What Is Dogecoin and How Does It Work?
Dogecoin is a digital currency or cryptocurrency. It started as a joke for cryptocurrency enthusiasts and took the name of a popular meme. This peer-to-peer cryptocurrency is considered an altcoin and a sarcastic meme coin, with its logo being the Shiba Inu dog, and despite starting as a joke, the crypto’s blockchain has merit and is up to the task.
History of Dogecoin
The creator of Dogecoin was Jackson Palmer. He was a project manager at Adobe Inc.’s Sydney, Australia office. Palmer created Dogecoin in 2013 as a satire on the hype around crypto. He came off as a skeptic of the technology, and his initial tweets had much irony.
Palmer was able to get positive feedback, and he decided to purchase the domain Dogecoin.com. The software around Dogecoin was built by Billy Markus, a software developer who worked at IBM. Markus had tried to develop his digital currency before hearing the Dogecoin info. He based the code of Dogecoin on Luckycoin. Palmer and Marcus launched the coin in 2013.
The Rise of Dogecoin
Dogecoin rise can be attributed to its casual presentation that suits the growing cryptocurrency community. The cryptocurrency offers unlimited supply and script technology which has created the argument for a faster, more consumer-friendly, and more adaptable version of Bitcoin.
The Elon Musk Connection
Elon Musk has openly stated his support for Dogecoin. Musk started by tweeting a faux DOGE magazine cover which resulted in the rise of the cryptocurrency price. He also tweeted in May 2021 that he was working with Dogecoin’s developers to improve the efficiency of buy doge token transactions . Musk ran a poll in early 2022 inquiring from social media users if Tesla should start taking Dogecoin as a form of payment.
How Does Dogecoin Work?
Like other cryptocurrencies such as Ethereum or Bitcoin, Dogecoin works on Blockchain technology. Blockchain is a secure and distributed online ledger that keeps all cryptocurrency transactions, and it is free from any centralized authority. Below are some of the ways Dogecoin works.
All cryptocurrencies are based on blockchain technology. The users have a digital wallet with a Dogecoin private key and a public key. All transactions made with Dogecoin are recorded on the Dogecoin blockchain or Dogecoin ledger.
There are numerous computers called nodes that store blockchain information. Typically, nodes are rewarded for checking transactions. This is usually in a process called mining, as discussed later. This explains why blockchains are referred to as decentralized networks.
Dogecoin cryptocurrency is stored in a Dogecoin wallet. These wallets are digital, and thus they exist on computers only. Here is where you store the information you require to use your cryptocurrency. The data include both private keys and public keys.
Dogecoin offers a set of different wallets you can choose from. The wallets are divided into four categories: online wallets, software wallets, hardware wallets, and paper wallets. Software wallets for Dogecoin are MultiDoge and Dogecoin Core.
Dogecoin mining happens when a node attempts trying to make a confirmation of a Dogecoin transaction. The node is entered into a lottery that involves guessing a code given to the latest set of transactions added to the blockchain.
There are different Dogecoin mining software that you can use to mine Dogecoin. They include CudaMiner and EasyMiner. During the process, the prize for the node that gets the correct code is 10,000 DOGE.
Features of Dogecoin
Besides being a meme cryptocurrency, Dogecoin has several features which separate it from other cryptocurrencies and altcoins. Below are some of the unique features of Dogecoin.
Dogecoin unlimited supply is one of its unique features. You can therefore buy Doge token easily. Miners get 10,000 DOGE for a block, each block being created every minute. This translates to 14,400,400 Doge tokens created every day. The tokens are then stored in wallets or sold to the market.
There are hundreds of billions of Dogecoin in circulation. This number continuously increases every day. At the time of writing this article, the market cap was $11.47 billion with a price of $0.08611.
Decentralization is a security feature that governs most cryptocurrencies, with miner distributions and the number of nodes on a crypto network being decentralization measures. Compared to 10,000 nodes for Bitcoin, Dogecoin has 1090 nodes. Therefore, Dogecoin has a 51% attack susceptibility where a single entity or person has 50% of the network.
Pros & Cons
Below are some of the pros of Dogecoin:
- Less Dogecoin transaction time.
- Meager Dogecoin transaction fee.
- The network has a friendly and passionate community of followers and creators.
- Has a higher acceptance than other cryptos.
- It can be used as a gaming currency.
- It has a comparatively low value which aids many social media platforms pay content creators.
Of course, Dogecoin has its shortcomings. Below are some of the cons of Dogecoin:
- Dogecoin mining is not profitable. This is because the value of Dogecoin is relatively low. The cryptocurrency also deals with a high number of coins.
- It is a limited means of investment. This is because the cryptocurrency is an inflationary currency.
- The coin has a limited number of functionalities. For example, it does not have Smart Contracts.
- The buying options for Dogecoin are limited. Notable exchanges such as Coinbase do not accept Dogecoin.
- The crypto is viewed as less secure compared to the other top cryptocurrencies.
Uses of Dogecoin
You might be wondering, “What can Dogecoin be used for?” or “Where can I spend Dogecoin?” Dogecoin uses spun from grocers to restaurants to product retailers to travel agencies. All these sectors accept Dogecoin as a mode of payment.
Some of the companies that accept Dogecoin include Playhub Casino, MonsterMeg, FlokiNET, and Prodigy. Therefore, we can see that Dogecoin has an overall acceptance rate over other cryptos.
Is Dogecoin Safe and Legal
Is Dogecoin safe to buy? This is a legit question given the rise in popularity of the meme coin. Buying Dogecoin should be straightforward, provided you follow the set guidelines. Whether or not you decide to invest in the cryptocurrency is entirely up to you. You should also ensure that the cryptocurrency you buy is within your risk tolerance.
The question of how safe the crypto is is a bit complicated. There are security risks, and the crypto is also very volatile. The currency is also much unregulated, and you face the risk of scammers, especially if you are a newbie.
On the other hand, the legality of Dogecoin is dependent on your jurisdiction. Countries like China have banned the use of any cryptocurrency.
Is Dogecoin a Good Investment?
Should you invest in Dogecoin? Is Dogecoin a good investment? Like any other cryptocurrfency, Dogecoin has high levels of volatility. The coin has also seen a significant drop in its price. As you invest, know that your capital is at risk as much as you could make significant gains. Therefore exhibiting caution while investing is very crucial.
It is estimated that the price of the cryptocurrency will be moderately bullish during the course of 2022. Dogecoin could end the year at around $0.196. The market is still bearish and Dogecoin cryptocurrency could end the year at around $0.10.
Interesting Facts about Dogecoin
Below are some of the exciting facts about Dogecoin:
- Dogecoin’s creator sold all his DOGE.
- The cryptocurrency was created in about two hours.
- The logo of Dogecoin is the Shiba Inu dog.
- Elon Musk cryptocurrency Dogecoin. Musk has played a significant role in the rise of Dogecoin.
- Dogecoin is a meme currency. Dogecoin was created as a joke from a Dogecoin meme.
Everyone, including Dogecoin’s founder, saw it as a joke when it came out. The value of the cryptocurrency started to soar after Elon Musk started tweeting about it. However, the price of DOGE has dropped significantly since its peak.
Therefore, just like any other cryptocurrency investing in Dogecoin has its risks. The path to actualizing good profits may be a long road that may need patience and endurance. You need to study the market closely and develop trading strategies if you are to reap anything. Above all, invest what you can afford to lose. With that said, all the best when investing in Dogecoin.