Who Let The DOGE Out?

When investing in cryptocurrency, the fundamentals seem very important. How then can a coin that was meant to be a meme remain so popular it has a market cap over a $1 Billion (as of this writing)? That is a lot of value for something that has no distinct utility or feature, yet has captured a large share of the market. It is certainly FOMO for noobs. Meme coins were meant to be just for fun, and that is the image many have of Dogecoin. Yet there are some things about Dogecoin that are actually fundamentally what cryptocurrency should be all about.

First and foremost, this is not financial advice. This is for reference and informational purposes only. Cryptocurrency is very volatile and there are risks to consider when investing. This is not a direct promotion of Dogecoin, the cryptocurrency or investing in a digital asset. Instead this is a look into why it is popular and how it fits in the current cryptocurrency landscape. With that said, what is all the fuss about Dogecoin?

What Is DOGE Coin?

A meme coin is a cryptocurrency that is not meant to be taken seriously. It does not serve any purpose other than for exchanging and trading. It can be used as a form of payment for tipping or just a way to exchange value over a blockchain. It doesn’t have the core principal of being a store of value like Bitcoin, or an application development platform like Ethereum. First released in December 6, 2013, Dogecoin was just meant to be a simple P2P (Peer-to-Peer) electronic payment software like Bitcoin. The cryptocurrency got its name from the popular Doge meme which features a Shiba Inu dog as the logo. DOGE is the listing name used for the digital asset.

DOGE, while not anything sophisticated, did not initially have any sort of application other than P2P. It is based on open source software from the cryptocurrency Luckycoin and Litecoin. DOGE uses the scrypt algorithm with a PoW(Proof-of-Work) consensus mechanism. There are 127 billion coins in total supply with a 1 minute block time. The block reward for miners is 10,000 DOGE per block produced. Unlike other cryptocurrency, Dogecoin’s founders (Billy Markus and Jackson Palmer) have not continued promoting or even associating with DOGE. They have pretty much been on the sidelines, but DOGE has flourished in part due to its community.

Pump And Dump

While Dogecoin seems like a fun and trendy cryptocurrency that is nice to have, it is also notorious for pump and dump schemes. This has been encouraged in large part by users from Reddit, social influencers and public personalities that include Elon Musk. All it takes is a tweet from a well known personality, and DOGE prices on the market surge. These pumps do not seem to follow any sort of fundamentals other than the encouragement of influencers.

DOGE became a TikTok trend in July 2020, promoted by fans of the popular social media app. It began going viral as users began to spread the word through the platform. This was a push to pump up the price of DOGE and it worked. DOGE volume spiked by 683% after TikTok user urged a buying spree pump. Another surge occurred when Elon Musk tweeted in support of the cryptocurrency. That led to the value of DOGE to surge from $0.003 to $0.005. What do you think happens with all the viral videos on TikTok and tweets from Musk? It creates attention, and people will either Google search Dogecoin to learn more or ask someone they know about it. This type of news is not something you would expect on mainstream media.

These pumps are usually followed by dumps, as can be observed from the latest that occurred in 2021. This was a result of the Gamestop Short Squeeze in which retail investors were temporarily shut off from buying stocks for Gamestop. This led to users urging a pump for DOGE because at least they can buy it freely without any restrictions. It was more about making a statement to the establishment by some, but more people probably did it in order to make gains. That was exactly what happened and then came the dump. During this time (January 28, 2021) DOGE surged by 1,100% to an ATH of $0.082 but would dump a few days later.

In these pumps, many were motivated to see the price surge. However, once it reaches the highs it is really hard to control people from taking profits. After all, DOGE does not really have the same value for HODLing as BTC. You can hold thousands of DOGE in your bag, which really does not seem to be worth much. When prices surge it becomes valuable for converting to fiat, like winning money from a casino. Unfortunately this does not end well for noobs who probably got into the pump craze with no idea what was about to happen. They probably expected that their investment was going to go up, but not realizing that when others cash in the prices go back down and they can lose their initial investment.

DOGE Is In Theory What Cryptocurrency Should Be

While many would berate and laugh DOGE off as just a meme coin used for fun, it actually does have fundamental features of a cryptocurrency. People will be surprised that Dogecoin is capable of many things that modern banking systems cannot do. Dogecoin takes the innovations from blockchain technology and applies it to a community driven environment. Despite not having a platform of its own, what matters is that it provides the basic needs for cryptocurrency which is the direct and decentralized P2P transfer of value. There are also no barriers to purchase it that require proof of documentation, like with other financial assets.

Transactions in DOGE are cryptographically secured, which is important in cryptocurrency. Dogecoin uses a blockchain to allow two people to exchange or trade without knowing each other personally and without requiring permission from a third party to conduct a transaction. Today before we can purchase an item with a credit card, it actually requires permission from the issuer of the card. They can stop a transaction any time they want since it is under their control. This can happen to certain individuals who credit institutions may want to limit or target for any reason.

