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What is Dogecoin (DOGE)?

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  • Author: Coinranking
  • Reading time: 12 minutes

Dogecoin was a token that was never supposed to be taken seriously. But somehow, the joke caught on and spread like wildfire.

Dogecoin’s mascot, the Shiba Inu was inspired by a popular meme floating around in late 2013.

Dogecoin is a cryptocurrency just like Bitcoin and Ethereum however, there is no real underlying utility associated with this coin. It was just a coin launched to mock fun at Bitcoin which was gaining traction back in 2013.

It is said that Dogecoin was based on a Proof-of-Work(PoW) coin known as Lucky coin. This coin is a fork of the popular token, Litecoin.

This is why merged mining of Dogecoin can be done with Litecoin. This is because the two tokens use the same hashing algorithm using Scrypt Technology.

Quick Facts

  • Dogecoin uses a Proof-of-Work consensus algorithm

  • Block rewards for Dogecoin were originally random but later changed to 10,000 doge per block

  • Dogecoin has only two utility functions, medium of exchange and for speculation.

How Much Dogecoin Is There?

Dogecoin has no maximum supply.

It is important to note that the large supply of Dogecoin could potentially dilute its value compared to cryptocurrencies with a limited supply, such as Bitcoin. However, Dogecoin's value is ultimately determined by market demand, which can fluctuate significantly.

How To Pronounce Dogecoin?

Dogecoin is pronounced like "dohj-coin." The "doge" part of the name is pronounced like the word "dohj," which rhymes with "vogue." The word "coin" is pronounced like the metal coin that you use for money. So, the name "Dogecoin" is pronounced as "dohj-coin."

Who Invented Dogecoin?

Dogecoin was created by software engineers Billy Markus and Jackson Palmer.

Billy Markus was born in Oregon in 1983 and mainly specialized in computer stuff. Before creating Dogecoin, he was working for IBM (International Business Machines Corporation).

Jackson Palmer was his friend working at Adobe at the time. Together, they decided to buy the domain, Dogecoin.com and develop the coin with zero crypto knowledge at the time.

Their success with Dogecoin is mainly due to their clever play on creating something that the community could relate to.

Back then, crypto was a very niche topic that only the well-versed are able to grasp.

It was complicated and confusing.

Dogecoin made use of a meme and a fun crypto which helped communities understand and participate in the crypto space.

The meme propagated its popularity and social media was also a clever tool that built Dogecoin’s community that still thrives today.

How Does Dogecoin Work?

Dogecoin is based on the same technology as Bitcoin, with a few modifications.

Transactions are recorded on a decentralized ledger called a blockchain.

New coins are created through a process called mining using a Proof-of-Work consensus mechanism.

Dogecoin has a fast block time and a large supply of coins, which makes it well-suited for small transactions and micropayments.

It is relatively easy to mine Dogecoin as compared to Bitcoins making transactions and payments faster.

Miners used to be rewarded randomly and the rewards could range from one Doge to one million Doge. There was no pre-mining of Doge.

However, some miners have discovered a loophole which allowed them to earn higher rewards and this was deemed unfair. Thus, the founders decided to set the block rewards at 10,000 Doge after the whole fiasco.

However, it is not suited as a store of value because of its high inflationary properties driven by its lack of supply limit.

How is Dogecoin (DOGE) used?

Dogecoin has only two supposed use cases as it does not have a real utility behind it like Ethereum or Cardano. The use cases are as follows:

1. Medium of Exchange

Dogecoin is currently used as a medium of exchange for payments and since its value is relatively small, it is ideal for micropayments.

Its fast block time allows payments to be made quicker and more efficiently.

In addition, Dogecoin has also been used in multiple donation efforts and collecting funds is relatively easier with the cryptocurrency.

Some efforts include donations of up to $50,000 for water crises in developing countries.

In addition, Dogecoin can be used for selected hotel payments, adult films, electronics, and even cars,

2. Speculation

Dogecoin could essentially be used as a gambling coin. The price of the token is very volatile and it responds mainly to social media news and celebrity support.

An expert Dogecoin trader would know exactly when to buy and sell Doge based on the current trending news surrounding the token. However, this is of course highly risky and requires a lot of constant monitoring which could be tedious.

What Influences Dogecoin’s Price?

There are four main things that influences Dogecoin’s price:

1. Meme Culture

Dogecoin is a cryptocurrency that was created in 2013 as a parody of Bitcoin.

It was named after the "Doge" meme, which features a Shiba Inu dog breed and has become very popular on the internet.

It also became popular due to its association with internet meme culture and its use as a joke currency.

The memecoin is an attention grabber because it relates to the general audience. Most people don’t really understand the technology behind a cryptocurrency. Thus, some really good projects don’t gain as much traction because it’s just too difficult to understand.

However, with Dogecoin, it’s a meme that everyone uses and gets. At this point, it seems to be a meme that never ends.

It's always easier to market and promote a meme than a complicated piece of technology, which is why Dogecoin was a relative success.

2. Social media

Dogecoin took off because of a meme.

Memes are very popular on social media. So putting Dogecoin on social media is probably a good way to skyrocket its price. Lately, TikTok has been a popular platform influencing Dogecoin’s price.

Dogecoin predictions, trends, memes and other fun stuff have been circulating TikTok through short form content endorsed by young influencers on the platform.

