A Beginners Guide to Dogecoin and its Key Strategies

Beginners Guide to Dogecoin

Dogecoin is an open-source cryptocurrency that is based on a meme and has gained a massive crypto market. The currency with a Shiba Inu dog as a logo was initially launched as a parody to Bitcoin in 2013. The coin is created by Billy Markus from Portland, Oregon and Jackson Palmer from Sydney, Australia, with Litecoin inspired technology. Though the focus was around the core bitcoin audience, its blockchain has rapidly gained popularity and has achieved market capitalization worth over $500 Million.

Understanding Dogecoin

Dogecoin is backed with Blockchain technology, which has huge digital databases called ledgers that store information. Therefore, every transaction that is made with Dogecoin is stored on the blockchain. Dogecoin was written in the C++ programming language and works with an open-source protocol as part of LuckyCoin blockchain. LuckyCoin is also an alternative to bitcoin. As per DOGE News, The Dogecoin developers created a similar copy of the Bitcoin with LuckyCoin source code and further modified it according to their preferences to create Dogecoin. Initially, it was used to tip the Reddit and Twitter users to share content or creation with flair. 

Working of Dogecoin

Dogecoin is an altcoin, which uses similar design concepts, such as Bitcoin. However, it has certain different parameters for specific features. The key differences are:

  • Currently, 100 billion Dogecoins are available for mining, while there are 21 million Bitcoins. The higher supply of Dogecoins explains the current market price of 1 Dogecoin= $0.000476 versus $445 for 1 Bitcoin.
  • Dogecoins can be mined every minute, which leads to reaching the 100 billion Dogecoin limit. As this results in several implications, it forced the founders to create a policy that allows creating an additional 5 billion Dogecoins every year indefinitely.
  • Unlike Bitcoin, Dogecoin does not lead to inflation as it was designed for small transactions.
  • The Dogecoin wallet address is a string of 34 characters starting with the letter D, while Bitcoin limits the addresses range between 27 and 33 characters.
  • To unlock special features, Dogecoin requires the use of a desktop, smartphone, or browser-based wallet. It is available for Windows, OS X, iOS, Android, and Linux operating systems.

Features of Dogecoin

  • Dogecoin Mining: Dogecoin is popular with miners. The platform allows no supply limit using scrypt technology. This means that the supply is uncapped with no limits on the mining. Dogecoin can be mined either solo or by joining a mining pool and cash in digital currency through Windows, Mac, or Linux with GPU devices.
  • Dogecoin Exchanges: Dogecoin offers crypto exchanges, where players can buy and sell. These exchanges have the highest Dogecoin 24-hour trading Bit-Z and Bittrex volumes.
  • Dogecoin Wallets: Dogecoin offers four kinds of crypto wallets, such as:
    • Software wallets
    • Online wallets
    • Paper wallets
    • Hardware wallets

Dogecoin Payment Methods

To shop or sell a Dogecoin, players need to have a crypto wallet or crypto exchange account to cash in the digital currency. To get a Dogecoin, one needs to set up an account on the Dogecoin faucet, a website that gives a small sum of Dogecoin for free as an introduction to the currency. The other options include searching sites and participating in a community that offers the digital currency against Dogecoin. Some of the platforms that usually accept Dogecoin for payments are BitcoinShop, Iron Rail Diner, eGifter, AllGamer.net, etc.

Can You Use Dogecoin for Donations?

Unlike other coins like Litecoin and Bitcoin, which have limited supplies, Dogecoin has no supply limit. Therefore, the Dogecoin platform helps in making hassle-free and instant transactions and is usually used for tipping and donations. The Dogecoin community has been known for its charitable donations and other good causes. Some examples are:

  • In January 2014, the Dogecoin community donated 27 million Dogecoins worth approximately $US30,000 to fund the Jamaican bobsled team’s trip to the Sochi Winter Olympic Games.
  • For World Water Day 2014, they raised $30,000 to help build clean-water wells in the Tana Valley, Kenya.
  • In March 2014, the community donated Dogecoins worth $55,000 to sponsor the NASCAR driver, Josh Wise.

Is Dogecoin a Good Payment Option in Cryptocurrencies?

Dogecoin is one of the biggest cryptocurrencies with great market capitalization. Though there are no major changes or development on the site, it still has an active community of miners and 24-hour trading volumes. The miners still prefer Dogecoin over other scrypt cryptocurrencies because the Dogecoin hash rate is roughly 150 TH/s currently, just below the Litecoin (LTC) hash rate of 170 TH/s. This allows the miners to merge-mine both cryptocurrencies simultaneously as merge mining Dogecoin multiplies benefits.

Investing in Dogecoin

Similar to any other currencies, the value of Dogecoin depends on the market. Since the values can be fleeting, one needs to weigh the risks in buying and selling the cryptocurrencies. Dogecoin is also quite similar to Bitcoin. Hence, the factors to consider before investing are:

  • Dogecoin has the same risks as Bitcoin and other cryptocurrencies.
  • Like any other cryptocurrencies, it is an expensive and risky activity.
  • Cryptocurrencies and cryptocurrency markets are unregulated. Hence, profits can be fleeting.
  • Similar to Bitcoin platforms, Dogecoin values can skyrocket or collapse.

Conclusion

Though Dogecoin is based on an Internet meme and designed with a fun and laid-back environment, it has rapidly evolved as a full-fledged cryptocurrency with a huge market capitalization that went from hundreds to millions of US dollars.

Despite having high capitalization and an active mining community, the Dogecoin markets can be inflationary as it is a novel currency. Though it can be used practically, it only mimics the real-world currency but cannot be it. Dogecoin is inflexible and works great as a speculative asset, and as it does not provide a steady, predictable money supply, users can trade their coins boosting liquidity, leading to upward trends. Before investing in Dogecoin, You must know more about the current prices & future price prediction by experts.

editor
Leon Teague has recently joined FinanceOrange team as a Sub-Editor. He has years of experience in writing about finance industry and also worked for local newspapers previously. He is an intense traveller. In his free time, he loves to explore unexplored places.

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