Dogecoin is highly decentralized after all. It is not controlled by any one entity or organization. Its founders cannot even shut it down and it is open source and available to everyone. There are no constraints to access the source code which users can do with as they wish. No one is going to stop you from buying or selling DOGE, because there are is no censorship against a user. Instead you have a permissionless and trustless system like Bitcoin that is peer to peer at best. Many do not realize that you can also use DOGE to transfer money across borders, but of course when you convert it to fiat it is your responsibility to meet KYC requirements from digital exchanges.

Banks take days or longer to settle payments. With Dogecoin it can be done much faster and at a lower cost as well. There are no middle men or third party to pay when conducting a transaction between two users. If Bob wanted to tip Alice with DOGE, he can do so directly to Alice’s digital wallet with no one to prevent the transaction or require arbiters to facilitate it. The Dogecoin blockchain network provides a neutral service users need to transfer value. So during any pump and dump, the blockchain is still being used to record all transactions in a transparent and immutable manner.

Takeaways And Closing Thoughts

Dogecoin is for the most part the simplest blockchain decentralized app for cryptocurrency. What started out as something just for fun, turns out to have a large following. What this did is foster a community of individuals that brings power to the people. We can see how much that is the case when influencers and public figures join in to participate in pushing the price of DOGE higher. Through social media and the Internet, information spreads faster and coordination becomes easier as the network provides the necessary infrastructure to allow that. Just be careful though when you participate, things can quickly change if you commit more than what you are willing to lose during pumps. It is not a good idea to invest life savings, pay checks or even mortgage a house just for DOGE. Think rationally and it should be fine.

DOGE as a digital asset is not actually worthless like so many penny stocks. It is cheap, but due to its popularity is gaining the attention of the mainstream. Many digital exchanges (e.g. Binanc) and wallets (e.g. Exodus) do support DOGE, which is why it can be purchased by many people. Developers of the Flare blockchain have announced their support for DOGE, which could introduce smart contracts to Dogecoin users. There is also interest in the gaming community to use DOGE, for online gambling, tips and purchasing game items (e.g. badges, powers, etc.). Ren has provided a path for DOGE into DeFi with their renDOGE token. This can bring more applications for DOGE when it comes to liquidity for cryptocurrency lending, payments and trading.

The interest in Dogecoin is going to help sustain the digital asset as something of value to users. This keeps the momentum of holding the coin for longer terms. What Dogecoin showed is that through a coordinated effort by a decentralized community, the market can drive the prices. That is what free market laissez-faire economics should be all about. People are free to enter and leave the market at their own will. When DOGE is surging there is no one group or individual who can stop people from buying it, like what Robinhood did with Gamestop (the reasons are due to how the current financial system works). DOGE is not to be treated as a sure bet financial instrument by any means though, it is a risk that must still be evaluated. With these new possibilities and opportunities coming to Dogecoin, who is to say it is worthless and only for pump and dumps.

Disclaimer: This is not financial advice. The content shared is for informational purposes only. Please do your own research always before investing in cryptocurrency.

Litecoin Halving – Do Less Rewards Mean More Value To Miners?

The Litecoin blockchain halving was succesful at the block height of 1,680,000 at 10:16 UTC (Monday August 5, 2019). The halving reduces the Litecoin reward in half, from 25 LTC to 12.5 LTC per block mined. There was no immediate dramatic rise in the price of LTC, but it showed plenty of optimism in the market. Litecoin, like Bitcoin, has a limited supply which caps at 84 million LTC. The halving is an event that occurs on the Litecoin network every 840,000 blocks or approximately every 4 years. As the name implies, it is a 50% reduction of the miner’s rewards for every block they validate on the network. This is part of the Litecoin consensus mechanism called PoW (Proof-of-Work) which is also used in the Bitcoin blockchain.

The halving creates digital scarcity, and to some analysts this means the digital asset becomes more valuable. Whether it is due to the lower supply of LTC or the hype surrounding the event, prices have not increased at the levels some may have expected. Perhaps this is due to the halving being priced in with investors already having accumulated the digital asset ahead of time. If these transactions were done over the counter style, then it will not really affect the market prices on digital exchanges. Some analysts believe there should be more to expect in terms of the utility of the token rather than just anticipate the digital scarcity will increase prices. Perhaps the law of supply and demand doesn’t exactly equate to expectations in a volatile cryptocurrency market.

