What is Dogecoin (DOGE)


29. Mar 2021

Dogecoin (DOGE) is an open-source cryptocurrency having the Litecoin-based framework. It means that it gets the same features and updates as Litecoin does. The interesting thing about this cryptocurrency is that it wasn’t created with the intent to bring some impressive and novel technology. But the fact of the matter is that it has become one of the most popular digital currencies in the whole world. It also has a strong community and customer base, and they actually use it instead of holding it as a speculative asset.

 

Dogecoin (DOGE): A Brief History

Jackson Palmer, along with Billy Markus, founded Dogecoin back in 2013 but here, using the word "founded" can be a little confusing. That's because it was initiated as a joke. Yes, you heard it right; it was no more than a parody of the whole crypto community. The intent of the creator was to make cryptocurrencies more approachable and fun. In its initial days, it was used to finance sporting sponsorships and charitable donations. But the tables have turned in the recent past as it has found better use cases and has grown merchant adoption beyond its energetic community.

The most interesting thing about this community is its name, which has taken from a popular internet Doge Meme which is a Shiba Inu dog. So much so, the logo of this cryptocurrency has the same dog with a big "D."

 

How Does Dogecoin Work?

One thing that makes Dogecoin unique from most of the cryptocurrencies is that instead of deflationary, it's an inflationary cryptocurrency. The deflationary cryptocurrencies usually increase their value, and it encourages hoarding. Moreover, if the hard cap of a certain cryptocurrency is met, the mining process doesn't remain profitable because of the high energy and processing power consumption. Therefore, Dogecoin was created on an inflation-based model to allow its users to maintain mining. It offers a fixed rate of production, which is 10,000 coins a minute. Inflation can play a big role in the success of this cryptocurrency because its users don't consider it an investment. Instead, it has become a great medium of exchange.

 

Dogecoin Vs. Litecoin

Dogecoin vs. Litecoin

The reason why we are comparing these two cryptocurrencies is that Dogecoin is based on the framework of Luckycoin, and Luckycoin has the same framework as Litecoin does. Initially, Dogecoin came with a randomized reward system but later in 2014; it was changed to a fixed block reward system. Both Litecoin and Dogecoin use Scrypt technology and proof of work algorithm.

Learn more about Litecoin (LTC) in detail.

One important factor that differentiates Dogecoin is that it doesn’t have any cap, unlike Litecoin. Moreover, both the companies have joined forces as the mining of Litecoin and Dogecoin has been merged. It means that using the same process; you can mine both cryptocurrencies.

Merged Mining

 

Dogecoin (DOGE) Vs. Litecoin LTC: Comparison Table

Properties

Litecoin

Dogecoin

Founded

7th October 2011

6th December 2013

Price

181.96 US Dollars

0.049 US Dollars

Market Capitalization

11.423 Billion US Dollars

6.424 Billion US Dollars

Mining Algorithm

Scrypt – Proof of work

Scrypt – Proof of work

Supply

84 Million

127 Billion

Coins Mined Already

66.8 Million

113 Billion

Average Block Time

2.5 Minutes

1 Minute

Block Reward

25 LTC

10,000 DOGE

 

Advantages of Dogecoin

As mentioned, Dogecoin has become one of the most popular and major cryptocurrencies with a strong community. Not only does it allow you to get familiar with the cryptocurrency, but at the same time, it also allows you to have fun. Here are some of the most compelling advantages of this cryptocurrency.

  • Extremely low transaction fees
  • Faster transaction times
  • Takes less effort for mining computations
  • More approachable
  • A devoted and energetic community

 

How to Get Dogecoin?

Just like most of the cryptocurrencies, you can get Dogecoin in a couple of ways which are as followed:

  • Mining Dogecoin
  • Buying Dogecoin

 

Mining Dogecoin!

The transactions of Dogecoin are included in a block before being verified. The users mining Dogecoin check their received transactions on the blockchain with the previous ones. Moreover, the users need to confirm the new transaction block if they fail to detect any data for the same transaction. The nodes located on the Dogecoin network verify these blocks, and after verification, they enter an entirely new form of lottery, which means that only a single node can win the reward. It involves solving a difficult mathematical problem, and the node that completes this computational process earlier adds a new transaction block to the blockchain.

Once a user completes a mathematical computation, s/he receives 10,000 DOGEs as we all know that the mining process needs a massive amount of processing power and consumes too much electricity. That's why Dogecoin offers rewards to its users, which work as an incentive for contributing their hashing power. Initially, the mining reward that Dogecoin used to offer was random, but after hitting the 600,000th block, the company put in place 10,000 DOGEs as a permanent reward.

 

How to Mine Dogecoin?

Dogecoin Mining

As mentioned, Dogecoin and Litecoin use the same Scrypt algorithm, so they merged their mining back in 2014. The Scrypt algorithm is not only easier than Bitcoin's SHA-256, but it also consumes way lesser power as well. If you already know how the mining process of Litecoin works, then understanding the Dogecoin mining process will relatively be a lot easier for you.

