This is part of "Blockchain Decoded," a series looking at the impact of blockchain, bitcoin and cryptocurrency on our lives.
June 22, 2014. Jackson Palmer, a self-identified "average geek," is high in the stands at a Nascar race at Sonoma Raceway, California. He is an Australian man in his 20s. He has zero interest in racing. Never in his wildest dreams did he imagine it would come to this.
He surveys the scene.
Below him: a tremendous crowd. The overwhelming blare of engines. Hurtling round at tremendous speeds: the #98 Moonrocket, a high-performance racing car. No different from the other cars on the track, except for one crucial detail.
On the bonnet of the car: a dog. A Shiba Inu, more commonly known as a "Shibe," the dog made famous in the Doge meme that was popular in 2013.
Emblazoned on top: the word "DOGECOIN" in all caps. Below: "digital currency".
Palmer describes the situation using words like "crazy," "surreal" and "nuts." He remembers this moment as a "reality check." Dogecoin was a tweet, then it was a cryptocurrency worth money in the real world. Six months later, he watched as a joke that he'd made in passing somehow manifested itself into something tangible. A Dogecar in full flight.
It reminded Palmer how insane the world could be.
This is the story of Dogecoin, the joke that became too real for its own good.
The next big thing
Dogecoin is a cryptocurrency, a form of digital money that, much like bitcoin, enables peer-to-peer transactions across a decentralized network. One important difference: bitcoin is the original blockchain proof-of-concept. Bitcoin is ground-breaking. Bitcoin is (some believe) world-changing tech with the potential to transform how money works in the 21st century.
Dogecoin is a digital coin with a picture of dog on it.
"It is a puzzle to me why Dogecoin is so highly valued," says Adrian Lee, a senior finance lecturer at the University of Technology in Sydney.
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At one point Dogecoin was worth $2 billion. It's difficult to make sense of that.
"Dogecoin is an easily replicable coin," Lee said. "I don't know how it distinguishes itself from Bitcoin. I really think it has to do with being established early.
"And also the dog."
If you've spent any time on the internet during the last decade, you've probably heard of the Doge meme. The iconic Shibe, his inner monologue expressed in comic sans with broken modifiers: "so scare," "much noble," "wow."Now Playing: Watch this: Dogecoin explained: The joke cryptocurrency worth serious... 1:48
At the peak of the meme's popularity near the tail end of 2013, Palmer, an Australian marketer for one of the world's largest tech companies, made a joke combining two of the internet's most talked-about topics: cryptocurrency and Doge. It was a joke taking aim at the bizarre world of crypto and bitcoin's multiple derivatives.
"Investing in Dogecoin," Palmer tweeted, "pretty sure it's the next big thing."
The tweet got a lot of attention.
For laughs, Palmer decided to keep the joke going. He bought the Dogecoin.com domain and uploaded a photoshopped Shibe on a coin.
He left a note on the site: If you want to make Dogecoin a reality, get in touch.
The bell tolls
On the other side of the world, Billy Markus, a video game-obsessed software engineer at IBM, saw Palmer's note. He'd just finished "Bells", a project he was working on in his spare time.
Bells was a cryptocurrency named after money used in the Nintendo game Animal Crossing. It was 2013, the original crypto gold rush. Markus saw that bitcoin's code was open-source. He decided to take a weekend and do something weird. He tried to create his own cryptocurrency for "sillies," as he put it.
Bells was weird as hell. The major difference between Bells and regular cryptocurrencies was the rewards: they were completely random. If you mined bitcoin, using a decently powerful home computer, the rewards were consistent.
If you mined Bells, there was no telling whether the reward would be one Bell or 500 Bells.
And that's because Bells wasn't meant to be serious, it was a digital currency based on a video game about animals who live in a village and go fishing together.
The cryptocurrency community didn't really get the joke.
"People were just trashing it," laughs Markus, who quickly discovered there was very little crossover between crypto-obsessives and gamers.
"I was like alright, I retire," says Markus. "I don't need to do this anymore."
But then Markus read Palmer's message on Dogecoin.com. That was the moment Billy Markus decided to come out of crypto retirement.
When Palmer didn't immediately respond to Markus' offer to help build Dogecoin, he started working on it anyway.
"Dogecoin," says Markus, "from 'that seems like it's funny' to actually doing it, took about three hours. It's almost trivial to create a new cryptocurrency."
It was a find-and-replace job.
Ctrl+F 'Bitcoin,' replace with 'Dogecoin.'
Markus freely admits to finding large chunks of bitcoin's source code completely incomprehensible, but knew enough to change a few core elements for Dogecoin. For example, Markus created 100 billion dogecoins (as opposed to bitcoin's 21 million) and made them easier to mine. (Dogecoin is already close to being mined out, while bitcoin's final coin will be mined in 2140.)
He changed the font (to comic sans of course) and changed every mention of the word 'mine' to 'dig' (because dogs don't mine, they dig...).
And then, during his lunch break, Markus set Dogecoin live.
Moving at light speed
Premining: the act of gathering cryptocurrency before launching your coin into the public domain. Almost everyone serious about launching a cryptocurrency does this.
But Markus and Palmer didn't premine any Dogecoin. Because they weren't serious about launching a cryptocurrency.
"We thought it was this big joke that would die off," laughs Palmer.
And according to Markus, Palmer wasn't even sure how to mine a cryptocurrency.
Markus had a relatively powerful gaming PC, with two graphics cards, so he was officially the first person to mine Dogecoin. But given the the nature of mining (which gets increasingly difficult as the currency is mined) Billy's computer was no longer powerful enough to mine Dogecoin after about five minutes. Markus split what he'd mined 50-50 with Palmer and that was that. Both got about $5,000 of Dogecoin.
And that's all the Dogecoin either man would ever own.
In online crypto circles, Dogecoin became popular very quickly. Forum threads moved rapidly. The name Dogecoin echoed throughout dark corners of the internet.
But Reddit was almost certainly the main driver in Dogecoin's rapid rise to crypto stardom. The Dogecoin subreddit exploded almost immediately, and with that explosion came the infrastructure any cryptocurrency needs if it is to become successful: mining pools, services.Now Playing: Watch this: What the heck is blockchain? 1:49
"It was moving at light speed," explains Markus. "Within minutes we were like, 'Wow, this is way out of our control."
But it was the Reddit "tipping bot" that drove Dogecoin into the stratosphere.
If a user posted something to the effect of, "hey 'dogebot' tip this person five dogecoin," that Reddit user would automatically receive five Dogecoin. People were sending Dogecoin back and forth in a feel-good exercise that cost very little money in real-world terms.
"I liked it," says Markus. "At the time, Dogecoin wasn't worth anything, but getting five Dogecoin felt better than getting two cents."
Reddit users were sharing Dogecoin back and forth constantly, which expanded the user base of Dogecoin and, as a result, increased its value as a cryptocurrency.
"Pretty much everyone who used Reddit had Dogecoin," says Palmer. "I think that was key to its success."