a woman between two enormous dogs

let's talk about Dogecoin inflation

By oceanloader4 | press play on tape | 3 May 2021


Unless you've just woken up from a coma (in which case: check your blockfolio), you might have noticed the DOGE price has been doing rather well lately. This has led to a few Bitcoiners (isn't it always bitcoiners?) bringing up an argument about how it's worthless and a terrible investment and so on.

my bias


magic bias goggles


I really like holding doge. I've been mining it, tipping it, trading it, on and off, since shortly after it launched.

Dogecoin IRC was the first crypto community I really felt part of, and I think it's always been a really accessible currency for newcomers to crypto, as a currency that is actually, you know, used and spent rather than purely traded.

Sadly, this means I had an ingrained assumption that DOGE is, by nature, extremely cheap. I sold mine around the 7c mark or something, and have real trouble trading it at this level. So I'm currently dogeless.

That's all to say: I have no skin in the game at this point, and frankly if it dropped a decimal point (or two) i'd be pretty happy to pick up a few hundred thousand like in the old days. So I'm not here to shill it.


the economic case against doge


bad dog(e)


There are arguably valid reasons not to sell a kidney and ape into dogecoin right now

  • its price is up CRAZY amounts.  Pullbacks are actually still a thing, despite this years general euphoria.
  • For a 'shitcoin', it now has a very high marketcap (briefly overtaking USDT last week), which makes it costlier for price to continue to increase
  • as a memecoin, its value is worryingly correlated to the the quality of the last gif Elon Musk tweeted
  • It has a disproportionate amount of retail traders / 'new money' investors, which increases the likelihood of panic sells

I'm not going to address any of that. Those are all factors each trader makes their own call on. Personally, item 2 is my main reason for not jumping back right now. But then: i sold at 7c, so maybe don't trade based on my reasoning...

I want to address the economic (what ERC-20 guys call 'tokenomic') criticism, specifically regarding inflation. This one is tricksy, because it sounds like it's based on fundamentals.


This argument is roughly "dogecoin is a bad investment vs. bitcoin because:"


  • dogecoin inflation is extremely high. Inflation means the value of each coin naturally decreases over time, all things being equal.
  • dogecoin supply is unlimited. bitcoins has an upper maximum. 


I'm unconvinced either of those things matter on a meaningful timeframe. But, let's see how much of an issue it actually is.

(To be clear, by 'inflation' I'm referring to the rate at which additional coins are created over a given timeframe. Inflation is generally considered a Bad Thing, since all things being equal, rare things are worth more than plentiful things. )


running the numbers

As a proof of work coin, new dogecoins are created via block rewards to miners. 

  • A new DOGEcoin block is created every minute
  • the block reward is 10000 DOGE.

There are ( 60 * 24 * 365 = ) 525600 minutes in a year, which means: every year 5256 MILLION Dogecoin are created.

That sounds like a lot, right?


Compare that to, oh, let's say Bitcoin.


  • A bitcoin block is produced every ten minutes (10 times less frequently as DOGE, so 52560 a year)
  • the block reward is 6.25 BTC

So 328500 BTC are created annually.


So yeah, the 'emission rate' of new coins for dogecoin is SIXTEEN THOUSAND times that of bitcoin. Holy crap!


factor in the supply


But here's the thing: there are very few bitcoin. Only 21 million will ever exist (due to its capped supply). 

At the time of writing (May 2021), 18.7 million have been created.


Whereas DOGE? Doge is supposed to be thrown around, tipped and shared and, well, used. There are, to use a technical term, fucktons of them in circulation, by design. As of May 2021, there are 129 billion in existence.


So let's look at those inflation figures again, but as a percentage of current supply.

Bitcoin : 1.75% 

Dogecoin : 4% 


(For comparision: LTC is around 4% too, as is ETH).


So, still higher. But comparable to other altcoins, and only twice that of BTC. 


decide if it matters to you


Sure, inflation is bad -  but then, DOGE blocks are produced ten times more frequently than BTC blocks. Because it's designed to be an actual currency, which means fast transactions and fast confirmations. (not a 'store of value', whatever that means these days).

For balance, I should mention that the BTC rewards regularly decrease - the 'halvings' that you hear about happen every 4 years and further decrease BTCs inflation rate, while DOGEs will stay constant. So I'll finish with an olive branch to BTC maxis:

In eight years time, after the next 2 BTC halvings, the supply limit still won't have kicked in. It will still be ten times slower to use. But at least BTC inflation will be *almost* as low as DOGEcoins inflation per block. 








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