The mining of Dogecoin is at least about a million times less difficult as compared to Bitcoin, and it generates a new block after every minute. Basically, there are three different ways you can mine Dogecoin, which is as followed:

  • Mining in a pool
  • Solo mining
  • Cloud mining

 

Mining in a pool

Just like all the other cryptocurrencies that you can mine, you can mine Dogecoin in a mining pool. Mining pools essentially are the groups of different miners who share their processing power, and in return, the block reward which is received is shared among the group. Because a group of users (mining pool) have more combined processing power as compared to a single user, they confirm new blocks more often as well. In order to become a part of a group of miners, you also usually need to pay a little fee.

 

Solo mining

Instead of being a part of a miners' group, if you want to mine Dogecoin on your own, it means you’re doing solo mining. You will confirm fewer new blocks in this process because of the immense competition. However, you won't have to pay any fee for mining, and if you successfully mine a block, all of it will belong to you.

 

Cloud Mining

Cloud mining is the easiest way to mine some DOGE, but you need to understand the whole process first because it can go unprofitable.

Dogecoin

In cloud mining, you will need to rent the processing power from a company that will charge you a monthly or yearly fee. This way, the DOGE you will mine will be shared between you and the company, where the company usually takes a little share. In this process, you also need a Dogecoin wallet where you will be storing your coins.

The most important benefit of cloud mining is that it’s a lot cheaper than setting up your own mining system. Moreover, it also keeps you from all the technical effort that you need to perform in your personal setup. However, you need to understand the contract fully in order to make sure whether this process will be profitable for you or not because it can be long-term. Other than that, the contract most probably will be fixed, and price volatility can also cause problems, and once you have agreed to the contract, you'll be tied to it even if it’s going unprofitable.

There is another unique method to mine Dogecoin from some online portals, such as NiceHash, where you can only purchase hashing power from the community. It keeps you from setting up your mining system, and unlike cloud mining providers, you won't also have to undergo the typical contract.

 

How to Get Started with Mining?

In order to start mining Dogecoin, you will need a computer with a stable internet connection. Moreover, you’ll also need to have a secure Dogecoin wallet where you’ll be storing your earned DOGEs. You’ll also need to have a PC with a powerful CPU or GPU such as Nvidia GeForce (RTX or GTX) to make sure that your system doesn't burn out. Once this hardware is in place, you'll need to download suitable software to start the mining process. You can find software for both CPUs and GPUs on the internet, such as CudaMiner, EasyMiner, CGminer, etc.

We recommend you go with GPU, especially if you're a beginner, and then once you get the necessary experience, you can upgrade your system to something such as Scrypt ASIC Miner.

 

How Can you Buy Dogecoin?

There are many online portals where you can buy Dogecoin. The best and most renowned place to buy it is undoubtedly Coinbase if it’s available in your country. Other than that, there are also many other places that you can use if Coinbase is not your cup of tea. Some of the best options are:

 

Should You Actually Buy Dogecoin?

This guide doesn’t have any aim to provide any financial advice or planning. The best way to decide whether you should buy Dogecoin or not is to perform comprehensive research about your financial situation and future goals before you make any investments.

Keep in mind that, according to many financial experts, cryptocurrency is a bubble that will burst anytime. On the other hand, there are also some who believe and suggest that decentralized platforms and cryptocurrency are bound to change the future landscape of the world. According to the current situation, approximately all the major cryptocurrencies are increasing their values, and many business tycoons such as Elon Musk are investing heavily in it. Still, the answer to this question depends upon your personal situation, and only you understand it better than anyone else.

 

Which Wallet(s) You should Use to Store Dogecoin?

There are many hardware wallets available in the market that you can use to hold your Dogecoins. The following are some of the best wallets to store Dogecoin:

There are also some software wallets that you can download on your computer to store your Dogecoins, such as Dogecoin Core Wallet. This software wallet contains the entire Dogecoin blockchain and allows you to transform your PC into a Dogecoin Node effectively.

On the other hand, if you don't want to turn your computer into an effective node, then you can use MultiDoge. It allows you to store all the necessary information so that you can use Dogecoin without turning your PC into a node. Moreover, there are also some online wallets that you can use to access the Dogecoin blockchain, such as Dogecoin. This way, you won't need to store any information about your Dogecoin on your PC.

 

How to Transfer Dogecoin?

Once you have a wallet to store your Dogecoin, you can transfer it with a single click by using the “Send” button. Here you’ll need to enter the coin value, address of the recipient, and a label to track your transaction.

 

How Long Does the Transfer Take?

According to the official website, Dogecoin is a peer-to-peer, decentralized cryptocurrency that allows you to transfer your Dogecoins easily online. You only need to think of it as a digital currency that offers a one-minute block time.

The transaction time of Dogecoin is a lot quicker (about a minute on average) as compared to most cryptocurrencies.

