Bitcoin latest: Cryptocurrency dogecoin that started as parody now valued at over $1bn

Dogecoin was created in 2013 and took its name from a meme based around pictures of dogs with garbled captions that relay the animal’s supposed internal monologue

A cryptocurrency that started as a parody named after an internet meme about a Shiba Inu dog now has a market value of more than $1.2bn (£900m).

After a long period of stagnation, dogecoin has increased in value more than five-fold in the last month as the interest in cryptocurrencies has exploded.

The rapid rise demonstrates the mania that has engulfed digital coins and has worried even dogecoin's creator.

Jackson Palmer told Coindesk, a website that tracks cryptocurrency news and prices, that he had faith in the development team behind dogecoin’s technology, but that it “says a lot about the state of the cryptocurrency space in general that a currency with a dog on it which hasn't released a software update in over two years has a $1bn-plus market cap”.

He added that the fact that most conversations about cryptocurrencies in the media concern investment and the potential to make money “draws attention away from the underlying technology and goals this movement was based [on]".

Dogecoin was created in 2013 and took its name from a meme based around pictures of Shiba Inu dogs with garbled captions that relay the animal’s supposed internal monologue.

It began as a way to poke fun at the growing hype surrounding cryptocurrency. Now it seems it has been swept up in the latest round of that very same hype.

“Dogecoin is an open source peer-to-peer digital currency, favored by Shiba Inus worldwide,” the cryptocurrency’s official website states. The creators are listed as Mr Palmer, along with “Shibetoshi Nakamoto”, a play on the alias of the founder of bitcoin, who is known as Satoshi Nakamoto.

All of the developers who work on dogecoin’s technology are reportedly volunteers. One of the team, Max Keller, told Coindesk that it was “a little scary” to find himself working on software that powers a billion-dollar network.

“This is quite the responsibility,” he added. “Still, I am proud of what we achieved and thankful to be part of such a great community."

4 January 2018 - Bitcoin has been at the centre of the cryptocurrency craze as its value has risen more than 12-fold this year but it has been significantly outperformed by a smaller rival which has seen its value rise by that amount in less than three weeks.

XRP, a cryptocurrency created by the fintech company Ripple is easily the best performing cryptocurrency of 2017, registering astonishing 37,000 per cent gains $0.0065 per token in January 2017, to $2.47 by the end of the year.

The rise has potentially catapulted its creator, Chris Larsen, high up the world’s rich list. Mr Larsen owns 5.19bn XRP coins, according to a report by Forbes, which would mean his holding is worth $12.82bn (£9.4bn).

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What is bitcoin?

Bitcoin is a digital currency created in 2009 by a mysterious figure using the alias Satoshi Nakamoto. It can be used to buy or sell items from people and companies that accept bitcoin as payment, but it differs in several key ways from traditional currencies.

Most obviously, bitcoin doesn’t exist as a physical currency. There are no actual coins or notes. It exists only online.

“Real-world” currencies, like the dollar, are managed by a central bank such as the US Federal Reserve or the Bank of England, which manage the money supply to keep prices steady. They can print more money or withdraw some from circulation if they think it’s needed, as well as using other monetary policy controls such as adjusting interest rates.

Bitcoin has no central bank and isn’t linked to or regulated by any state. The supply of the cryptocurrency is decentralised – it can only be increased by a process known as “mining”. For each bitcoin transaction, a computer owned by a bitcoin “miner” must solve a difficult mathematical problem. The miner then receives a fraction of a bitcoin as a reward. The use of problem-solving in this way is the reason bitcoin is known as a cryptocurrency.

Read our bitcoin explainer