Dogecoin 101: A look into the meme cryptocurrency

What started as a parody in 2013 has now become one of the world’s fast-rising cryptocurrencies in the market. Dogecoin, the cryptocurrency based on a viral meme dog named ‘Doge’, was worth less than a cent when it was initially released. 

Today, its market capitalization has reached $26,000,000,000 as of August 2021—a remarkable feat that makes it a valid investment prospect. 

Despite its bizarre origin story, Dogecoin continues to gain traction this year as its online community maintains consistent growth. Even the biggest names like Elon Musk, Snoop Dogg and Kevin Jonas have started investing in this altcoin, further establishing its spot as the ninth most valuable cryptocurrency. 

However, with a plethora of digital currencies available, how does Dogecoin differ from its contemporaries? What other prospects and uses can this cryptocurrency bring to the table? Find out more about it here at Cryptoshimbun!

A background on Dogecoin

In late 2013, IBM and Adobe software engineers Billy Markus and Jackson Palmer invented Dogecoin originally as a joke to ridicule the hype around cryptocurrency. 

It all started when Palmer was reading a news article regarding the most famous meme of the year—Doge and had CoinMarketCap open on another tab in his computer. The idea to combine the two came to him, giving birth to the ‘fun and friendly internet currency.’

Palmer aimed to differentiate this altcoin from Bitcoin, which carried a lot of mystery during that time, creating distrust among the general population. He wanted a digital currency that is open and accessible to the public.

How does it work?

Similar to Bitcoin and Litecoin, Dogecoin runs on blockchain technology where a secured, distributed ledger records every transaction made using this altcoin. It relies on cryptography to secure the various transactions and verify the transfers of digital assets from one user to another.

Dogecoin uses Auxiliary Proof of Work which is a consensus algorithm that allows merge mining. Meaning to say, users can simultaneously mine Dogecoins and other proof of work cryptocurrencies like Litecoin with no additional cost. This was an attempt by the developers to prevent a network attack against the Dogecoin network.

Moreover, it utilizes Scrypt technology which uses less energy and has lower hashrates. In terms of speed, the Dogecoin blockchain can process transactions in approximately a minute, which is faster than Bitcoin’s 10-minute processing time.

Dogecoin vs. Bitcoin: What’s the difference?

When compared side-by-side to Bitcoin, Dogecoin has several significant differences. Solving the mathematical equations needed for the transactions is easier in Dogecoin, making it one of the best choices for efficiently processing payments. 

Moreover, the most significant difference between the two is their mining capacities. There is no lifetime cap on the numbers of Dogecoin that can be mined, making it a highly inflationary currency. On the other hand, Bitcoin has a finite supply of 21 million which can run out once every coin has been unlocked. 

How to buy Dogecoin cryptocurrency

Despite its highly volatile nature, Dogecoin cryptocurrency (DOGE) continues to be one of the most sought-after coins. If you’re looking to join the Dogecoin craze and start trading, here are the steps you need to get started:

  1. Open an account

Before you can buy Dogecoin, you first need to open and fund an account with a cryptocurrency exchange where users meet to exchange digital currencies for dollars. This can be eToro, Robinhood, Gemini, Webull and Coinbase.

Make sure that you’ll set up an account on a platform that supports DOGE. Although Dogecoin is becoming more popular over the years, it is still not available on some crypto exchanging sites. 

  1. Choose a payment option

Start funding your account to get you started on cryptocurrency trading. You can use your savings account or wire transfers and PayPal transactions to deposit money. 

In some cases, several exchanges will allow you to use a credit card. However, this payment method is highly inadvisable since your credit card issuer will consider your crypto purchase as a cash advance. This can lead to higher fees and bigger percentage rates. 

Once you’ve chosen a payment method, you can now buy Dogecoin. Based on your funds, calculate how many dogecoins you’re willing to purchase. 

  1. Pick a crypto wallet

When it comes to owning cryptocurrencies, a crypto wallet helps you protect your investments and keep them all in one place.

Here are the two types of crypto wallets you should know:

  • Hot wallets – If you want a cheaper wallet for your digital assets, a hot wallet is your best choice. Although they are free, they should be connected to the internet to access your investments, which makes them vulnerable to system attacks and security breaches.
  • Cold wallets – A cold storage wallet is a physical hardware that is not connected to the internet, making it the safest choice in storage options. However, once you forget your password, you lose access to your investments. 

The future of Dogecoin

There’s no question that Dogecoin’s popularity is mainly driven by celebrity tweets, headlines and endorsements, attracting the attention of newbie investors. But according to Michael Kamerman, a Forex industry veteran, he stated that Dogecoin’s value and security concerns still need to be determined and addressed. 

Although Dogecoin cryptocurrency is no longer just a meme, what the future holds for it is still in question despite its rising success. Its usage and appeal mostly rely on the support of online communities such as Reddit and Twitter. 

However, Dogecoin still sparks speculations and enthusiasm among crypto investors and the market. Elon Musk’s consistent interest in Dogecoin can positively impact its price in the next five years. 

Also, both Walletinvestor and Digitalcoinprice has predicted that the meme token’s price will grow steadily in the coming years, making it ideal for a long-term investment. 

Stay in touch with cryptocurrency updates here at Cryptoshimbun!

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