luke Besser, co-founder of the University of Missouri Investment Group, trades Bitcoin. He said he thinks the independence of cryptocurrencies makes them an attractive asset for people who value economic freedom.
“I think it’s nice for citizens to have a way to store their money without the government being able to touch it,” Besser said.
How do they work?
You can get Dogecoins two ways. You can purchase them with a digital wallet or "dig" for them online. Purchasing Doge requires opening a wallet and purchasing them with Bitcoins.
Digging, or mining as it is referred to by other cryptocurrencies, can be likened to printing money.
People searching for Doge know ahead of time how many coins they could find during any particular dig. Dogecoins exist in blocks, but to dig them up, people have to find them by collaborating with other users. A community thread on the website Reddit explains trading and digging in detail.
Dogecoins can also be exchanged directly between wallets or virtual tip jars with no transaction fee, a popular practice of Twitter and Reddit users looking to tip each other.
How much is Dogecoin worth?
Currently, it takes about 1,500 Dogecoins to make up one dollar. In comparison, competitor Bitcoin, the cryptocurrency with the highest net value, typically costs between $300 and $800 per coin.
What can you do with Dogecoin?
Internet users can exchange funds in Doge, commonly in low-value sums. Virtual tip jars may be set up to give and receive Doge for helpful information or just good faith.
MU economics graduate student Jeremy Thiele said fee-free virtual tip jars (such as Reddit’s) are one of Dogecoin’s several advantages over dollars.
“The great thing about cryptocurrencies is that they are easy to set up and do small values,” Thiele said.
Dogecoin is also a popular method of crowdfunding. The Dogecoin Foundation uses Reddit’s crowdfunding partner crowdtilt.com to collect large sums of Doge for charitable causes. This month, the Doge4Kids program has raised more than 20 million Doge, or $30,000, to provide service dogs for children in need.
What’s the difference between Dogecoin and Bitcoin?
With a market capitalization of more than $7 billion, Bitcoin is often used as a store of value between investors. Bitcoin is also more applicable in commercial use, with web retailers such as Overstock.com accepting the cryptocurrency.
Bitcoin’s high value is partially due to the fact that mining will eventually be cut off, meaning the coin will gain value with increasing demand.
The founders of Dogecoin intend to limit digging, but plan to allow new coins to be dug up for the foreseeable future. The greater supply of Doge will maintain its low per-unit value, which is ideal for low cost online exchanges.
Dogecoin’s light-hearted nature differentiates it from the negative attention Bitcoin received from its involvement in Silk Road, the online market place that conducted illicit sales of drugs, weapons and other contraband.
What does the future hold for Dogecoin?
It’s hard to say. While Dogecoin's market capitalization has quickly risen to $62 million since its inception, skeptics note that its comparatively low value and lack of presence in traditional business transactions give the coin an uncertain future.
Besser is one of the skeptics. Although he said he doesn’t think Dogecoin will succeed in the global marketplace in the manner of Bitcoin, he remains fond of the shiba inu’s modest principle.
“I like the fact that it exists because people are having fun with it, and I think people get really rich off that too,” Besser said.