What is Dogecoin, and How Does it Work?
In the world of cryptocurrencies, Dogecoin stands out among the other coins on the market. For starters, its logo is a Shiba Inu Dog, and it is named after the famous Doge meme. Launched in 2013 by Billy Markus and Jackson Palmer, Dogecoin has grown to become one of the most accessible cryptocurrencies. The coin has a large devoted fanbase, and it even has some celebrity supporters.
Most people know Dogecoin as the meme coin of the crypto market. However, there is much more to this coin than its status as a joke coin. This article will look at what Dogecoin is, how it works, as well as answer some common questions.
A brief history of Dogecoin
When Dogecoin launched in 2013, its creators intended it to be a parody of the crypto market. To achieve this goal, Dogecoin took its name and logo from the famous Doge meme. The creators also wanted Dogecoin to have a broader demographic than Bitcoin. This is also why the coin’s name and logo are based on the famous meme.
Upon its release, Dogecoin quickly gained a following. The Dogecoin fanbase soon became a large and dedicated one. To spread awareness about Dogecoin, fans set up several publicity stunts. For example, the fanbase used Dogecoin to sponsor NASCAR driver Joe Wise with $55,000 in 2014.
Throughout its history, Dogecoin’s price has remained low. So far there have been three major market jumps for Dogecoin. The first occurred immediately after its launch. The second jump occurred during the 2017 crypto boom; the price increased by 1,494% to $0.0051 CAD. However, Dogecoin’s price fell after the bubble burst in 2018. But in 2021, Dogecoin experienced a resurgence. Due to various celebrity endorsements, including Tesla CEO Elon Musk, Dogecoin hit an all time high of $0.944 CAD.
How Dogecoin works
Like most cryptocurrencies, Dogecoin operates on a blockchain. This is a digital ledger that stores and adds all transactions made on its network. Once someone purchases a Dogecoin from a person or exchange site, that transaction is added to the Dogecoin blockchain. New Dogecoins are created and entered into circulation through a process called mining. Dogecoin miners have an extra incentive for creating new coins. For each coin they enter, miners could receive 10,000 Dogecoins per block. This is called a block reward system, and it has caused the supply of Dogecoin to grow exponentially.
At first, Dogecoin had a maximum supply of 100 billion tokens. This supply cap has since been removed, meaning an endless stream of Dogecoins are being entered into the market. The proliferation of Dogecoin means its exchange rate is low. As of August 3, 2022, one Dogecoin costs $0.087 CAD, which is much cheaper compared to Bitcoin’s exchange rate.
Frequently asked questions about Dogecoin
Why is Dogecoin so popular?
One of the reasons Dogecoin is popular is the fact that it is based on the Doge meme. Since millions of people are familiar with the meme, Dogecoin’s founders were able to market themselves to that demographic; the coin is more accessible than others. And in an industry full of high valued coins, Dogecoin brings some levity. This is something the coin’s fan base can get behind.
Dogecoin is also popular thanks to several celebrity supporters, the most notable being Elon Musk. In recent years, Musk has made cryptic posts about Dogecoin on his social media accounts. These posts went viral, helping increase Dogecoin’s popularity.
Another reason for Dogecoin’s popularity is its price. As of August 3, 2022, you can buy 100 Dogecoins for $8 CAD, which is much lower for what you would pay for 100 Bitcoins.
How do you pronounce Dogecoin?
Doge can be a tricky word to pronounce. According to Wikipedia, Doge is pronounced Dohj. A helpful tip is to pronounce the g as a j.
How do I buy Dogecoin?
There are several ways to buy Dogecoin. The most common way is through a cryptocurrency exchange. This is an online site that lets users sell and purchase various crypto coins. Popular cryptocurrency exchanges include Binance, Kraken, and Coinbase. Once you have created an account with a cryptocurrency exchange, you can start purchasing Dogecoin. Most exchanges accept traditional money as payment. Some sites will let you exchange other cryptocurrencies for Dogecoin (e.g., Tether for Dogecoin).
Once you have bought Dogecoin, you can then store it on your crypto wallet. There are two types of crypto wallets, hot storage and cold storage. Hot storage is digital based, meaning they store coins online. There is a heightened security risk with hot storage wallets. Hackers can easily access the wallet and steal its contents. Cold storage wallets are actual pieces of hardware, like USB sticks. They are much more secure than hot storage. Because of their superior security, we recommend you use a cold storage wallet to keep your Dogecoins save.
There are alternatives to buying Dogecoin. One way is through a Bitcoin ATM. These machines allow people to buy Bitcoin and other cryptocurrencies. They are similar to regular ATMs, but instead of dispensing cash they connect customers to cryptocurrency exchanges where users can purchase their coins. To find a Bitcoin ATM in your area, click here.
Lastly, you can buy Dogecoins from someone directly on a peer-to-peer network. These sites eliminate the need for exchanges, which means the trading fees will be low or waived completely.
Is Dogecoin a good investment?
Dogecoin is not a good long-term investment. This is due to two factors. First, Dogecoin’s low price means it does not have the same market value of higher priced cryptocurrencies. Second, the large amount of Dogecoins in circulation means it will always have a low price. The proliferation of Dogecoin has made it a highly inflationary cryptocurrency. Based on these two factors, Dogecoin is more effective as a transaction currency. For example, Dogecoin is commonly used to “tip” content creators on Twitter and Reddit. It is also used to purchase other cryptocurrencies.
Where can I spend Dogecoin?
You can spend Dogecoin at any merchant that accepts it as a form of payment. In 2022, there are over 2,000 businesses that accept Dogecoin. Companies like SpaceX or sports teams like the Dallas Mavericks also accept Dogecoin as payment. And as mentioned in the previous question, you can use Dogecoin to reward content creators on Reddit and other social media platforms.
What is the Dogecoin price prediction for the short and long term?
While things were looking good for Dogecoin heading into 2022, the token was affected by the crypto market crash of May 2022. Over the course of one year (August 3, 2021-August 3, 2022), Dogecoin’s price has decreased by -65.82%. Even though things look bleak for Dogecoin, some fintech experts are optimistic for the future. According to a panel organized by the website Finder, Dogecoin’s price could reach $0.10 CAD by the end of 2022. For 2025, the panel predicts DOGE will cost about $0.24 CAD. And in 2030, DOGE could increase to $0.82 CAD.
Still, the majority of the panel believes the time is right for investors to sell off DOGE holdings. One panelist said that Dogecoin “was a meme coin that shouldn’t have really gotten to this point.” Other panelists highlighted the coin’s lack of utility; it has little value other than being a funny joke coin. Around 55% of the panel believe that DOGE will hit zero at some point in the future.
The bottom line is that Dogecoin is still a popular cryptocurrency, and it could make a comeback by the end of 2022. However, there are important questions about its longevity.
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