17 July 2023
Dogecoin is a cryptocurrency that was inspired by one of the most well-known memes ever. Amazingly, its humor hasn't prevented it from surviving. It has a strong user base of supporters who have contributed money to numerous projects throughout the years.
In 2009, Bitcoin made its debut, ushering in a wave of new digital currencies. Since its introduction, thousands of alternative cryptocurrencies, sometimes known as altcoins, have appeared to support a wide range of use cases. While some aspire to power Ethereum-like smart contract systems, some want to become the new money.
One of the most distinctive coins among the older ones is probably Dogecoin. Since 2014, it has captured the attention of cryptocurrency fans. And we'll explain why in this essay.
A quick account of Dogecoin's history creation and launch
A fork of the Litecoin code led to the creation of Dogecoin (DOGE), an open-source, peer-to-peer cryptocurrency. As the name implies, it is mostly based on the Doge meme that became viral online in 2013. The Shiba Inu breed of dog is shown in the original image, and comic sans is used to portray the dog's inner monologue.
The concept for a sort of "joke" cryptocurrency was first proposed by an Oregonian programmer named Billy Markus. He reasoned that Bitcoin wouldn't have as good of a chance of getting noticed by the general public as a more humorous coin. Around the same time, Jackson Palmer of Adobe tweeted that he was "Investing in Dogecoin, pretty sure it's the next big thing" and that he was "pretty sure it's the next big thing."
Palmer created dogecoin.com after receiving some encouragement. After discovering the website soon after its introduction, Markus contacted Palmer to make it happen and started developing what is now known as Dogecoin.
The cryptocurrency propagated over social media quite quickly after its inception. It quickly reached a market valuation of several million dollars.
The Dogecoin community has developed a reputation for doing good deeds. On websites like Reddit, where users would give each other tiny amounts of Dogecoin to reward content creators, it became popular as a tipping system.
This generosity was reflected in its larger-scale fundraising efforts: in 2014, it raised more than $30,000 in Dogecoin for the Jamaican bobsled team to compete in the Sochi Winter Olympics. Despite qualifying, the team was unable to afford travel expenses to Russia.
Two other community initiatives were started in the same year. In order to drill wells in Kenya, Doge4Water raised an additional $30,000+. Later, Dogecoin supporters sponsored NASCAR driver Josh Wise with more than $50,000 in the digital currency. As a result, Wise famously painted the Dogecoin emblem on his automobile.
Elon Musk, the CEO of Tesla, previously stated that he "might be" a fan of Dogecoin. He was sarcastically appointed the CEO of the coin via a community poll.
A chain reaction started by a popular TikTok video in the middle of 2020 led to a sharp increase in the price of DOGE. A user urged other users to buy Dogecoin with him, promising that if they all did so, they would all become wealthy by buying coins and then selling them when the price reached $1. Dogecoin's price increased by over 2.5 times compared to the previous weeks as a result of the growing buzz. The price spike, however, was brief, and prices soon started to rapidly fall.
You should be aware that this type of behavior can be seen as a pump and dump. The risks to investors make this kind of plan illegal in conventional markets. Before creating enthusiasm around a product, promoters make massive purchases of that asset, making others fearful of missing out (FOMO) on the investment. As a result, there is a considerable price increase (the "pump"). Then, the promoters sell their stakes, causing a "dump" in which there is such intense pressure to sell that the price plummets and later investors suffer significant losses.
Always do your own research before making any kind of investment. You may learn a lot about trading and economics at Binance Academy to help you comprehend the cryptocurrency markets.
Dogecoin is built on Luckycoin, a fork of Litecoin (LTC). But the protocol has now undergone some significant revisions. Let's check how it performs.
Dogecoin utilizes a blockchain, much to Bitcoin, in which blocks are added through the Proof-of-Work algorithm. In order to function as full nodes, network users install open-source software on their computers. Those who are not familiar with blockchain technology should know that this implies that each participant keeps a complete copy of the database (which contains all transactions).
Due to the lack of an administrator, the system is decentralized. Instead, users communicate with one another directly and rely on cryptographic methods to determine whether their peers are being truthful.
Check out What is Blockchain Technology? for a more in-depth overview of this kind of system. The Complete Guide.
A method known as mining is utilized in Proof-of-Work blockchains like Bitcoin to produce new currencies. The network requires participants to demonstrate their "work," which might be compared to presenting the solution to a challenging puzzle, to the network.
By hashing data until the user can get an output that the network would accept as legitimate, the mystery is solved. Users devote electricity and processing capacity to the search because it is impractical to produce a solution by hand.
Litecoin doesn't employ the SHA-256 hash mechanism for mining, which is one of the key differences between it and Bitcoin. Scrypt, an ASIC-resistant Proof-of-Work algorithm, is used by Litecoin, which was chosen specifically for this reason.
In layman's terms, this means that Litecoin mining with standard computers and GPUs would be able to compete with purpose-built Bitcoin mining equipment. Theoretically, a more decentralized mining environment would come from this. Application-Specific Integrated Circuits for Scrypt did, however, appear quickly.
Dogecoin received the Scrypt algorithm as a descendant of Litecoin. Dogecoin developers converted to a merged mining mechanism, allowing Litecoin miners to simultaneously earn Dogecoin, however this was done to avoid any competition and to reduce security threats. Check out Binance Research's case paper on "Merged Mining in Dogecoin & Litecoin" for a breakdown of this.
The block reward for mining Dogecoin is 10,000 DOGE, with a goal block time of one minute. Over 130 billion units have already been distributed, and there is no limit supply. Enthusiasts believe that removing any restrictions is a wise decision because it encourages coin spending and prevents early adopters from reaping disproportionate benefits.
You may buy Dogecoin in a variety of methods, much like many other cryptocurrencies. It might be mined by you, or you could accept it as payment for goods and services. However, using a cryptocurrency exchange to buy it is the simplest option. Normally, you must first purchase Bitcoin or another well-known coin before exchanging it for DOGE.
Once you have your Dogecoin, you may use it just like any other cryptocurrency. You can store it for a long time in a hardware wallet, exchange it for goods or services, trade it against other cryptocurrencies, and tip people with it.
Despite being a resource whose existence is based on an Internet meme, Dogecoin has grown a loyal user base. Even many years later, Dogecoin has maintained its position as one of the most valuable cryptocurrencies.
It's unclear if the market views Dogecoin as a novelty coin, a workable financial asset, or any combination of the two. But few cryptocurrencies have had the influence that the Shiba Inu currency has, even just because it is a meme coin.