If you’re a frequent user of social networking sites, you’ve almost certainly come across the word Dogecoin. To put it another way, it’s a cryptocurrency similar to Bitcoin or Ethereum. It has its unique flavor and several variances from the other two. Dogecoin was launched in 2013 as a ‘Joke Currency’ and a more humorous cryptocurrency for cryptocurrency aficionados. The name Dogecoin comes from a once-popular meme. Despite all of these strange origin myths, its popularity has skyrocketed in 2021. It has surpassed Bitcoin as the fifth-largest cryptocurrency by market valuation as of last week. (Source Forbes).
What is Dogecoin?
In late 2013, two eager software programmers, Billy Marcus and Jackson Palmer invented Dogecoin. Palmer bought the site and branded the coin using a meme that was popular at the time. The word “doge,” which was used to describe a Shiba Inu dog, was misspelled on purpose.
It was created when existing cryptocurrencies Luckycoin and Litecoin were forked. Scrypt technology was employed in the proof-of-work method for these two crypto coins. This crypto coin takes advantage of the same system. MDOGE stands for milliDogeCoin, and 1 DOGE Coin equals 1000 milliDogecoin.
It earned cult status on Reddit’s WallStreetBets message board in early 2021. This board was the driving force behind the January GameStop incident. Here, supporters promised to boost its value “to the moon.” After a while, all mention of cryptocurrency was removed from the subreddit.
Today, it is a force to be reckoned with. Its value has skyrocketed, with a rise of more than 5,000 percent in 2021. (Oh, no!) Elon Musk, the CEO of Tesla and SpaceX, is the guilty party, as you might expect. He declared it to be his preferred cryptocurrency. It’s also the “people’s crypto,” he claims. He also stated that a physical Dogecoin token would be placed on the moon. So it’s up to you to decide whether it’s people’s crypto or Elon Musk Cryptocurrency Dogecoin.
Dogecoin might be my fav cryptocurrency. It’s pretty cool.— Elon Musk (@elonmusk) April 2, 2019
Cryptocurrency and Blockchain:
Dogecoin is a cryptocurrency that works on the same blockchain like Bitcoin and Ethereum. Blockchain is a decentralized digital ledger that stores all transactions conducted with a decentralized digital currency in a distributed, secure manner. The term blockchain also refers to how information is kept in ”blocks” and subsequently connected in a permanent “chain.”
“Picture a spreadsheet that is duplicated thousands of times across a network of computers. Then imagine that this network is designed to regularly update this spreadsheet and you have a basic understanding of the blockchain.”
Every cryptocurrency holder has an identical copy of the blockchain record, which is updated regularly with all new transactions. Its blockchain network, like those of other cryptocurrencies, employs encryption to ensure that all transactions are secure.
Miners/diggers use computers to process transactions and record them on the blockchain, which is known as the “proof of work” system. In exchange for their efforts in processing transactions and supporting the blockchain ledger, miners/diggers receive more coins, which they can keep or sell on the open market.
Dogecoin vs. Bitcoin
When compared to Bitcoin, it has a few key differences. Miners of Dogecoin are known as diggers. Miners can finish the mathematical equations that complete and record transactions faster and more easily. This feature makes it a little more efficient when it comes to payment processing. There are certain differences between the two coins that make them more than mere duplicates.
“On the Bitcoin blockchain, the process of ratifying new blocks takes ten minutes; on the Dogecoin blockchain, it takes one minute,” stated Gary DeWaal, Chair of Katten’s Financial Markets and Regulation group. Aside from that, Bitcoin’s mining problem is based on the SHA-256 hash code, whereas it is based on Scrypt.
Another notable difference, as previously indicated, is the lack of a lifetime cap on the number of “Elon Musk Cryptocurrency” that can be created. Bitcoins have a lifetime cap of 21 million coins, which limits the total amount of coins that may be minted. This means that miners must work significantly harder and for longer periods of time to earn new Bitcoin. It helps to ensure Bitcoin’s ability to hold and grow in value over time to some extent.
Between these two cryptos, there is also a significant disparity in block rewards. Dogecoin is slightly more rewarding for miners. You may learn more about its block rewards by visiting their official GitHub repository.
If you are interested in learning similar technologies do check out my previous blog.
How to Buy it?
It can be purchased on popular cryptocurrency exchanges such as Binance and Kraken. You must create and fund an account with US cash or cryptocurrency on the exchanges. Then you can purchase and sell cryptocurrencies like Dogecoin. Notably, the popular crypto exchange Coinbase does not allow its purchases.
In addition to traditional assets like stocks, mutual funds, and bonds, certain online brokers, such as Robinhood and TradeStation, allow you to buy Dogecoin. Although they don’t have as many cryptocurrencies as exchanges, Dogecoin is widely available.
Once you’ve purchased it, you should transfer your coins to a crypto wallet, just like you would with any other cryptocurrency. Wallets come in a variety of shapes and sizes, ranging from online services provided by exchanges like Coinbase(while you can’t buy it on Coinbase, you can store it in your Coinbase wallet), to mobile apps, and even a physical hard drive. A private password is used to protect the wallet. There’s an added degree of safety against hacks because your coins aren’t housed on an exchange.
You could earn free coins for doing simple things online before it became popular and skyrocketed in price.
“For many years, you could execute chores at Dogecoin ‘faucets’ to earn Dogecoin rather than buying it,” stated C. Neil Gray. At Duane Morris LLP, he is a partner in the fintech practice. “Some of the tasks were as simple as watching a commercial or filling out a survey. Finding any that work has gotten increasingly difficult in recent years.”
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Is it a Good Investment?
Because there is no limit to the number of Dogecoins that can exist in the world at any given time, and millions of fresh new coins are launched onto the market every day. There is little need to keep a cryptocurrency for the long run. Because of the system’s lifetime cap on the number of coins that can be minted, Bitcoin’s value continues to climb.
“Doge is more like DASH or Bitcoin Cash than Bitcoin,” White explained, “where the express objective is a spending currency.”
This coin’s per-coin value has historically been quite low, hovering around $0.003 for most of 2020, therefore individuals were more likely to give them away. “Users on social media networks such as Reddit, Twitter, Facebook, and others may use Dogecoin to reward, or “tip,” one other for submitting content,” Gray explained.
Only 12 accounts control over half of the available Dogecoins. Because the supply is concentrated in the hands of a few people, it is an extremely hazardous coin to own.
The advances in it that occurred in 2021 may not be sustainable in the long run. So long as you’re utilizing it as a tip or a donation, everything is fine.
Should You Buy Dogecoin?
Those that purchased it at the beginning of 2021 were paid handsomely, as it has grown by about 5000 percent. White is still hesitant to acquire Dogecoin, especially as an investment. The steady influx of fresh coins onto the market kept the coin’s value under constant downward pressure.
In comparison to other prominent cryptocurrencies, White also warned about greater security dangers for Dogecoin. “It simply hasn’t been subjected to the same amount of security and code analysis as Bitcoin or Ethereum has. Furthermore, there isn’t much of a mining community in the Doge area. As a result, the risk of a mining-level attack is far greater than that of a cryptocurrency like Bitcoin.”
Purchasing any cryptocurrency, including Dogecoin, entails some risk. It’s usually a good idea to buy a few coins and get to know the system. Although it’s definitely wise not to put more than a smidgeon of your hard-earned cash into a cryptocurrency. Particularly in the one that began as a joke.
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