In addition, the Dogecoin community also came together through social media and they play a huge part in Dogecoin’s price action.

3. Elon Musk

Elon Musk deserves his own category because he can single-handedly influence the price of Dogecoin with a single tweet.

Elon Musk, the CEO of SpaceX and Tesla, has had a significant influence on the price of Dogecoin.

Musk has been an outspoken supporter of Dogecoin and has often tweeted about it, which has led to increased interest in the cryptocurrency.

In fact, some people have referred to him as the "CEO of Dogecoin."

One of the most notable instances of Musk's influence on Dogecoin occurred in May 2021, when he tweeted that he was "working with Dogecoin developers to improve system transaction efficiency." This tweet caused the price of Dogecoin to surge by over 20%.

Musk has also used his social media presence to promote Dogecoin, often tweeting about it and even mentioning it on Saturday Night Live.

These actions have helped to increase the visibility of Dogecoin and have contributed to its popularity.

However, they have also led to some criticism, with some people arguing that Musk's tweets have caused unnecessary volatility in the Dogecoin market.

Who Invests in Dogecoin?

There are three main types of people who invest in Dogecoin.

The first type are people who just wanna have fun with memes. Elon Musk would also be part of this category.

These people know that Dogecoin is a meme and they are buying it just for the fun of it and joining the trend. They are usually people who have nothing to lose or are willing to lose the capital they decide to use for this “memecoin”.

The second group of people are serious traders looking to make money off of Dogecoin.

They monitor social media groups and news and know when to buy and sell to make a quick profit of the token. They know what pumps the token and are willing to gamble on it because they believe they are taking a calculated risk.

The last group of people are people who want Doge to be the next Bitcoin. These are the die-hard supporters of Dogecoin. They often tend to be bagholders and “HODL for Life” because they believe Dogecoin would make it to the top.

Whichever type of investor you are, always remember to do your own due diligence before buying the token.

How To Buy Dogecoin?

If you want to buy Dogecoin, you will need to follow these steps:

1. Choose a cryptocurrency exchange

First, you will need to choose a cryptocurrency exchange that supports Dogecoin. Some popular exchanges that support Dogecoin include Binance, Kraken, and Coinbase.

2. Create an account

Once you have chosen an exchange, you will need to create an account by providing your email address and creating a password. You may also be required to provide some personal information, such as your name and address.

3. Verify your account

Many exchanges require you to verify your account before you can start trading. This may involve uploading a copy of your ID or other documents.

4. Deposit funds

Next, you will need to deposit funds into your account. Most exchanges allow you to do this using a bank transfer or a credit card.

5. Buy Dogecoin

Once you have funds in your account, you can buy Dogecoin by placing an order on the exchange. You can choose to buy at the current market price, or you can place a limit order to buy at a specific price.

6. Secure your Dogecoin

After you have bought Dogecoin, it is important to store it securely. The best way to do this is to use a hardware wallet, such as a Trezor or Ledger Nano.

Keep in mind that buying and trading cryptocurrency carries risks and you should thoroughly research and understand these risks before getting involved.

How To Mine Dogecoin?

You can actually mine Dogecoin. However, the process may be a tad bit complicated.

Mining is the process of verifying transactions on a cryptocurrency's blockchain and adding them to the blockchain as blocks. Miners are rewarded for their efforts with a certain amount of the cryptocurrency.

Dogecoin uses a proof-of-work consensus algorithm, which means that miners need to use their computing power to solve complex mathematical problems in order to add blocks to the blockchain. As a reward for their efforts, they receive a certain amount of Dogecoin.

To start mining Dogecoin, you will need to do the following :

1. Get a Dogecoin wallet

First, you will need to get a Dogecoin wallet to store your mined Dogecoin. You can choose a software wallet, such as a mobile wallet or a desktop wallet, or a hardware wallet, such as a Trezor or Ledger Nano.

2. Choose a mining pool

Next, you will need to choose a mining pool. A mining pool is a group of miners who combine their computing power to increase their chances of finding a block. When a block is found, the reward is distributed among the members of the pool.

3. Set up mining software

Once you have chosen a mining pool, you will need to set up mining software on your computer. There are several options available, such as CGminer or EasyMiner.

4. Start mining

After you have set up your mining software, you can start mining Dogecoin. The mining process will involve using your computer's processing power to solve complex mathematical problems and verify transactions on the Dogecoin blockchain.

Keep in mind that mining can be a resource-intensive process and it may not be profitable for everyone. It is important to carefully consider the costs and risks before getting involved in mining.

Final thoughts On Dogecoin

Dogecoin is a decentralized cryptocurrency that was created in 2013 as a parody of Bitcoin. It is named after the popular "Doge" internet meme and has a large and active online community.

Despite its origins as a joke, Dogecoin has gained significant mainstream attention and has a market capitalization of over $9 billion.

Dogecoin has gained a reputation for being a fun and lighthearted cryptocurrency, and it has often been used for online tipping and charitable fundraising.

However, it has also been the subject of speculation and controversy, and its value can be highly volatile.

It is important to note that investing in cryptocurrency carries risks and that Dogecoin may not be a suitable investment for everyone.

Before getting involved in the Dogecoin market, it is important to thoroughly research and understand the risks and to only invest what you can afford to lose.

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