Dogecoin is an example of an altcoin, which are peer-to-peer digital tokens that descended from bitcoin. The more popular ones include ethereum, which topped $1,000 for the first time on Thursday, and ripple, which saw a staggering 35,000 percent jump in its value last year.
Dogecoin, for its part, was created in 2013 and its mascot is a Japanese shiba inu dog popularized by an internet meme that dates back to 2010. The creators of dogecoin positioned the virtual token as "the internet currency" that can allow users to easily send money online.
There are several ways to get dogecoins: Users can buy them at online exchanges, get tipped in the cryptocurrency and even mine them.
The virtual currency's meteoric rise in recent months has the project's creator expressing concern about market excess. Jackson Palmer, the founder of dogecoin who left the team in 2015, told cryptocurrency news site CoinDesk that it was telling that the token saw such a sharp jump in price even when the project hadn't released a software update in over 2 years.
The total value of cryptocurrencies is over $750 billion, according to CoinMarketCap, and bitcoin dominates around 34 percent of that market.
"The most significant contributing cause for altcoins to rise so parabolically is owing to the perception of 'cheap' coins," Dave Chapman, managing director at Hong Kong-based commodities and digital assets trading house Octagon Strategy, told CNBC.
"The two most well known cryptocurrencies (i.e. bitcoin and ethereum) are considered too expensive for most new entrants. Despite being able to purchase a fraction of each, there is a real psychological barrier around owning something in its entirety," Chapman added.
A buyer, he explained, would feel better knowing they own 2,000 ripple tokens, which would cost a little over $6,000, rather than owning less than half of a bitcoin at the same price.
Chapman also said there is a mindset among new investors than they have missed the "upside opportunity with cryptocurrencies that have already demonstrated incredible returns."