What is Dogecoin? 10 questions we ask ourselves about this cryptocurrency

What is Dogecoin?

Dogecoin (DOGE) is an altcoin launched in December 2013, maybe as a joke. But cryptocurrency investors consider the Dogecoin blockchain, derived from Litecoin, to be reliable, which is one of the many reasons for the rise of cryptocurrency.

Dogecoin’s “Doge” comes from the Flash cartoon “Homestar Runner”, in which Homestar calls another character his “DOGE”, deliberately misspelling the word “dog”. In the early 2010s, a blogger posted a photo of her dog smiling excitedly, which struck a chord on Tumblr and Reddit. Then, a Redittor called the image “Doge”, creating a meme.

How does Dogecoin work?

The code for Dogecoin is based on Litecoin , and early versions of the coin incentivized block miners through a random reward system. But in March 2014, the coin switched to a static reward system for miners. Based on Litecoin, Dogecoin uses Scrypt technology. It is a proof-of-work coin, which explains its low price and virtually unlimited supply.

This scrypt technology sets it apart from other types of cryptocurrencies, including bitcoin , which uses a different proof-of-work algorithm called SHA-256. Although the differences between the two are complex, the result is that the Dogecoin scrypt allows for an unlimited supply of coins. This makes Dogecoin an “inflationary coin,” while Bitcoin and similar cryptocurrencies are considered deflationary because the number of coins miners can create is limited.

Who created Dogecoin?

Jackson Palmer, an Australian project manager, created Dogecoin, which he originally saw as a way to poke fun at the media frenzy around cryptocurrencies. He did, however, purchase the dogecoin.com domain . At the same time, Portland, Oregon-based software developer Billy Markus looks up from his desk at IBM and notices the attention Dogecoin is getting on social media. Together, Palmer and Markus began writing the code that would be the basis for the first real Dogecoin.

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Two weeks after Palmer and Markus launched Dogecoin in 2013, its value increased by 300%. At the time, Dogecoin billed itself as a “fun” version of Bitcoin. Its smiling dog logo matched the playful vibe of the crypto community at the time, while its underlying code made it relatively cheap to buy.

This playful spirit was manifested in 2014 by a donation from the Dogecoin community of 27 million Dogecoins (about $30,000 at the time) to fund the expenses of the Jamaican bobsleigh team at the Sochi Winter Olympics. .

What can Dogecoin be used for?

Once you have Dogecoins, you can put them in a BitPay wallet , and through their partnership with Mastercard, you can put them on a prepaid crypto card, which you can spend anywhere Mastercard is accepted. This means you can use your Dogecoin to buy just about anything.

BitPay has also added Dogecoin support for Apple Wallet, allowing you to store your BitPay card – and the Dogecoins on it – in your iPhone to make purchases with Apple Pay.

How Dogecoin Works

How did Dogecoin become so popular?

Born out of a Reddit meme, Dogecoin had a following of fans ready to buy the cryptocurrency, most notably on the WallStreetBets subreddit. But he reached a much wider audience through his celebrity endorsements.

How many Dogecoins are there?

There were over 129 billion Dogecoins in circulation on May 21, 2021, according to CoinMetrics . This makes it the most circulated cryptocurrency in history. The closest competitor is Stellar (XLM) , with 105 billion coins in circulation. By comparison, bitcoin has just over 18.5 million coins in circulation.

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Dogecoin has no limit on the number of coins miners can create. This is a stark contrast to bitcoin, which is designed never to exceed 21 million coins in circulation, a level it is expected to reach in the year 2140.

Why is dogecoin so cheap?

Dogecoin is so cheap because there is so much of it, and because there will be even more, without limit, for the foreseeable future. The founders decided not to cap the number of existing dogecoins. And the law of supply and demand means that, without shortages, parts will remain cheap.

But that same low price is also the reason why Dogecoin is so liquid and can be traded so quickly. Although the price remains low, it has increased significantly, by 12,000% between January and July 2021. This is an incredible return for those who have successfully HODLed their cryptocurrency through volatility.

Dogecoin Price Prediction: Will It Reach $1?

Of course, it is impossible to predict the future, but at present it is very easy and inexpensive to create new Dogecoins. Therefore, one would think that the price is unlikely to reach $1 per coin before it becomes harder and more expensive to mint new Dogecoins.

Is Dogecoin a good investment?

Although Dogecoin has been on the rise in recent years, it is very difficult to predict the future of any form of crypto. But if crypto is an important part of your investment strategy, then Dogecoin might make sense as part of a diversified crypto portfolio. It is a popular currency, which has a unique set of investors behind it.

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That said, Dogecoin comes with risks. Critics say that Dogecoin, as a cryptocurrency, doesn’t have many benefits built into its code or apps. They also point out that beyond the popularity of Dogecoin, there is little that differentiates it from a new competing cryptocurrency that may appear next year. But Dogecoin proponents point to its popularity and growth as the kind of first-mover advantage that newer competitors might struggle to match.

How can I buy and sell Dogecoin?

You can invest in Dogecoin through a cryptocurrency exchange, such as Coinbase , Binance, Kraken, or another platform. After opening an account and funding it, you can use these funds to trade Dogecoin or other cryptocurrencies.

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