Introduction to Dogecoin (DOGE)

By iTrustCapitalAugust 05, 20223 minutes read
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Understanding Dogecoin (DOGE)

Dogecoin (DOGE) is a cryptocurrency and blockchain platform. Though Dogecoin is a meme coin with generally little utility, Dogecoin has been a first mover in the crypto space. The Dogecoin community is noticeably passionate about DOGE.

Though originally started as a joke, DOGE has stuck around, even being lauded by billionaires and celebrities on social media. Keep reading to understand more about Dogecoin and DOGE.

What is Dogecoin (DOGE)?

Dogecoin (DOGE) is a blockchain platform and digital currency. DOGE is commonly called a meme coin, but the Dogecoin platform was cloned from another blockchain in 2013. DOGE is the native cryptocurrency of Dogecoin. 

What’s the meme? Well, it’s complicated, but Dogecoin was spawned by internet culture on Reddit and arguably a Flash-based cartoon called Homestar Runner. The term “doge” originated as an intentional misspelling of “dog” and eventually became associated with a photo of a smiling Shiba Inu dog. The word “doge” is often depicted in Comic Sans font below the Shiba Inu.

Dogecoin uses the proof-of-work method to operate its blockchain. There is no maximum supply of DOGE, meaning that there is no limit to the number of DOGE coins that can be created. 

How does Dogecoin (DOGE) work?

Dogecoin uses the proof-of-work method to achieve distributed consensus and operate the Dogecoin blockchain. Here’s how the Dogecoin blockchain works:

  1. Users initiate new DOGE transactions, which are pooled into blocks for processing.

  2. The blocks of transactions are processed by Dogecoin miners, who race to solve complex math functions. The miner who is first to verify a math puzzle’s solution earns the right to add the newest block to the Dogecoin blockchain.

  3. The winning miner is awarded DOGE for adding the new block to the Dogecoin blockchain. The per-block reward is currently 10,000 DOGE.

  4. The Dogecoin blockchain is updated with the new block of completed transactions. The wallet balances of DOGE buyers and sellers should automatically update.

Dogecoin community members wishing to mine Dogecoin first must download or procure a Dogecoin-compatible wallet to store their DOGE coins. They must also set up the appropriate computing hardware to participate in Dogecoin mining. While some miners compete independently, many form Dogecoin mining pools to combine their computing resources.

Joining a mining pool can be a more effective way to mine Dogecoin successfully.

Dogecoin vs. Bitcoin

Dogecoin and Bitcoin are both digital currencies that use blockchain technology. While Dogecoin and Bitcoin are similar in many ways, there are also some key differences between the two.

Bitcoin is the very first cryptocurrency, with its whitepaper released in 2008 by Satoshi Nakamoto. The first Bitcoin block was mined in 2009. Dogecoin, as a joke, wasn’t created until 2013. Here are some other ways that Bitcoin and Dogecoin differ:

  • Source code: The Bitcoin blockchain is based on its own original source code. Dogecoin derives its blockchain code from Luckycoin, which is a version of Litecoin. Litecoin uses a version of the source code of Bitcoin. 

  • Coin supply: Bitcoin’s maximum coin supply is capped at 21 million, of which more than 19 million are already in circulation. There is no limit to the maximum supply of Dogecoins, and more than 132 billion DOGE are already in circulation.

  • Block rewards: Dogecoin miners earn 10,000 DOGE for every new block that they successfully mine. Successful Bitcoin miners currently earn 6.25 bitcoins for each new block.

  • Transaction processing times: Dogecoin, using Litecoin’s mining algorithm, can process transactions generally faster than Bitcoin. The Bitcoin blockchain uses a more complex mining algorithm and more often experiences network congestion.

  • Transaction processing fees: Bitcoin transaction fees tend to be higher than transaction fees for Dogecoin. In the six months preceding May 2022, the average fee for a Bitcoin transaction was $1.33, while the average fee for a Dogecoin transaction was only about $0.18.

Conceptually, Bitcoin is designed as "programmable money." Dogecoin, instead, has a focus on "tipping" for online content and charitable giving.

A brief history of Dogecoin

The concept of Dogecoin was created in 2013, originally as a joke. In response to the crypto craze occurring around that time, Jackson Palmer, an Australian, established Dogecoin by purchasing its domain name. Billy Markus, who worked for IBM at the time, observed the media hype surrounding Dogecoin and approached Palmer to formally collaborate. 

Palmer and Markus together created the DOGE cryptocurrency by cloning the Luckycoin blockchain. With the blockchain platform and cryptocurrency established, the team began developing the Dogecoin platform and community.

Reddit.com, a social media platform, additionally played a role in the rise of Dogecoin. In 2013, members of the Dogecoin community—mainly on Reddit—began tipping each other in DOGE for providing interesting or insightful content. This bolstered a sense of community around the meme-based cryptocurrency.

Dogecoin gained further visibility when influencers like Elon Musk and Mark Cuban began tweeting about the cryptocurrency. In contrast to the more “serious” Bitcoin, Dogecoin was seen as a fun and friendly alternative.

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