New people to cryptocurrency may think of Bitcoin as the sole currency in existence – contrary to popular opinion however, many currencies are increasing in popularity. Dogecoin is among them, and had a quick rise in popularity compared to other coins, since it had its own online community prior to capitalization.
What is Dogecoin?
A cryptocurrency launched in 2013, an American programmer, Billy Markus, developed it, and funded by Jackson Palmer, an employee of the Sydney Adobe Systems marketing department. He wanted to create a fun cryptocurrency that reaches a wider demographic than Bitcoin, as well as removing it from the problematic history of other cryptocurrencies.
After getting several twitter mentions, the purchase of the domain dogecoin.com occurred. When Markus saw this, he reached out to Palmer and they agreed to begin efforts to make the domain into a currency. The design of Dogecoin uses Luckycoin (an existing cryptocurrency) that has random rewards for mining blocks. In turn, Litecoin is the basis for Luckycoin, meaning that it uses scrypt in its proof-of-work algorithm.
Initially, the Dogecoin network had a market cap of 100 billion Dogecoins, but later announcements indicated that the network would make an infinite number of Dogecoins.
Why is Dogecoin different?
Beginning as a ‘joke currency’, it has surprisingly increased in value. All this is due to social media sites such as Reddit, with internet communities forming around sharing the currency as well as posting memes about it. This popularity has led to it becoming among the top currencies today.
Because the currency uses Litecoin as a basis for its structure, we will examine some differences it has.
Infinite coin supply – because of surplus supply, the coins are at lower values than other altcoins at considerable rates. For instance, as of September 2017, it had a market cap reaching $89 million, and each coin cost $0.0008 in purchases – this means that it gives minor users an easier time to tip other users for small amounts.
Scrypt algorithms – Dogecoin also has a mining system, which rewards DOGE (the currency token) to miners. However, the difference with Bitcoin is that it does not use SHA-256, but uses Scrypt instead, like Litecoin.
Alternative coins to use
Dogecoin has the potential for increasing popularity even further with time. However, other coins provide viable alternatives, and we have put a list of some of them.
Lisk – founded in 2016, it aims to simplify development of blockchain technology, therefore allowing for faster transactions.
Bitcoin/XBT – the most famous cryptocurrency, from 2009. It is similar to Dogecoin because of the proof-of-work system, though Dogecoin uses a different mining algorithm for cheaper costs.
Ripple/XRP – based on open-source internet protocol currency, and formed in 2012.
Cardano – thought to be an open-source digital currency, and constantly evolves itself from research and scientific philosophies.
Ethereum/ETH – this is a 2015 decentralized software platform allowing smart contracts to operate without interference from third parties.
NEM – this is another blockchain currency from 2015, and utilizes Java script in its coding.
How Dogecoin mining works
The mining of Dogecoins is done through special hardware and computers, and serves two purposes – paying all miners new dogecoins, and securing the network.
The industry is however, less developed than Bitcoin. The proof of work function in Bitcoin is by ASICs, though they are hard to buy for Dogecoin. For this reason, the best mining hardware for Dogecoin is graphic cards, though they are not profitable. If you want to mine dogecoins on a large-scale basis, it is better to go for hardware that mines Bitcoin, and then convert the Bitcoin into Dogecoin.
Trading in Dogecoin currency
For you to send Dogecoins, blocks must record each transaction, which Dogecoin miners then verify through proof of work. They also examine incoming transactions against previous ones on the block. If there are no double-spends, the miners make a block with new transactions and add that to the existing block.
Starting with random rewards, the system changed to a fixed-reward system in 2014. This means that the creators of Dogecoin put a irreversible DOGE reward per block of 10,000 after you mine above 600,000 blocks, and rates differ among blocks.
Dogecoin prices and trading history
Similar to other cryptocurrencies in price volatility, Dogecoin has a current market value of over$1 billion, and individual tokens are at $0.010360 currently. In fact, the coin’s value has increased by more than 400% within six months, with its highest value being $0.0107 in December.
Is it worth trading in the coin?
This question is complicated, since even experts generally see investing in cryptocurrency as a risky venture with low returns. The reasons given usually cite the highly fickle nature, and the unpredictable rises and falls in value.
The success of investment will depend on the uptake by individuals and businesses. The currency will give you a nice return in investment, as well as a whole DOGE coins that you can sell when the value increases.
Cryptocurrency tends to be unpredictable in value, but this should not stop you from investing in Dogecoin. It promises to make a difference in the financial world, but only invest in it if you are not afraid of possible losses.