Will Dogecoin Ever Be Capped?

By Brian Nibley · September 29, 2021 · 5 minute read

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Will Dogecoin Ever Be Capped?

When evaluating a cryptocurrency, such as Dogecoin, it’s important to know whether it has a supply cap, since that can have an impact on the long-term value of the coin.

Bitcoin, the first and largest cryptocurrency by market cap, is known for having a 21 million coin hard cap, meaning there will only ever be 21 million BTC in existence. However, all cryptocurrencies are different and many do not have a supply cap.

Here’s what you need to know when it comes to Dogecoin.

What Is a Cap in Crypto?

A supply cap, or cap, refers to an upward limit on the amount of new cryptocurrency coins that can be created.

Once miners have mined a certain amount of coins, the protocol will stop distributing block rewards, and miners will only collect transaction fees. For Bitcoin, this point is estimated to be reached by about the year 2140.

Recommended: How Many Bitcoins Are Left?

Does Dogecoin Have a Cap?

No, Dogecoin does not have a cap.

This means that whenever the price of DOGE rises, more people will have an incentive to mine for Dogecoins. After they mine Dogecoin, they can move it from their wallets onto a crypto exchange where other investors can buy it. As more miners come online, more of them will dump new coins onto the market, causing the price to fall.

For this reason and others, some have argued that coins like DOGE tend to function as somewhat of a pump-and-dump scheme. Of course, others believe that it’s an important cryptocurrency that can add diversity to a portfolio.

Recommended: Crypto Diversification: Can You Diversify with Crypto?

Will Dogecoin Ever Have a Cap?

Sometimes the crypto community decides to alter the protocol of a currency. An active cryptocurrency needs periodic upgrades to its software to remain functional, relevant, and secure.

But it’s hard to say for certain whether or not Dogecoin will ever have a cap. In theory, DOGE developers could choose to implement a cap on the creation of new coins, but to date there hasn’t been much discussion on this.

For now, it seems reasonable to work from the assumption that there might never be a Dogecoin cap limit.

Has Dogecoin Ever Been Capped?

In the eight years since Dogecoin’s creation, there’s never been a cap on the crypto. In fact, for much of those eight years, no one thought much about DOGE at all and it traded for less than a penny. The meme featuring a Shiba Inu dog was popular in 2014 and 2015, so Dogecoin had some popularity back then.

In 2017 when cryptocurrency began reaching the masses in a big way, the valuation of DOGE hit $1 billion. Many investors considered this a sign of frothiness and irrational exuberance in the crypto markets, as DOGE had no special features (it’s simply a clone of Litecoin, which is a clone of Bitcoin) and hadn’t had a developer update in three years at the time.

It wasn’t until early 2021 that DOGE became ultra-famous amid a wave of high-profile celebrity endorsements, including Elon Musk, Mark Cuban, and Snoop Dogg. Dogecoin then took a seat among the top 10 cryptocurrencies by market cap, a feat few would have thought possible just a year earlier.

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3 Reasons Why Dogecoin Doesn’t Have a Cap

Rumor has it that the decision to not cap the supply of DOGE was intentional on the part of developers. They wanted to create a currency that people would be more likely to spend. DOGE was created as a joke, but it was also intended to be used for transactional purposes.

The DOGE developers set out to create a cryptocurrency that would differ from Bitcoin in several key ways. Most if not all of those ways stem from the fact that there is no Dogecoin max supply.

Here are three reasons that are thought to have been big factors contributing to the decision to never implement a cap on Dogecoin.

1. Cheap Transactions

Dogecoin is an altcoin that developers created for spending meant to be spent, so they intentionally made it inflationary.

By contrast, Bitcoin is deflationary, which makes its value relative to inflationary currencies likely to continue rising. As a result, BTC has become more of a store of value investment, making many investors want to HODL it.

If you think your Bitcoin might be worth twice as much next year, you’re less likely to use it to make purchases in the short term. But a currency like DOGE with no supply cap is more likely to be spent. People will use it today, while it still has value, and be less likely to hold it for the long-term as they know it’s unlikely to increase in price.

2. New Coins Forever

It’s estimated that about 20% of all the Bitcoins mined to-date have been lost forever. This happens when people forget their wallet password or lose a piece of physical hardware they used to store Bitcoin. This makes the supply of BTC even more deflationary, as those coins won’t be replaced.

With Dogecoin, there will always be plenty of new coins. Even if someone loses millions of DOGE, the long-term impact is minimal, since there are constantly new coins going into circulation. With no supply cap, lost coins don’t matter as much.

3. Mining Longevity

At some point, there will be no more Bitcoins left to mine. When that happens, the only monetary incentive for mining BTC to keep the network secure will be transaction fees.

But with Dogecoin, there will always be a block reward of 10,000 DOGE. The idea is that this will keep people mining Dogecoin forever.

The large block reward also keeps transaction fees on the DOGE network very low, as miners don’t need to charge high fees for transactions. They know their odds of getting a good block reward are high.

How Many Dogecoins Are in Circulation?

According to CoinMarketCap data, there are about 131 billion DOGE in circulation at this time. Keep in mind, 10,000 new DOGE are mined every minute, so the number will be higher by the time you read this.

It’s also worth noting that more than half of DOGE’s total supply is held by only about 20 different wallet addresses, making it one of the most unevenly distributed of the different types of cryptocurrency.

How Much Dogecoin is Left?

There is an unlimited amount of DOGE left to be mined. Just like U.S. dollars or any other national fiat currency, there’s no upward limit on the creation of Dogecoins. There are some key differences between DOGE and fiat currencies, of course, like the fact that anyone can mine Dogecoin, but only central banks can print money.

The Takeaway

The answer to the question “Will Dogecoin ever be capped?” is likely a “no.” Nothing is for certain, as developers could decide to alter the protocol, but the history of the coin and the ethos of the community surrounding it suggest that they will not enact a cap.

Just as the Bitcoin community tends to value scarcity and a fixed supply cap, the Dogecoin community tends to value low transaction fees, large block rewards, and the other benefits that can arise from not having a supply cap. For investors, there may be a place for both types of cryptocurrency in their portfolio.

Whether you’re interested in a deflationary crypto like Bitcoin or an inflationary crypto like Dogecoin, a great way to get started buying crypto is by opening a brokerage account on the SoFi Invest trading platform. In addition to Bitcoin and Dogecoin, you’ll have access to Ethereum, Litecoin, Cardano, and others to create your crypto portfolio.

Photo credit: iStock/Amax Photo

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