LTC is used mainly in making direct P2P online electronic payments. It functions like any other cryptocurrency, where the transactions are made transparent and immutable, allowing for greater accountability. In terms of speed, it isn’t any faster than traditional payment systems like VISA or Mastercard. However, LTC can instantly transfer value across any border because of its P2P feature. The transactions also have lower fees than money transfer agents or bank charges. When you don’t have intermediaries in the payment network, you can pretty much transfer value easily in a frictionless manner. All that is needed is an exchange that supports LTC that converts the cryptocurrency to fiat.

The problem is that regulatory clarity has not fully accepted cryptocurrency like LTC. Although it is being used by some people to make payments or transfer value, it is not happening on a large scale yet. Not all exchanges are available in all countries that support a fiat to LTC pairing. If any exchange has a Litecoin pairing then it would be easier to transact. This would be like how using the USD becomes viable because of currency exchanges that support it. Therefore it makes it accessible to everyone and it is the legal medium for exchange. LTC on the other hand is not readily available to be used to purchase items, unless the business supports it. So far there are very few establishments that will accept LTC as a payment for let us say a cup of coffee or breakfast sandwich. How easy it is to use fiat to pay for those items.

There is more concern among the mining community though. Since block rewards have been cut in half, operations will be affected due to decrease in profitability among miners. It would be fine if the price of LTC greatly increases, but if not then the miners will have to absorb net losses. The issue here is related to the electricity costs to cover producing LTC from mining blocks. What this can result to is an exit among miners who cannot absorb the costs, while established miners will continue mining and making profit. The bigger mining pools can survive because they have the resources to do so. The hash rate of the overall network could also decrease, making the difficulty target easier and block mining just as profitable for the miners who remain in the game. 

Let’s look at how blocks are mined on Litecoin’s blockchain. The block production time, on average, is 1 block every 2.5 minutes, which is 576 blocks are produced every 24 hours. Due to the halving, each block mined now rewards miners 12.5 LTC. That means that every day or every 24 hour period 7,200 LTC is created. This will go on for the next 840,000 blocks which will be the next halving. With a total supply cap of 84 million LTC, the halving leads to less and less rewards for miners. The incentive here is to produce blocks, but with less rewards there may be less miners providing hash power to the network. The idea is that demand will exceed supply, so miners will still be incentivized to validate and mine blocks so the value of LTC will increase. The point here is that the lower amount of LTC is not going to stop miners if the price of LTC increases due to the demand. Fees should also be reasonable enough that people will use LTC to make payments. So far it seems current fees are low enough in terms of LTC/KB with 3 priority levels (the highest level costing more than the rest). This is what the Litecoin team refers to as “near-zero cost payments” i.e. cheap fees.

The only thing that has not been determined is whether LTC will continue. The LTC is only valuable if it is being used, but if it is just speculation fueling the prices then there is really no utility behind it. The developments in Litecoin need to catch up to the demand which is what is creating it in the first place. There has been encouraging news about new ways to bring privacy to transactions on the Litecoin blockchain. Developers will need to make sure that the value of LTC doesn’t rely on pure hype and speculation alone. Instead it must demonstrate that the technology is capable of providing the features of a decentralized instant electronic payment system for the world.

BTT: Tokenized and Decentralized File Sharing

Do you remember back in the 2000’s there was a file sharing program called Napster? Actually it was for music but it allowed us to share files of different types, from movies to images. It was the start of mainstream peer-to-peer or P2P file sharing, allowing anyone to share files and download them as well. Basically, everyone who has Napster installed connected to a centralized location where the communication is established with the network. Napster’s server’s then control the data that allows users to share their files. It did not last however, it was shut down by the government because of complaints of copyright violations and the risk of sharing of intellectual property protected information. This would be a stab at file sharing on the Internet, but it would be replaced by something else.

That something else would allow users to continue to share files but without a central server like Napster. It would be decentralized, but also direct P2P using a different protocol. The protocol has become synonymous with the name of the application itself, BitTorrent. It is the most commonly used file sharing application on the Internet and it was purchased by the cryptocurrency project called the Tron Foundation. It now delivers a tokenized decentralized file sharing network that runs on the BTT token. So it seems that file sharing and cryptocurrency is a match.

The principles of the BitTorrent network is based on a “Tit-for-Tat” algorithm. That means that to download files or to “leech”, you must also contribute files to the network or “seed”. Therefore, it is an ecosystem of “leechers” (downloaders) and “seeders” (uploaders). This is to make sure that there is fairness in the amount of contribution made to the network from all users. The network also becomes faster with more “peers” aka computers or users. Another feature users get on BitTorrent’s network is anonymity. In no manner is a user required to provide their ID or personal information for other users. There is more privacy in using BitTorrent than let’s say Google Drive when it comes to sharing files. With Google Drive, the owner of the shared file can be tracked to their Google account and g-mail which has an identity often attached to it. In order to understand the concept of BitTorrent, we must take a look at how their network functions.

