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Dogecoin Community Burning Currency for Dogeparty

Last Updated March 4, 2021 4:40 PM
Clay Michael Gillespie
Last Updated March 4, 2021 4:40 PM

What is a Dogeparty? At the end of 2014, there will be 100 billion Dogecoins in existence. Anybody in digital currency knows that’s an unprecedented amount of coins. To put that number into perspective, there are only 13 million bitcoins in circulation at the moment. The staggering amount of Dogecoin leaves a pretty simple outlook from even the basic investor: Supply is high, so demand is low.

In a slight response to this, the Dogecoin community is currently voluntarily destroying their Dogecoin in a “burn” event called Dogeparty . The Dogeparty is a two-sided event; one side being the destruction of Dogecoin, the other being a new coin creation. Humint and Social Giver are the two organizations leading the initiative, but it may seem confusing at first glance.

Here’s the way this works: Dogecoin users send Dogecoin to a wallet address that’s provable and permanently unspendable. By sending Dogecoin to the address, it effectively destroys the Dogecoin. In return, they receive Dogeparty (XDP), a new cryptocurrency.

Dogeparty is a layer on the Dogecoin network, and it looks to strengthen the Dogecoin network. With Dogeparty, owners can create new currencies to crowd fund projects or promote their works for profit. Once they create their currencies, others can buy those currencies in a fundraiser to promote even more crowd-funding on the Dogecoin network.

Currently, early-burners are being rewarded for taking the leap of faith with even more Dogeparty for their wallets. But this has uncovered some issues that Dogecoin users have with the new altcoin.

The Dogecoin Issues At Hand

The issues with this Proof-Of-Burn altcoin creation are not only economic, but ethical. On the economic side, Humint and Social Giver have valued one Dogeparty at 1000 Dogecoins. Why? There seems to be little to no explanation as to why this new altcoin currency is this value.

One reddit user, under the username felloutboy, spoke out with concerns of the Dogeparty coin.

“Your marketing is seeking to hype people up with an arbitrary countdown and unclear incentives for early adopters and an unjustified starting price. One fundamental rule of marketing is to actually have a product that people might want to buy, which involves clearly saying what it is in their terms not yours.”

“Your vision for the future of your layer seems to stop at the point that you have allocated all the ‘dogeparty thingys’ – basically no vision.”

Ethically, the concept of destroying a currency leaves some unsure. To make an equivalent: If you light $100 on fire, I’ll give you this special copper coin. Only people that light their dollar bills on fire will get these coins. As an effect of this, all dollar bills may go up in value because of the now-smaller supply.

Of course, the dollar is not backed by anything directly and is a Fiat currency, but the concept of the example can still hold strong in relation to the ethical dilemma surrounding this burning Dogecoin event.

Bitcoin Did It First

Earlier this year, Bitcoin did a similar fundraiser called Counterparty. They would destroy their Bitcoins in exchange for some Counterparty. The destruction of thousands of Bitcoin took place, and one Counterparty today is now worth $2 per coin. Counterparty is considered to be a success as Counterparty started at absolute zero and worked its way up. However, this didn’t quite affect the Bitcoin community as the price currently continues to drop. The idea has also spurred other fundraisers like Ethereum, although no coins are burned in the process.

Dogeparty is emulating Counterparty directly, but this time the tables of value have turned. Through Counterparty, a single Bitcoin was worth quite a few Counterparty. Through Dogeparty, 1000 Dogecoin are worth a single Dogeparty. How the burning will affect either coin is unknown, as these are the first steps into a great unknown that is Cryptocurrency 2.0, not just Bitcoin 2.0.