This is part of an ongoing series on Bitcoin and Dogecoin and the nonprofits who are experimenting with it or thinking about it. This one is with Tod Beardsley of Pocketfu.com about DogeCoin.
>Explain why the Dogecoin community is so friendly towards causes?
One of the more unique aspects of Dogecoin is the fact that it does have a bona-fide community. Of course, Bitcoin and Litecoin also have their own userbases, but Dogecoin really /feels/ like a community. The people there are characterized as helpful, friendly, and “such generous.”
I’m sure this is due to many social factors, some of which can be pretty subtle. The fact that the currency itself is ultimately self-deprecating to the point of being anti-serious, the goofy doge-grammar of “such coin, many recieve, wow,” to the wild success of the Reddit tipbot. The tipbot (/u/dogecointip) makes the act of giving easy, public, fun, and nice all at the same time. Dogecoins individually are worth so little that it’s not a big deal to give tens or hundreds away at a time, and people tend to really like getting them.
So, yes, I think the tipbot plus the silly attitude of dogecoin makes it ideal for giving away — even in meaningful volumes.
> Dogecoin has become second only to Bitcoin in terms of market value, how did that happen?
Technically, it’s fourth right now, according to http://cryptmarketcap.com/ . I think to answer the “how” is pretty complicated and subtle. For starters, Dogecoin is based on a meme — the adorable Shiba Inu that is addictive to look at. Memes already have extremely rapid pickup and transmissions, so combining a popular funny meme with cryptocurrency was a pretty brilliant happenstance.
Second, Dogecoins have extremely low value when compared to US Dollars. Therefore, it’s not painful at all to give them away in seemingly significant values. 1000 Doge is worth about $0.33 now. More importantly, though, is the Dogecoin-centric saying, “1 DOGE = 1 DOGE.” Dogecoins are as valuable as you want them to be. It’s a currency built for fun, so why not be a Dogeillionaire? One million Dogecoin is about $330 on the exchanges, which will get you some fraction of one BitCoin. Most people would rather a million of a thing than less than one of a thing. I really think this is a major part of it.
Finally, early on, the reward for mining Doge (which is the cryptographic function that keeps the currency going) was random. If you “mined” one block in the block chain, you were rewarded between 1 and 500,000 Dogecoin. Compared to Bitcoin’s rather stodgy reward of 25 BTC per mined block, this hit a jackpot-potential / gaming / gambling nerve in the mining community. (Note, the reward is no longer random, which is a little bit of a bummer.)
There are other reasons — such as the dedication and goodwill of the core development team, the overwhelming friendliness and attractiveness of the Dogecoin community, and the truly amazing publicity that Dogecoin has picked up through its previous charitable spirit.
> If a nonprofit wanted to start accepting Dogecoin who would they hire to enable the transactions? Who are the providers in the space?
Technically, anyone can start accepting Dogecoin once they have a wallet. One of the features of cryptocurrencies is their peer-to-peer nature. There is no requirement for a central payment processor like PayPal or Square, no need for banks like you might need for credit cards or checks. Literally anyone on the planet can take Dogecoin provided they have a network connection and can participate in the Dogecoin swarm.
That said, there are providers. The most notable is Moolah (http://moolah.ch). Moolah has been very agressive in their marketing and effort in the Dogecoin community, offer a free escrow service for Internet transactions, and provide point-of-sale solutions for merchants. I’d go with them first. Dogepos.com is also looking promising and are currently in beta for transaction processing. I’m sure there are others but those are the two major players.
> If a nonprofit wanted to start accepting Bitcoin who would they hire to enable the transactions? Who are the providers in the space?
BitPay and Coinbase are both capable and respected as general-purpose enablers for merchants and organizatons to take Bitcoin, so I’d go with them first. However, the nature of Bitcoin adopters tends to be less charitable than the average Dogecoiner — there was a period on Reddit where tipping in Bitcoin was actively discouraged on the Bitcoin subreddit (that stance has softened since the advent of Dogecoin).
> What are the risks of using Dogecoin as a currency? What are the benefits?
The benefits are obvious to me — giving away Dogecoin is fun and is a core part of the Dogecoin community. By not accepting Dogecoin, non-profits and charities are leaving actual money on the virtual table. If I could donate to my public radio stations with Dogecoin, I’d probably give three times as much as I do now. Maybe I’m an edge case, but I find magic Internet money stupendously fun to use. Besides, it’s like cash — I don’t have to give up credit card details to anyone, and so I don’t have any account number that can get stolen. Dogecoin (like all other cryptocurrencies) are based on public-key cryptography, so every transaction is unique; there’s a lot of security to be had there for end users, and there is no risk imposed on the non-profit in handling account data.
The risks, of course, are real. For starters, the security of the wallets themselves get pretty important. There is no bank to cover you if your details get stolen and it’s extremely difficult to undo fraudulent transactions. If a non-profit’s private key is compromised, it’s pretty much game over for that wallet. Luckily, there are capable people who know what they’re doing in this space, but there’s an IT cost there for sure in the form of enhanced security and reliable backups.
Second, there’s the extreme volatility of Dogecoin. It’s settled some lately in comparison to Bitcoin (around 100 satoshi, or 100/1,000,000ths of a Bitcoin), but Bitcoin itself slides around quite a bit, too. Dogecoin is still closely tied to Bitcoin for its value for technical and psychological reasons, and Bitcoin has been on a decline lately for varied reasons.
So, if a non-profit were to take Dogecoin, they would be wise to spend it fairly immediately. Luckily, there is a thriving market of goods and services that take DOGE, as well as fairly liquid exchanges to convert them to US Dollars (some directly, some by way of converting first to Bitcoin).