Hello fellow shibes. I thought it would be helpful to address Dogecoin’s most common criticisms and shed some light for the newest members of the community.
1. Is Dogecoin’s supply infinite?
Not exactly. While it’s true that no hard cap exists on Dogecoin’s supply, the number of new coins that can be mined is capped at 5.256 billion per year. Currently, DOGE’s total supply stands at about 128 billion coins. Thus, the number of new coins that will be mined this year will inflate the total supply by only 4.11%. Next year, when the supply reaches 133 billion, the rate of inflation will drop to 3.94% as an additional 5 billion coins are mined.
Contrary to popular thinking, Bitcoin also has an inflation rate. Although Bitcoin has a hard supply cap of 21 million, only 18.58 million have been mined so far. New coins will be mined every year until the supply cap of 21 million is reached in the year 2140. At today’s mining rates, Bitcoin’s supply is currently growing at a rate of 2.32%. The true rate of inflation might even be higher, as some analysts believe that nearly 20% of Bitcoin’s supply is out of circulation as wallets containing Bitcoin have been lost.
2. Does a lack of a supply cap limit Dogecoin’s value?
Quite the opposite. The decision to allow a steady increase to the supply was made to keep Dogecoin accessible to as many people as possible, continue to reward miners for maintaining the system, and most importantly, to encourage its use as a digital currency—true to the original vision of cryptocurrency.
If Dogecoin were to have a fixed supply, it would severely limit its ability to grow as a medium of exchange. Like Bitcoin, few would ever use Dogecoin as a form of payment, as they would instead be incentivized to hold their coins indefinitely, expecting further gains in its exchange rate.
With its growing supply, the market potential of Dogecoin as a medium of exchange has vast, underestimated potential. Dogecoin has essentially positioned itself as a strong contender for a true form of decentralized payment.
3. Why would anyone buy Dogecoin if it can be mined?
It’s very difficult and very costly to mine Dogecoin. Even with the best Scrypt ASIC currently on the market, mining DOGE directly is unprofitable. You can join mining pools to receive a share of the block, but the equipment costs and technical knowledge needed to contribute in a meaningful way make it inaccessible for the vast majority of people.
4. Where does Dogecoin derive its value?
From us, the people. Cameron Winklevoss said it best, “If people believe Doge is money, then it’s money.” This is the same way fiat derives its value—except people are becoming more aware of the many ways fiat money is being manipulated to the detriment of the people. The recent events in our financial markets, such as the GME short squeeze and the recent rise of Dogecoin, represent an underlying frustration with a system rigged to benefit the wealthiest members of society. As Winklevoss further stated, “Doge is a protest. People are tired of the modern monopoly. They’re tired of being told what money is and what they are allowed to do with it.”
5. What’s next for Dogecoin?
Adoption. Indeed the democratization of currency through Dogecoin presents an opportunity to disrupt the old guard and bring about overdue change. But the only way it will get there is with adoption.
Charitable Projects: The Dogecoin community is marked by its generosity. In 2014, generous shibes banded together to donate 14 million Dogecoins to provide clean water to the people of Kenya. They also donated more than 26 million coins to help the Jamaican bobsled team reach the Winter Olympics. It’s our obligation to continue that generosity and show the world the power of a coin backed by The People.
Form of Payment: To further drive adoption, we must focus our efforts on encouraging businesses to accept Dogecoin as a form of payment. Whether it’s a major retailer, restaurant chain, or online merchant, payments will allow Dogecoin to realize its untapped potential as a decentralized medium of exchange. (Thoughts on starting with Chewy?)
TLDR
Dogecoin’s supply is not exactly infinite, it grows at a fixed rate of 5 billion new coins per year. The steady growth rate positions Dogecoin as a powerful, accessible and decentralized medium of exchange. To get Dogecoin to the moon, we must encourage generosity through charitable projects, and also encourage businesses to accept Dogecoin as form of payment. How about we start with chewy.com?
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