Dogecoin (DOGE) is an open-source peer-to-peer cryptocurrency that was created as a parody of the cryptocurrency market after the creation of Bitcoin. It was originally created as a light-hearted joke for cryptocurrency enthusiasts, but has quickly become one of the leading cryptocurrencies in use today.
The Dogecoin brand logo is based on a Shibu Inu dog meme that was popular at the time. It was created in December 2013 and is based on the same core technology as other cryptocurrencies such as Bitcoin and Litecoin.
However, Dogecoin has made some improvements, including faster access speeds and more accessible transactions. Additionally, it enjoys the support of a strong DOGE community, popularly known as the “Doge’s Army.” In 2021, Dogecoin will become the ninth largest cryptocurrency by market capitalization.
Dogecoin uses a simplified version of the Scrypt hashing algorithm. It also uses a proof-of-work protocol that allows it to receive work from other Scrypt-based networks. Mining Dogecoin consumes less energy than the Bitcoin SHA-256 algorithm.
History of Dogecoin:
Dogecoin was created in late 2013 by two software developers, Bill Marcus and Jackson Palmer, who worked for IBM and Adobe Systems, respectively. It was created using the open source Litecoin, which itself was a fork of the Bitcoin blockchain. The main purpose of its creation was to increase public awareness of the capabilities of blockchain technology.
With the support of a large online community including Elon Musk, Mark Cuban and Snoop Dogg, the volatile cryptocurrency has surged more than 4,000% in 2021 alone, with some analysts predicting the price will hit $1 before the end of the year.
The online community also influenced news headlines that included several fundraising efforts, such as raising $50,000 to send the Jamaican bobsled team to the 2014 Winter Olympics after the team folded. In 2014, they also sponsored NASCAR Sprint Cup driver Josh Wise for approximately $55,000.
Such publicity stunts have elevated Dogecoin to near cult status in 2021. He gained influence on Redditt WallStreetBets message boards and on Twitter, where his value reacted to Elon Musk’s popular tweets, such as taking his value “to the moon.” ” and “People’s cryptocurrencies”.
The historical price of DOGE is shown below:
DOGE’s price has remained relatively stable since its inception, but began to rise rapidly in April 2021. The all-time high price reached was $0.7376 and the all-time low was $0.00008547. The investment return for early investors is approximately 89.841% as of September 15, 2021.
Features of Dogecoin
- No maximum bet:
Dogecoin does not have a maximum quantity like other cryptocurrencies such as Bitcoin. Dogecoin miners earn 10,000 DOGE per block, and each block is created every minute. It involves the creation of 14,400,400 new DOGE tokens per day, which are then sold on the market or stored in miners’ wallets.
At the time of writing, there are approximately 131.28 billion DOGE in circulation with a market capitalization of $31.67 billion and a price of $0.24.
- Decentralization:
Decentralization is part of the security that drives most cryptocurrencies, meaning that security is in the hands of many users around the world. The decentralization of a cryptocurrency is usually measured by the number of nodes on its network and the distribution of miners.
According to Block Chair, Dogecoin has about 1,090 nodes compared to Bitcoin’s 10,000 nodes in 97 countries. This makes the Dogecoin network vulnerable to a 51% attack, where one person or entity controls more than 50% of the network.
- Most Dogecoins are in the hands of a few:
Most Dogecoin wallets contain a large amount of DOGE in circulation, which poses a risk as they have undue control over price fluctuations and liquidity in the market. It is estimated that 0.002% of Dogecoin wallets contain approximately two-thirds of the total supply of DOGE. A completely different scenario occurs with Bitcoin, where wallets are evenly distributed.
How Dogecoin works:
Dogecoin operates on blockchain technology, which uses a secure distributed digital ledger that stores and aggregates all transactions made on its network, similar to how most cryptocurrencies operate. The Dogecoin network also uses cryptography to secure all transactions on its blockchain network.
Dogecoin mining uses the concept of “proof of work,” where miners use computers to solve complex mathematical equations to process and record transactions on the blockchain network. Miners are rewarded for their mining activities by earning Dogecoins, which they can sell on cryptocurrency exchanges or store in their wallets.
