August 2022 guide to Dogecoin

R

ecent booms in the crypto industry put many weird but funny ideas into implementation. And one of the most talked-about assets related to the industry would be the memecoin/meme coin. It’s also crypto like Bitcoin, inspired by memes captured by an image/video/other media.

The purpose of meme coins was to make fun of cryptos rather than being a utility token. But the changes in trend have now made those coins worth a reasonable amount in that industry. And Dogecoin happens to be the most well-known one among the traded ones.

What is Dogecoin?

Dogecoin or DOGE is an open-source cryptocurrency made as a lighthearted parody of the crypto market. The name and its featured #Shiba Inu (a Japanese dog breed) logo at the center are based on a meme. That’s why DOGE is popularly known as a meme coin. Despite being established to make fun of #Bitcoin, it quickly became a leading asset in the industry.

Its peer-to-peer (P2P) communication is derived initially from Litecoin’s underlying technology. The proof-of-work tech utilizes the Scrypt Algorithm to ensure unlimited supply and lower prices. The coin even has a loyal supporter community to promote and trade the cryptocurrency on virtual platforms.

Dogecoin continued its journey since the beginning with a relatively lower trading value. However, its participation in the late 2017’s crypto bubble pushed the values significantly. The bubble refers to the skyrocketing crypto prices due to the global ransomware problem. Also, the asset lost a great portion of its fortune during 2018’s crypto crash/burst.

Still, the coin holds a vast following all over the world. Most of the active supporters of DOGE use Twitter and Reddit to promote the meme coin. It eventually entered the world's top ten list of crypto assets in 2021. Limitless mining and circulation of #Dogecoin make it relatively more investable.

DOGE received much media attention in the first months of 2021 due to a ‘meme stock’ craze. The boom was further sparked by Tesla Founder Elon Musk’s favorable comments on the coin. The market price soared over 7000% within weeks to attract retail investors and renowned companies. DOGE is like other cryptocurrencies with high volatility and dependence on Bitcoin pricing.

What is the history of Dogecoin?

An Australian product manager from Sydney, Jackson Palmer, is credited with creating Dogecoin in 2013. He designed the coin to make fun of the then ongoing cryptocurrency hype. His colleagues described him as a ‘skeptic-analytic observer’ of the newly emerging technology. He posted about the new crypto creation on Twitter, mainly for tongue-to-cheek talks. However, the platform's positive response made him purchase the Dogecoin.com domain.

Meanwhile, an IBM software developer, Billy Markus from Oregon, USA, was trying to develop his cryptocurrency. He eventually discovered the Dogecoin buzz amidst the trouble of how to make his efforts work. Markus managed to reach Palmer to take his permission to build the actual Dogecoin software. That’s why Jackson Palmer and Billy Markus are credited for creating the Dogecoin you see today.

They launched crypto for trading on December 03, 2013. The price made a jump on December 19, 2013, to surge by 300%. China’s prohibition on the banks from investing in cryptocurrency was likely to trigger the increments. The asset made major headlines in the media in January 2014. At that time, the Dogecoin community donated $30K Dogecoins to fund the Jamaican bobsled team for the Sochi Winter Olympics. Also, they donated a further $11K and $55K to Kenya and NASCAR driver Josh Wise in March of the same year.

But the freewheeling fun lost some mirth in 2015 with the departure of Jackson Palmer. He accused the rise of a ‘toxic community’ centering DOGE and its market price. Alex Green, a.k.a. Ryan Kennedy, convinced some community members to donate large sums. But he was found to have bought Bitcoin with the donations, which then funded a luxurious lifestyle. His luck ran out in 2016 with an 11-year sentence for multiple rape convictions.

Doge kept struggling to grow, but this was before the crypto bubble in late 2017. It soared in price with the skyrocketing cryptoverse at the time. DOGE also fell from the surge with other cryptocurrencies in 2018. Binance, the crypto exchange platform, had another bump when it enlisted the coin in 2019. Many even believed Tesla CEO Elon Musk to endorse the meme coin with one of his tweets related to the asset.

However, Musk openly admitted to working on the coin in 2021 only to skyrocket its value. It even drew the attention of media, investors, and other companies to a large extent. The well-known AMC Entertainment Holdings, Inc. (AMC) cinema chain even agreed to accept DOGE for digital gift purchases. And the once-satirical coin entered the top 10 cryptocurrency list on October 8, 2021. 

How is Dogecoin created?

Palmer created the meme coin in 2013 as a way to poke fun at Bitcoin. And Billy Markus made the original DOGE code based on Luckycoin, derived from Litecoin. The system initially used random rewards for block mining in the early stages. But the founders changed it to a static and systematic reward in March 2014. Dogecoin works on the same Proof-of-Work (PoW) and Scrypt Technology as Litecoin.

The ‘Scrypt Tech’ enables the hashing function or deriving secret values for the private key/password. Scrypt requires sufficient graphic processing units (GPU) to perform the complex algorithmic analysis. Meantime, PoW is an approach to exterminate the chance of malicious uses of digital tech. The system makes transactions anonymous and safe on either end. It’s one of the most significant features of cryptocurrencies like Bitcoin and Litecoin.

Soaring in supporters, transactions, and market price required the asset to adopt sophisticated techs. And DOGE currently runs on blockchain technology incorporated with secure cryptography like others. The static reward has remained the same since 2014, letting miners earn DOGE as rewards for solving complex mathematical problems. The miners can hold the earned Dogecoin in their wallets or sell it in exchanges.

How do I purchase Dogecoin?

