Background
Dogecoin is the 10th largest cryptocurrency by market cap (at the time of writing). It is a Litecoin fork, although its mining rewards and block times are different. This article analyzes how the Dogecoin supply changes over time and how those changes impact the coin's inflation rates.
Supply and Mining Rewards
100 Billion Dogecoin was mined by early 2015 according to Dogecoin Github documentation. 10,000 Dogecoin is mined per block, and a block is produced roughly once per minute. the number of minutes in a year is 60 * 24 * 365 = 525,600. The number of Dogecoin mined per year is therefore 525,600 * 10,000 = 5,256,000,000 or 5.256 Billion.
Because block rewards for Dogecoin miners are now set at 10,000, the total Dogecoin supply should increase at a constant rate in perpetuity. The below graph represents how the total Dogecoin supply changes over time:
Rates of Inflation
The rate of inflation in the total Dogecoin supply will decrease over time because the Dogecoin supply increases at a constant rate. for example, a 5.256 billion increase in a 100 billion supply from 2015 to 2016 represents a 5.256 percent increase in inflation, and a 5.256 billion increase in a 200 billion supply from around 2034 to 2035 is only a 2.628 percent increase. The below graph illustrates a theoretical yearly rate of change in the total Dogecoin supply:
Conclusion
Dogecoin is less inflationary than most national currencies because its rate of inflation is predictable and decreases over time. Furthermore, the rate of increase and total supply might be less than predicted because Dogecoin is lost over time - Dogecoin owners sometimes lose the keys to their wallets. However, other popular cryptocurrencies are even less inflationary than Dogecoin because they have set caps (such as Bitcoin's 21 million cap). Some Cryptos such as BNB are even deflationary, with Binance burning BNB on a regular basis. Since Dogecoin has no cap, Dogecoin adoption will need to increase in perpetuity to maintain the price of the coin.
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I am a crypto enthusiast. I am not a financial advisor, and nothing I say constitutes financial advice. All statements I make are opinions and should not be treated as fact without further research.
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