Difference Between Dogecoin & Bitcoin – A Comparison Guide
Bitcoin vs Dogecoin
Both of these cryptocurrencies are widely known. Bitcoin is known to have been the first cryptocurrency developed in 2009. It was created after the 2008 recession to show distrust of financial institutions such as banks for their role in the recession. On the other hand, Dogecoin was developed in 2013. While the developers of Bitcoin remain anonymous with the pseudonym Satoshi Nakamoto, the people behind Dogecoin are known. Satoshi Nakamoto issued a white paper that talked about the centralized control of money and the trust required in handling peoples’ money.
Jackson Palmer, who worked as a product manager at Adobe Inc. in Sydney, created the cryptocurrency as a satire on the hype of cryptocurrency that was there. He was a skeptic of cryptocurrencies, and his initial tweets were tongue-in-cheek. However, he got positive feedback for his creation and decided to buy the domain dogecoin.com. Billy Markus heard of the Dogecoin buzz while trying to create a digital currency. Hence, the two got together and launched Dogecoin.
Differences B/W Dogecoin and Bitcoin
Despite some similarities between the two cryptocurrencies, Dogecoin and Bitcoin also have key differences. These differences are essential for any trader, crypto enthusiast, or investor to consider. Below are some of the critical differences.
The premise on which these two cryptocurrencies were created is a world apart. Bitcoin was created with a detailed white paper to become a decentralized currency. As such, you may ask, what are Bitcoins used to buy? Bitcoin uses range from trading it for other cryptocurrencies and flat currencies to paying for goods and services with the currency.
On the contrary, Dogecoin started as a joke. The cryptocurrency is based on a viral meme about the Shiba Inu Dog. It begs the question; what is Dogecoin used for? Dogecoin uses are somewhat akin to those of Bitcoin. However, the cryptocurrency is not widely accepted as a payment method like Bitcoin.
Market capitalization means the coin price multiplied by the number of outstanding coins. The number of outstanding Doge may be more than that of BTC, but the value of Bitcoin is higher than that of Dogecoin hence the difference in market capitalization. The total Bitcoin market cap is almost fifty times larger than the Dogecoin market cap.
A single Bitcoin holds a five-digit value while a Dogecoin trades at less than a dollar. At the writing of this article, Bitcoin was trading at almost $30,000 while Dogecoin was trading at around $0.08. In 2021, Bitcoin had picked to about $60,000 while Dogecoin traded for $0.01.
Dogecoin is an inflationary currency since more Doge is created each minute. This means that the total Dogecoin supply is infinite. Let us put this into perspective: 10,000 Doges are issued every day per minute. That translates to 15 million Doge daily and 5 billion Doge annually. If the currency has an unlimited cap, its value will be affected over time.
On the other hand, the maximum Bitcoin supply stands at 21 million. This results in a “built-in” scarcity. It is the same way gold is valuable due to its scarcity. Therefore, holding Bitcoin for the long-term can be a good investment because its value will increase whenever the demand for the currency increases.
The bitcoin algorithm and Dogecoin algorithm are different despite both of the cryptocurrencies being programmed by C++ and blockchain technology. Since they differ in the algorithm, their functionalities are also different. Also, Bitcoin has a well-founded ecosystem that we cannot say exists with Dogecoin.
Transaction Time and Fees
The transaction processing times of Dogecoin are better than that of Bitcoin. The average Bitcoin transaction time is a minute, making it nine times slower than Dogecoin. Additionally, Dogecoin transactions per second are 33, while Bitcoin’s are 4.6. Also, Bitcoin is by far more popular than Dogecoin and hence more susceptible to network congestion.
Bitcoin transaction fee comparison to Dogecoin is such that Bitcoin has higher fees. In the six months leading to 2022, the Dogecoin minimum transaction fee was $0.10, while Bitcoin’s was $1.25. The fee structures of the two platforms are also different.
Similarities in Dogecoin & Bitcoin
Bitcoin and Dogecoin are both cryptocurrencies that rely on blockchain technology. These digital assets can be traded for flat currencies and other cryptocurrencies or can be used to purchase goods and services. Below are some of their similarities.
Blockchain technology has acquired a great deal of traction since the introduction of Bitcoin. Blockchain is essentially a ledger of digital transactions distributed and replicated across a vast computer network. A single block comprises several separate transactions, with every new transaction being added to the participant ledgers.
Both Bitcoin and Dogecoin utilize blockchain technology and the DLT technology to facilitate transactions. Dogecoin is a fork of Luckycoin blockchain, a fork of Litecoin, and a fork of Bitcoin. Therefore Dogecoin facilitates transactions like Bitcoin.
Both Bitcoin and Dogecoin come into the cryptosphere through a mining process. Miners use high-powered computers to solve math problems and are then awarded BTC or DOGE. Also, Dogecoin miners receive 10,000 DOGEs per compensation, while Bitcoin miners get 6.25 BTC. Dogecoin mining limit is infinite, while only 21 million Bitcoins can be mined.
Volatility is expected among cryptocurrencies. You can never be sure of what will rise and what will fall. You are likely to lose your investment as much as you are likely to gain from your investment. Dogecoin volatility is due to its unlimited supply. On the other hand, Bitcoin price volatility makes it a 50/50 investment regardless of its high value.
Bitcoin volatility index was 4.56% in 2021. Notably, BTC is relatively volatile, but the price will also be dependent on the cryptocurrency you are comparing it to. It will be helpful to note that the volatility of cryptocurrencies is due to their nature of thriving on speculation.
Bitcoin regulation is similar to Dogecoin regulation. Cryptocurrencies have been the center of attention, with regulators trying to establish if they are a form of currency or investments. The investor protection issue also comes into play when talking about any cryptocurrency. There will be more regulation on both DOGE and BTC, which will go a long way in determining their prices.
Dogecoin and Bitcoin are unique cryptocurrencies despite some functionality similarities. DOGE is a better form of conducting transactions than BTC due to its reduced footprint and increased speed. However, BTC is widely accepted and is viewed as more stable than Dogecoin.
If you want to start trading, these coins will offer you vast opportunities. You will experience volatility with both BTC and DOGE, with spikes and crashes in price being common. The cryptos will also be affected by similar drivers in the market, such as demand, supply, rumors, and government regulation. Therefore, you should weigh your options before deciding on the cryptocurrency you want to invest in.