Dogecoins are available for purchase on many well-recognized cryptocurrency exchange platforms. It requires you to open an online account in the preferred or chosen exchange. Funding the account to purchase DOGE depends on the platform’s preference. American and other major platforms need US Dollars for funding.

Top cryptocurrency exchanges for buying DOGE are:

    • Binance

    • Coinbase

    • Gemini

    • Upbit

    • eToro

    • Robinhood 

    • OKEx

There are other avenues available for purchasing DOGE locally outside the USA. However, be aware that fraudsters often use those systems to scam investors. So, it’s in everyone’s best interest to avoid the risks associated with locally made investments. So, it’s essential to consider some crucial facts while purchasing from the exchanges –

    • Knowing the trustworthiness of the chosen exchange.

    • Amount of money to invest in Dogecoin for now.

    • Select preferred and usable payment options.

    • Consider the available storage options within the account.

    • Proper placing of orders for Dogecoin to receive.

Different exchanges offer varying options for their clients to suit their requirements. You need to assess what you have, what you want, and what the exchange offers.

How do I store Dogecoin?

The simplest and most accepted storage is via crypto wallets from a cryptocurrency exchange account. Funding the wallet with centralized currency lets, you make purchases. Make sure you enough spare funds/money to make an initial investment. You must place a purchase/buy order to a broker available within the exchange.

Successful execution of an order will store your DOGE on your wallet of choice. And you can make trades, donations, and investments using the stored cryptocurrency. However, if an order gets canceled, it could be for various reasons, this does happen from time to time. All you need to do is place another order in the next session to buy DOGE.

Using a crypto wallet is the most secure way to store your virtual assets. Storage options in a crypto wallet should allow you to use a private key set. This feature enables you to use Dogecoin outside the realm of that exchange. That’s how you can store your own crypto currency without the need of involving the platform itself.

Also, two types of wallets are available in major exchanges – hot software and cold hardware. Hot software wallets are mostly free while requiring an internet connection for access. Dogecoin Wallet is the most intuitive software wallet to have DOGE on desktops and smartphones. Cold hardware ones are available offline for access. But you’re to pay a nominal fee for the wallet as per the provider policy.

What are the advantages of Dogecoin?

    1. No Limits on Maximum Supply

Major crypto assets have a limit on the maximum supply available for circulation. But Dogecoin is yet to draw a line to restrain the circulation limit. Almost a full block gets created every minute in the network from which a miner earns 10K DOGE per block. It suggests that 14,400,400 DOGE are created per day.

    2. Fully Decentralized Transaction

Decentralization keeps the transaction security in the user's hands instead of govt authorities. Blockchair, a crypto explorer, claims Dogecoin to have 1090 nodes to indicate its decentralization. This stat makes the asset’s network 51% susceptible to an attack when one entity/person controls 50% of the network.

    3. More Efficient Mining Process

Putting the mathematical puzzles together to record transaction is easy for dogecoin miners. This makes DOGE more efficient and faster in processing transactions. Processing and ratifying one dogecoin block require only one minute on average. But this superfast system also affects the coin’s market value.

Dogecoin and Elon Musk

The recent success of Dogecoin in 2021 was most notably associated with Elon Musk’s interest in it. The Tesla and SpaceX CEO showed his passion for cryptocurrency holdings is recent times. He made his first DOGE tweet by sharing a Lion King Doge meme by mentioning, “who let the doge out?”.

It kickstarted a furious buzz, however temporary dips, following his Saturday Night Live appearance. But DOGE eventually crashed despite his promise to take its price to the moon. Musk seemed to lost his interest in the cryptocurrency after his withdrawal of accepting BTC for Tesla.

Should invest in Dogecoin?

Crypto currency is a highly inflationary asset with no lifetime limit. Millions of new coins are entering market circulation daily to dampen the desire. This puts downward pressure on the market price, making it prone to crashes. Therefore, long-term dogecoin investment isn’t considered a good idea.

DOGE enjoyed a massive increment in 2021 to bypass its predicting factors. But analysts never got DOGE as long-term sustainable crypto. Experts consider it more suitable for instant and short-term trading currency. It has also been used as a reward or tip for posting relevant content on Reddit and Twitter. 

How much can I earn from Dogecoin?

The following table lists centralised saving organizations that will pay a rate of interest on Dogecoin assets on a flexible terms basis:

The following table lists centralised saving organizations that will pay a rate of interest on Dogecoin assets on a fixed terms basis:

What’s the problem of Dogecoin?

Most active Dogecoin wallets contain a vast portion of the circulating DOGE. Research says nearly two-thirds of the circulating coins are held in a mere 0.02% DOGE wallets. Uneven distribution makes it very different from other altcoins. It even possesses a risk related to DOGE’s market value and liquidity.

The overall market condition of Dogecoin highly depends on these accounts’ activity. They can flood or contract the market by manipulating its circulation. Undue control makes the crypto even more volatile than other cryptos like Bitcoin. Yet, its unlimited and uneven distribution is to cause any major setback.

Conclusion

You should understand by now that Dogecoin is good for short-term investments only. But you don’t have to write it off either. Fortunes are made and lost within the meme coin space in a short period. Extreme volatility requires you to remain cautious of sensitive and important news. Developing ideas on current and possible future trends can make money on Dogecoin a precious investment, you must keep a close eye on the market and how it affects you investment.

Dogecoin FAQs

Chris

An editor at Coincrop

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Chris is a Crop Crop staff writer based in the UK, covering the best rates for cryptocurrency earning and borrowing products. When not at work, he's likely assembling lego models.