When a file is uploaded to the network, it is not stored in one place. It is actually broken into fragments called “pieces” and identified by their cryptographic hash. The pieces are stored across the network on different computers. A cryptographic hash function is used to verify the authenticity of the pieces for security purposes as well. That means that no one can just tamper with the pieces, they are protected with cryptographic technology. Pieces of files are then distributed across the network and as more seeders join, the faster and more reliable the network becomes. BitTorrent also does not let the user download the file immediately. It must go through a process first which involves having the torrent file to point users to the location of other peers who have the pieces to the file.

How BitTorrent works

A torrent file is accessed by users when they want to download a file. The BitTorrent client gets a list of file locations for torrents that users download. The communications protocol is beyond explaining in this article, but in simpler terms it allows information to propagate across the network. The torrent file does not actually contain the content. It just contains information about the location of the file’s pieces which the user’s client will download from. The content’s pieces can be downloaded as .torrent files. Once the pieces have been downloaded, the client then puts the pieces together to reconstruct the content. Thus downloading a large movie file becomes more efficient and reliable by breaking it into pieces rather than one large file. This is because when the connection times out, you don’t have to download everything again if you already have pieces of the file.

BitTorrent has been controversial because of the way it circumvents the law regarding file sharing. Music companies are against the sharing of music on various platforms unless there is paid royalty to the musician and recording studio. Copyright laws also protect intellectual property as well as published content. BitTorrent makes pirated movies easier to share and there is a market for leaked Hollywood films that make use of P2P technology. It also allows the sharing of games, music, software and photos. Just about anything digital can be shared using BitTorrent’s network. There is not much the government can do however because of the decentralized nature of BitTorrent. Another complaint comes from users who were infected by malware since some files can be disguised to appear legit, but the truth is as a leecher you have no right to make a claim since you are using the software somewhat at your own risk. Despite these claims of piracy, patent infringement, viruses/malware and illegal file sharing, BitTorrent was able to continue unlike Napster. Besides its distributed and decentralized nature, BitTorrent is more a software or protocol rather than a company, so that is another issue for the legal sector.

The slippery slope is that in some jurisdictions, or nations, what is legal may not be legal and vice versa. BitTorrent gets around this argument since the peers are decentralized and BitTorrent itself is not the one providing the data. Through the years since it started in 2001, BitTorrent has faced lawsuits and has had to meet compliance to regulations on certain occasions. It was too decentralized to stop since there are millions of users worldwide, not just in one country or geographic location. When BitTorrent does comply, it does so by removing links to content which creators requested.

The protocol or software itself is legal, you are not violating the law by having it installed. Other controversy involves BitTorrent trackers, which provide the links to the content that may or may not be copyright protected. In the US alone, there are over 200,000 lawsuits against BitTorrent since 2010. Because of this outrage, it would only be a matter of time before more BitTorrent protocols are blocked by ISPs on the request of regulators and legal departments. If that is the case, then it would not have a good future and will likely thrive more underground rather than finding mainstream use.

This is where Tron steps into the picture. It seems that the BitTorrent network would be an ideal platform to add to the Tron network’s ecosystem and blockchain. To get this started, Tron would issue a token for the BitTorrent network called the BTT coin. What Tron aims to do is use the network as a platform for DApps based on BitTorrent’s decentralized file sharing. Tron can utilize this for its entertainment and media based content sharing platform. BitTorrent would remain distributed and decentralized and with Tron’s vision of censorship resistant, open source and incentivized communities. In a nutshell, the BTT coin allows Tron to tokenize the BitTorrent network. This is in order to connect creators to users and in return get paid in BTT coins for their content. It will actually be more compliant to copyright laws and intellectual property for the platform to remain clear of violations.

The BTT coin from Tron

The platform sounds good for creators, but the overhaul to the system may not resonate well with users. Instead of a truly decentralized system, it seems Tron’s BTT coin as a token has put more regulation to the platform. Users of BitTorrent do not have to use BTT as a token to get content. Tron is supporting users who want to continue using the software like before. They will not be able to collect BTT coins though, so there are incentives to using the tokens. The incentive here is to keep users to continue sharing on the network, only this time around they will get rewarded for it. Seeders will tremendously benefit from this ecosystem because the more files they upload for sharing, the more BTT coins they can get. The BTT coin as a token can also be exchanged for goods and services on the platform besides just converting into fiat currency.

The benefits it seems are still yet to be explored for the new BitTorrent and BTT. The vision of a truly decentralized file sharing network continues, only this time there will be rewards for everyone. It encourages more file sharing and that way the availability of content can become sustainable (that’s the idea in theory). What remains to be seen are the legality of the content and whether the Tron Foundation will work closely with regulators to make sure that content is not being illegally shared by users unless there is consent from or incentives for the creators as well.