What Is Dogecoin?
The Dogecoin cryptocurrency is based on a meme, one of the most famous memes of all time, the Doge. Its comedic nature has not hindered its survival. Over the years, it has led to the growth of a dedicated community of users who've raised money for a number of initiatives.
Introduction
In 2009, the arrival of Bitcoin set in motion the revolution of digital currencies. The advent of alternative cryptocurrencies (or altcoins) has allowed a broad range of use cases to be accommodated since the inception of bitcoin. Several cryptocurrencies are seeking to establish themselves as money, while others hope to fuel platforms for smart contracts such as Ethereum.
Dogecoin may be considered to be one of the most unique offerings among the earliest coins. Since its inception in 2014, it has captivated crypto enthusiasts worldwide.
A brief history of Dogecoin
Founding and launch
A fork of the Litecoin codebase led to the creation of Dogecoin (DOGE), an open-source cryptocurrency. According to the name, it is heavily based on the Doge meme that took over the Internet in 2013 when the internet. The original image depicts a dog belonging to the breed of Shiba Inu, whose inner monologue is written in Comic Sans.
A programmer from Oregon named Billy Markus first suggested the idea of making a kind of "joke" cryptocurrency as a novelty. Considering a lighthearted coin could attract a larger audience than Bitcoin, he argued that it would have a better chance of attracting mainstream attention. In a now-deleted tweet posted at around the same time, Adobe's Jackson Palmer stated that he was "Investing in Dogecoin, pretty sure it's the next big thing".
Having received some encouragement, Palmer went on to create the website dogecoin.com. After discovering the Dogecoin website shortly after its launch, Markus reached out to Palmer with a hope that they would be able to make this idea a reality and begin working together on the project that is now known as Dogecoin.
Upon its release, the cryptocurrency gained a lot of popularity across social media platforms. Within months, the cryptocurrency reached a market capitalization of several million dollars.
Community initiatives
Dogecoin is a cryptocurrency that has earned a reputation of being a community that provides charitable contributions. As a tipping system, it became popular on sites such as Reddit, where users would reward content creators with small amounts of Dogecoin by sending them to their friends.
Its giving spirit was echoed in more ambitious fundraising campaigns: in 2014, the organization raised over $30,000 in Dogecoins to fund a Jamaican bobsled team to compete in the Winter Olympics in Sochi. However, when they qualified for the event in Russia, the team was not able to afford the travel expenses to Russia.
Two other initiatives were introduced by the community during the same year. Over $30,000 was raised by Doge4Water to drill wells in Kenya, and over $50,000 was raised by cryptocurrency enthusiasts to sponsor NASCAR driver Josh Wise with Dogecoins. Thus, Wise famously displayed the Dogecoin logo on the side of his car as a result of the event.
Elon Musk, Tesla's CEO, previously said on Twitter that Dogecoin could be one of his favorite cryptocurrencies. He was jokingly named the CEO of the coin after a community poll resulted in his election.
The TikTok pump
The price of DOGE rose significantly around the middle of 2020 after a viral video on TikTok created a chain reaction that caused the price of the cryptocurrency to rise. In response to a user's call, the user asked that others join him in purchasing Dogecoin, stating it would be a great opportunity for them to "all get rich" by buying the coins and selling them once the price reaches $1. Dogecoin's popularity snowballed, causing Dogecoin's trade price to over 2.5 times what it had been a week earlier. Although the pumping activity was short-lived, it was followed by a sharp decline in prices.
There is a possibility that pumping and dumping could be regarded as a pump and dump activity. In traditional markets, such schemes are illegal due to the dangers that they pose to investors. A promoter purchases a significant amount of an asset just prior to generating hype around it, causing many investors to be FOMO in the investment. Due to this, the prices rise substantially as a result (the "pump"). Afterward, the promoters sell their holdings, which results in a "dump" - with such high pressure on selling, the price plunges as later investors are left with huge losses.
How does Dogecoin work?
Dogecoin is a type of cryptocurrency which is based on a fork of the cryptocurrency Litecoin. Significant changes have been made to the underlying protocol since its creation. Let's take a look at how it works.
Blockchain
A similar system is used by Dogecoin, where blocks of data are appended to a blockchain via the Proof-of-Work. In order to become a full node, network participants must install open-source software on their machines in order to do so. The blockchain technology essentially refers to a distributed database (which maintains track of all transactions) where every participant maintains a full copy of it.
Decentralization of the system is implied by the fact that there is no administrator who has control over it. Instead send information directly to each other and rely upon cryptographic techniques to determine if each other is being honest with them.
Mining and supply
For Proof-of-Work blockchains, such as Bitcoin, a procedure called mining is used in order to create new coins. The network requires its users to prove that they have performed "work" by revealing an answer to a difficult puzzle, which can be compared to the reveal of an answer to a complex puzzle.
In order to solve the puzzle, the user hashes information until the user is capable of providing an output that is accepted by the network as valid. As a result, users instead dedicate electricity and computing power to searching for a solution that simply cannot be produced by hand.
In my opinion, the biggest difference between Bitcoin and Litecoin is that Litecoin does not use the SHA-256 hash function when it comes to mining. Since Litecoin relies on Scrypt instead of Scrypt, an ASIC-resistant Proof-of-Work algorithm, this decision was intentional.
Basically, this means that the purpose-built machines that are used to mine Bitcoin will not be able to compete with the regular computers and graphics processing units that mine Litecoin. Theoretically, this would give more freedom to the decentralization of the mining process. Nevertheless, Application-Specific Integrated Circuits for Scrypt were developed prior to long.
In addition to inherited the Scrypt algorithm from Litecoin, Dogecoin was also derived from Dogecoin. As a result of the change in Dogecoin developers' strategy and to mitigate security risks, Dogecoin has switched to a merged mining model, meaning that Litecoin miners can also earn Dogecoins simultaneously.
Mined DOGE coins target a one-minute block time, with a block reward of 10,000 DOGE per block. There is no limit on how many units can be produced, and over a hundred billion units are already in circulation. The removal of any limit is generally regarded by enthusiasts as a good decision, as it incentivizes the spending of the coin and prevents early adopters from reaping disproportionate rewards.
What can you do with Dogecoin?
There are several ways by which you can acquire Dogecoin, as there are for numerous other cryptocurrencies. It is possible to mine it yourself, or to accept bitcoins as payment for goods and services. In most cases, the easiest way to buy a cryptocurrency is via a cryptocurrency exchange. In general, you will need to buy Bitcoin or another popular coin, then you will need to exchange it for DOGE.
It is a similar process to using any other cryptocurrency. You can use your dogecoins the same way you would any other digital currency - you can hold them long-term in a hardware wallet, trade them with other coins, exchange them for goods, and tip others with your dogecoins. Bitrefill may be regarded as the easiest way to spend, since it allows you to purchase gift cards and vouchers from a wide range of retailers.