What is Dogecoin and what is behind rise of this joke cryptocurrency?

Billionaire Elon Musk is this digital currency’s biggest fan as the hype continues to push its prices up. But it all just started as a joke.

Dogecoin is now worth billions despite being started as a joke. Picture: Yuriko Nakao/Getty Images

After Bitcoin surged to a record new high on the back of Tesla’s $2 billion investment, parody cryptocurrency Dogecoin is also experiencing its own groundbreaking price.

Dogecoin hit a record peak of US0.087 cents (A0.11 cents) on Sunday after rapper Snoop Dog and musician Gene Simmons confessed to being fans on Twitter.

Snoop Dog tweeted a mock album cover with the title Snoop Doge and a dog’s face photoshopped on to his body.

@elonmusk pic.twitter.com/KElwKghpei

— Snoop Dogg (@SnoopDogg) February 6, 2021

His tweet also tagged billionaire Elon Musk who has been responsible for some of Dogecoin’s recent price spikes.

RELATED: Bitcoin prices suddenly skyrockets

Dogecoin was started out to mock Bitcoin but its now got celebrity investors. Picture: Ina Fassbender / AFP

Kiss frontman Simmons went on a Dogecoin tweeting spree last week and has revealed he jumped into the cryptocurrency scene three months ago and owns a number of them, including “six figures” worth of Dogecoin.

He labelled himself the “God of dogecoin” in one tweet last week and posted a picture of himself in his black and white Kiss make up as he said the cryptocurrency was “skyrocketing...to the moon”.

It surged by 32 per cent on Monday morning trading at US0.082 cents (A0.106 cents) before closing the day at US0.071 cents (A0.09 cents).

Tesla CEO Musk won’t stop tweeting about Dogecoin either and most recently shared a one minute video on the cryptocurrency with his 46 million followers.

So why does this meme-based cryptocurrency have the internet fired up?

Jackson Palmer, the Australian founder of virtual currency Dogecoin. Picture: James Croucher

WHAT IS DOGECOIN?

It was started to mock Bitcoin in 2013 by IBM and Adobe software engineers Jackson Palmer and Billy Markus. It’s even got an Aussie connection as Mr Palmer is Australian and created Dogecoin when he was 26 and living in Sydney.

“It was a piss take,” he told the Sydney Morning Herald in 2018. “My whole point of Dogecoin was taking a jab at all these alt-coins that were coming on the scene — like Initial Coin Offerings are today — and, you know, basically making a cash grab.

“So I made the joke and it was me taking the piss out of really scammy cryptocurrency back then. But then it quickly turned into a legitimate thing … and at that point, I was like, ‘Oh my god, now I feel responsible for this joke’. I feel responsible for this economy.”

The cryptocurrency is even represented by an internet meme of Shibu Inu dog breed with bad spelling habits, hence the use of ‘doge’, and is in reference to a popular internet cartoon series from the 1990s called Homestar Runner.

Neither of the founders works on Dogecoin anymore and Mr Markus said he sold all his stock in 2015 without making a profit, while Mr Palmer said he gave all his away.

HOW DO YOU PRONOUNCE IT?

The cryptocurrency’s co-founder Mr Markus says the correct pronunciation is “dohj coin”, despite its logo including a dog.

There are predictions cryptocurrency could become accepted in the mainstream in the future as more companies invest in it. Picture: iStock

WHAT HAS HAPPENED WITH THE PRICE?

A single coin was worth just US0.005405 cents (A0.7 cents) at the start of 2021 before reaching its latest highs. Over 128 billion Dogecoin units are currently in circulation.

Dogecoin’s price is up more than 1500 per cent this year with celebrity tweets attributed to fueling the surge. In fact on January 28, it was the most tweeted about cryptocurrency in a single day.

Last week, amateur trading app Robinhood turned off its instant buying feature for Dogecoin, which allows customers to access bank transfers after the surge in demand.

But despite Dogecoin being started as a joke, it is now a serious rival with its ranking as the eighth largest cryptocurrency by total market value, according to CoinMarketsCap.com.

It is worth around $US10 billion making it more valuable than Western Union and Xerox.

“The idea of dogecoin being worth 8 cents is the same as GameStop being worth $325,” said Mr Markus in The Wall Street Journal. “It doesn’t make sense. It’s super absurd. The coin design was absurd.”

Reddit users are gunning for Dogecoin to reach a value of $US1 ($A1.30).

Tesla CEO Elon Musk has been a prolific tweeter about Dogecoin but admits he is only joking. Picture: Saul Martinez/Getty Images

WHAT ABOUT THESE BILLIONAIRE’S INVOLVEMENT?

Musk is Dogecoin’s best known supporter but admits when he is talking about digital currency he is only joking.

“Arguably the most entertaining outcome, the most ironic outcome would be that Dogecoin becomes the currency of Earth of the future,” he recently joked on the invite only Clubhouse app.

Financial consultancy company deVere Group added Dogecoin to its crypto trading app on Monday due to a surge in demand that CEO Nigel Green attributed to ‘The Elon Effect’.

Another billionaire entrepreneur, Mark Cuban, has also thrown support behind the cryptocurrency.

“If I had to choose between buying a lottery ticket and dogecoin, I would buy dogecoin,” he said on Twitter last week. “But please don’t ask me to choose between it and anything else.”

He told Forbes that Dogecoin provides the “best entertainment bang for your buck” and he has even purchased a few dollars worth for his son to learn about price movements.

“You can buy $1 worth or $10 worth and have fun watching it all day every day,” he added.

A bitcoin ATM is seen inside the Big Apple Tobacco Shop on February 08, 2021 in New York City. Tesla announced on Monday that it purchased $1.5 billion worth of bitcoin. The car company also announced that it will start accepting payments in bitcoin in exchange for its products which include their electric cars and solar panels. Picture: Michael M. Santiago/Getty Images/AFP

WHAT’S NEXT FOR DOGECOIN?

Financial regulators have warned that people investing in cryptocurrency risk losing all their money and other experts have predicted that Dogecoin could lose 90 per cent of its value.

But Fred Schebesta co-founder of Finder, said Dogecoin has unlocked the achievement of becoming a recognisable cryptocurrency, alongside Bitcoin.

“It was created as a joke, but many believe it will periodically go up in value as long as it is around,” he said. “All other blockchains are in heavy competition to add value and claim success for the vertical they serve.”