Cryptocurrency

What exactly is Dogecoin? A DOGE cryptocurrency intro for newcomers

Dogecoin (DOGE) is a cryptocurrency that was created in 2013 based on comedic inspiration rather than a pressing need to meet a specific use case. The cryptocurrency was inspired by the “Doge” meme, which depicts a Shiba Inu — a Japanese dog breed — sitting with its paws folded over each other. Text overlays the image of the dog, with phrases promoting illogical grammar.

Dogecoin was inspired by the overall cryptocurrency community’s humorous and eccentric culture, which began to form in 2009 with the launch of Bitcoin (BTC). Following Bitcoin — a blockchain-based asset capable of moving and storing value — thousands of other crypto assets emerged, each touting different advantages, such as increased privacy.

Bitcoin’s code is open-source, and it has been used by other projects to create separate crypto assets and blockchains. Following the creation of Litecoin (LTC) and, later, Luckycoin (LKY) based on Bitcoin’s code, software engineers Billy Markus and Jackson Palmer used Luckycoin’s code to create Dogecoin in just hours.

Palmer and Markus left the Dogecoin project in the years following its inception. Markus sold his Dogecoin holdings in 2015, when they were worth about the same as a pre-owned Honda Civic.

Case Studies for Dogecoin

Dogecoin has had a devoted following for years, but the asset’s popularity propelled its price to dizzying heights in 2021. The coin itself, on the other hand, lacks many distinguishing features that would suggest it could replace the world’s dominant currency or store of value.

Why is it so difficult for Dogecoin to become a mainstream currency? The main reason could be the scarcity of Dogecoin. The coin’s maximum coin supply is unrestricted. On a daily basis, 14 million additional Dogecoins are mined, causing the asset’s value to rise. In contrast, Bitcoin, for example, has a fixed maximum supply of 21 million coins, giving it defined scarcity.

Dogecoin, on the other hand, has the potential to be used as a form of currency for tipping or payments, both online and offline. Its US dollar price per unit is much lower than that of other crypto assets, such as BTC, allowing users to work with whole numbers rather than fractions of BTC.

On the one hand, DOGE appears to be more viable as a transactional asset than Bitcoin, owing to Dogecoin’s lower unit price, popularity, and transaction speed. The coin’s community has also made DOGE more approachable to the general public. It is also true that the asset could follow in the footsteps of many previous fads, gaining significant public attention for a time but failing to stick as a unique long-term solution to anything.

In terms of transaction speeds, Dogecoin’s technical design places it significantly ahead of Bitcoin. Every 10 minutes, blocks are mined on Bitcoin’s blockchain. Blocks on the Dogecoin blockchain are completed in less than one minute. As a result, while each block on the Dogecoin and Bitcoin blockchains is one megabyte in size, the Dogecoin blockchain generates more blocks in the same amount of time. Bitcoin’s slow transaction speed has been noted in the past; however, over time, Bitcoin has come to be viewed more as a store of value asset.

History of prices

Dogecoin has typically traded for less than $0.01 per coin since 2013. Dogecoin’s price peaked around $0.018 in early 2018, before falling back below a penny in the months and years that followed.

For a brief period in early January 2021, the price of Dogecoin rose above $0.01 again. Furthermore, the asset saw a significant price increase in late January, when Dogecoin surged up to around $0.07 per coin in a matter of two daily candles, or a 48-hour period of time.

A few days later, the asset had risen to around $0.088 per coin. Following a drop to the $0.04 range, the coin’s price consolidated for weeks before resuming its rapid upward price run. In May 2021, the price of Dogecoin was just under $0.74. This dramatic price increase appears to have been driven primarily by the asset’s hype, as well as the asset’s community of interested participants.

The community and the hype

Dogecoin received significant attention in 2020 from users of the social media platform TikTok in an effort to entice people to buy the asset in the hope that its price would rise. In 2021, Dogecoin received a lot more attention, including from a member of the Reddit-based group WallStreetBets. (The group is well-known for its influence on the price of Gamestop stock in early 2021.) Around the time of the GameStop stock price surge in January 2021, a Twitter user known as “WSB Chairman” posted a tweet in which he wondered if Dogecoin had ever reached the $1 price point. Following the tweet, the price of Dogecoin increased to around $0.07.

The Dogecoin-related tweets posted by Tesla CEO Elon Musk may also have contributed to Dogecoin’s popularity in 2021. Tweets ranged from comments on the coin’s development to a picture of Rafiki holding up Simba (from the film The Lion King), with Musk’s head pasted on Rafiki’s body and the Doge dog’s head pasted on Simba’s body.

Dogecoin discussion can be found on a variety of social media platforms, including Reddit. Dogecoin-related searches flooded Google during its 2021 bonanza, Twitter hosted a significant amount of chatter about the asset, and mainstream media covered the digital asset. Dogecoin’s single-day trading volume surpassed Bitcoin’s on at least one occasion in 2021, with billions of dollars worth of the coin traded.

The years that followed Dogecoin’s inception were eventful, with stories of hacks, Dogecoin-painted racing vehicles, and other escapades. Among the stories are how Dogecoin donations helped fund Jamaica’s national bobsled team’s 2014 Olympic run in Sochi.

Where to buy, sell, and spend DOGE

Buying and selling Dogecoin is similar to trading most other well-known crypto assets. The market has a plethora of cryptocurrency exchanges where one can buy or sell the dog-themed coin, including a number of US-friendly exchanges. Purchasing DOGE on a crypto exchange entails transferring fiat currency (such as US dollars), stablecoins, or other crypto assets to the exchange and then purchasing the coin with those funds. Users can also sell their DOGE and withdraw cash or cryptocurrency from the exchange.

How to Purchase and Sell DOGE

In addition, interested parties can purchase or sell DOGE in person. Purchasing and selling Dogecoin is similar to that of Bitcoin. There are several platforms where people can buy DOGE, some of which accept credit cards.

How to Keep DOGE

Storing Dogecoin holdings is also an issue worth discussing. DOGE can be held on the crypto exchange where the asset was purchased, but this method gives owners potentially less control over their funds.

Dogecoin owners can also keep their coins in a self-hosted personal wallet. These wallets come with more security and responsibility, but they also give users more options for storing their funds. Hardware and local wallets are two possible options. However, a user’s preferred wallet must be capable of holding Dogecoin. Storing DOGE away from a crypto exchange necessitates sending the coin from the exchange to the desired wallet.

Where can I spend DOGE?

How does a DOGE holder spend their DOGE? One option is to send it to a cryptocurrency exchange, sell it, and then cash out or transfer the proceeds. Users can also sell their DOGE for fiat while uploading it to their crypto card, effectively spending Dogecoin proceeds. In addition, in 2021, the Dallas Mavericks of the National Basketball Association (NBA) will accept Dogecoin payments for merchandise and tickets.

The fundamentals of DOGE

On the technical front, Dogecoin has received continuous updates over the years, which have been made public on the asset’s Github page.

Aside from its growth, Dogecoin’s fees continue to be a selling point for the asset. In May 2021, the average Dogecoin transaction fee was around $2.52, which was a high point in terms of previous and subsequent levels. When compared to transaction fees seen in other crypto assets, such fees are considered low.

However, a small number of DOGE owners could cause price fluctuations in the future. Despite its large supply, Dogecoin boasts a number of wallets that hold a sizable portion of DOGE’s total coin supply. Approximately 50 percent of the total supply of the asset is held in approximately 20 Dogecoin wallet addresses.

In terms of Dogecoin mining, significant amounts of DOGE are expected to continue entering the ecosystem via mining, causing inflation.

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