Similar to Bitcoin or Ethereum, Dogecoin is a cryptocurrency with a blockchain network. Although the coin started as a lighthearted joke, it has earned a massive following, including the highly influential entrepreneur Elon Musk. It trades in the crypto exchanges under the ticker Doge.
Despite using a “proof of work” consensus to validate a transaction, it takes about a minute to mine 1 Dogecoin. Interestingly, miners can earn 10,000 Doge for their effort to mine each coin.
A brief history of Dogecoin
Billy Marcus and Jackson Palmer created Dogecoin in 2013. Palmer took a popular meme picture with a Shiba Inu dog as the coin’s logo and intentionally misspelled ‘Dog’ as Doge. Since then, crypto communities have often used it to poke fun at Bitcoin or other crypto assets.
In 2014, a group of Doge enthusiasts sent the Jamaican Bobsleigh team to the Olympics. The group also sponsored a NASCAR driver to create awareness about the coin. These efforts helped create massive popularity for Dogecoin, with some investors even buying it for its fun value.
How Dogecoin works
Dogecoin uses a dedicated blockchain network to store data and perform transactions. The underlying network is almost identical to the one Litecoin (LTC) uses, except it is faster and slightly better.
Another similarity between Litecoin, Bitcoin, and Dogecoin is the latter’s use of “proof of work” consensus to complete a transaction. It is a code-based program that can authenticate the validity of new transactions in a decentralized system. Doge and Litecoin also use the same Scrypt hashing algorithm.
Price of Dogecoin
As a cryptocurrency, Dogecoin’s price is incredibly volatile. Initially, it enjoyed a cult following but no substance, which kept the price below a penny. However, during the crypto bull run in 2017, its price gathered some upward momentum. As a result, the price for 1 Doge briefly went above a penny in early 2018 before falling to the previous range.
In 2021, Dogecoin enjoyed a mammoth rise in its backers. Some big investors and celebrities, including Mark Cuban, Snoop Dogg, and Elon Musk, became the coin’s most prominent advocates. Tesla CEO Musk even claimed Doge to be his favorite cryptocurrency.
These online activities took the price for each Dogecoin to $0.68 by May 2021. Unfortunately, the coin’s value has fallen sharply since then, touching as low as $0.11 in the first quarter of 2022. Still, Doge remains among the top 20 crypto assets in market capitalization.
How to Mine Dogecoin?
Mining Dogecoin requires a computer system capable of solving complex cryptographic problems. A miner must also provide a mining pool address and a Dogecoin wallet.
Once a block is mined, the network broadcasts the transaction data to another miner to verify. Only when all the information is unique, the network updates its records.
Dogecoin vs. Bitcoin
Despite using a similar “proof of work” method to complete transactions, Dogecoin and bitcoin differ in various ways. These are:
- Dogecoin is more efficient in completing transactions, requiring just one minute. In comparison, Bitcoin requires around 10 minutes to do the same.
- Bitcoin has a cap in its program to limit the lifetime circulation of the coin to 21 million. However, Doge has no such cap for lifetime circulation, putting it at high risk of inflation.
- Mining Dogecoin is less complex than mining Bitcoin, with the latter’s difficulty level outlandishly high.
What is Dogecoin used for?
As a mainstream cryptocurrency, Dogecoin is suitable for online purchases and payments, with some top online casinos and sports betting sites accepting it. However, as the coin is highly inflationary by design, it may not be the best option to store value.
Where to buy Dogecoin?
Popular cryptocurrency exchanges like Kraken, Bitstamp, and others sell Dogecoin for top fiat and digital currencies. In addition, some online brokers like Robinhood allow users to exchange Bitcoin or other popular cryptos for Doge.