 

Use Cases of Dogecoin!

As mentioned, this cryptocurrency has been used for charity and fundraising initiatives such as building clean water wells in poor areas and helping people to attend Olympics. Below are some of its most notable use cases achieved by the community.

The Dogecoin community managed to raise about 30,000 US dollars in March 2014 to build wells in Kenya to provide clean drinking water.

In 2014 50,000 US dollars were raised to fund the Bobsled Team of Jamaica to attend the Sochi Winter Olympics.

The community also raised 55,000 US dollars to sponsor Josh Wise (a NASCAR driver). He then raced in the competition in a car with the Dogecoin logo printed.

Dogecoin NASCAR

You can also go for holding the Dogecoin with the goal to earn money. Moreover, the cryptocurrency has also seen many troughs and peaks in its value, which also provides you with an excellent opportunity for speculation.

 

How to Use Dogecoin?

One of the most asked questions about this digital currency is “how to use Dogecoin”? Well, more and more online stores are now accepting cryptocurrency as an acceptable payment method. One of the best online platforms where you can use your Dogecoin is Coinsbee. Not only can you buy Giftcards with Dogecoin here, but you can also get a mobile phone top-up with Dogecoin. Other than that, this online portal also allows you to buy eCommerce vouchers for such as Amazon Dogecoin, steam Dogecoin and much more.

Coinsbee is accessible in over 165 countries across the globe for people to buy gift cards for Dogecoin, mobile phone top-up with DOGE, game Giftcards DOGE etc.

 

The Team and Developers of Dogecoin

The team of Dogecoin consists of volunteers entirely, and the developing team of the cryptocurrency consists of famous people such as Max Keller, Patrick, Lodder, Ross Nicoll, etc.

 

The Price of Dogecoin: Historically

Just like all the other major digital currencies, Dogecoin also faced price fluctuation that went down to 0.0001 US dollars in 2015 and currently experiencing the highest value (0.049 US Dollars).

 

Last Year’s Price Chart of Dogecoin

Dogecoin Chart

 

Will Dogecoin Reach 1 Dollar?

The probability of Dogecoin reaching 1 US dollar is less, but it's possible. The immense supply of the DOGE makes it highly unlikely to reach one US dollar price because of its inflationary nature that increases the chances of the Dogecoin to circulate around as a mediator currency.

 

What is the Maximum Number of Dogecoins?

As we have already discussed, there is no supply limit for this cryptocurrency. Currently, there are about 127 Billion Dogecoins circulating in the market, and 113 Billion have already been mined by the users. The main idea behind Dogecoin was to maintain the mining and keep it profitable for the users, unlike other cryptocurrencies where mining doesn't remain profitable once the maximum cap is reached. It also leads to extremely high fees and high transaction times. That's why there is always an incentive if you mind Dogecoin, and the developers also ensure that there will always be a reward on Dogecoin mining.

 

The Future of Dogecoin!

Dogecoin has experienced many hard times in its whole history. One of the major incidents was the massive theft of a cryptocurrency exchange that made many community members of Dogecoin leave the community. Moreover, it was also removed from the Exodus wallet because it was mentioned that Dogecoin lacks many important updates which are not being developed. But still, it's going forward with more pace than ever now, and it outweighs the downsides.

Dogecoin still provides all the features that the developers promised back in 2013, such as an easy to acquire process, lower cost, and welcoming and friendly digital currency. That’s why the community of Dogecoin is known to be the most energetic, and friendly and it always helps the newcomers. So much so, many Dogecoin users have seen donating their DOGE in small amounts to new users in order to encourage them to join the community. That’s why every day more and more people are joining it and making it even stronger.

Ross Nicoll, who is one of the leading developers of Dogecoin, said in his last interview that he wants to see Dogecoin as one of the most adopted and trusted digital currencies on the internet. He also said that the evolving community is one of the biggest opportunities why it's actually possible in the near future. He added that the developers of Dogecoin are constantly upgrading the whole system, and they want to make it a part of the Ethereum Ecosystem. Moreover, Dogecoin has already announced that its development team is currently working on the bridge that will connect Dogecoin with the Ethereum ecosystem to open doors for countless new opportunities. Many people are already calling it Dogethereum and hoping that it will happen soon. You can join communities on multiple social media such as Reddit, Twitter, etcetera.

Dogethereum

 

Final Words

Even though Dogecoin started as a lighthearted internet joke, it has evolved with the period of time into one of the most popular, major, and genuine digital currencies. Not only does it have one of the most energetic and thriving communities, but it's also known to be the most helpful and friendly. That’s why more and more people are joining and making the community even stronger.

These factors are playing an important role in the success of Dogecoin, and the chances are it will continue to grow in the future as well. Moreover, the cryptocurrency is in continuous circulation as people don't hold it usually as an investment.

Blockchain has the potential to become the biggest tech of this century, and Dogecoin is playing its part to make it happen as soon as possible.

 

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