Dogecoin can be used to make payments and purchases, but it is not an effective cryptocurrency as a store of value. This is due to the infinite number of Dogecoins that can be created, making the cryptocurrency highly inflationary in nature.
How to buy Dogecoin:
Dogecoin can be purchased on various cryptocurrency exchanges. Therefore, the first step to purchasing Dogecoin is to open an online account with a cryptocurrency exchange that supports DOGE. The account must be funded in US dollars or cryptocurrency.
Once your wallet is replenished, you can start making purchases by placing orders through your broker. If the order is executed successfully, you will see DOGE in your wallet. Otherwise, the order may be canceled and another one must be placed in the next trading session.
There are two main types of wallets: hot software wallets and cold hardware wallets. Popular software wallets are usually free, but you will need an internet connection to access DOGE investments. The best Dogecoin wallet software, intuitively, is Dogecoin Wallet, which is available in both desktop and mobile applications. Cold hardware wallets are stored offline but charge a nominal fee depending on the provider.
Dogecoin as an investment:
DOGE’s lack of lifespan and the fact that millions of new coins are released into the market every day puts downward pressure on its value. Consequently, it is a highly inflationary cryptocurrency, which reduces its attractiveness for long-term investment.
Therefore, it is more suitable as a transaction currency rather than a long-term investment, unlike other cryptocurrencies such as Bitcoin or Ethereum. Dogecoins became popular because they were used as rewards or “tips” for posting content on social networks such as Reddit and Twitter.
However, despite the above factors, DOGE has experienced tremendous growth in 2021. Some crypto analysts believe that the rally is not sustainable in the long term. Other undesirable features of Dogecoin also discourage its purchase, such as relatively weaker security and controls at the code level, and the lack of a strong mining community compared to its peers such as Bitcoin. These issues pose a threat to mine-level attacks.
An increase in the money supply thanks to US fiscal stimulus packages, which have led to higher inflation in most traded commodities, stocks, real estate and even cryptocurrencies.
Increasing access to trading and investing for younger generations through the use of financial apps such as Robinhood. Retail brokerage platforms have responded by reducing their commissions and fees.
Social media platforms promoting selected investment options, especially Reddit forums. This younger generation of retail investors is flocking to these platforms.
How to mine Dogecoin:
Mining Dogecoin has not been profitable mainly due to its low cost. However, the recent increase in DOGE prices has opened up new opportunities for miners. It is very important to consider the volatility of DOGE when trying to start mining it.
DOGE Mining Process:
The hardware used to mine Dogecoin is called Dogeminer. It is simply a node on the Dogecoin blockchain that calculates mathematical equations to validate incoming transactions on the network.
Miners receive DOGE as a reward for completing these complex mathematical calculations. Dogechain releases 10,000 DOGE per minute, which the fastest miner receives to confirm the incoming transaction.
Choose the right equipment:
The first step in DOGE mining is choosing your hardware. While you can still use computer processors (CPUs) and video cards (GPUs), the former are not recommended for the cryptocurrency mining process. GPUs are more efficient than CPUs, but suffer from poor heat dissipation. The advent of ASIC miners has made them the hardware of choice due to their efficiency and cost-effectiveness.
Mountain approach:
Solo mining: miners who mine individually. This may not be sustainable or profitable due to competition for block rewards from larger mining pools with more hashing power. However, people with high computing power can always try this.
Join mining pools: Pools of individual miners pool their computing resources to increase their chances of earning block rewards. Participation in a mining pool also reduces the burden of high energy costs. Popular Dogecoin mining pools in 2021 include Multipool, Antpool, Prohashing and AikaPool.
Creating a wallet:
Once the hardware, software, and mining approaches are determined, the next step is to create a wallet. As stated in the sections above, the wallet must support Dogecoin and use a private key. Profits from the mining process will be stored here. It is also important to link your wallet to your mining software.
Launch:
Once everything is ready, DOGE mining can begin. The mining software should be able to track your profits on an hourly or daily basis. However, when you join a mining pool or cloud mining service, the process becomes much easier.