Top Cryptocurrencies

Dogecoin, a complete guide to the joke cryptocurrency

Dogecoin is an open source peer to peer crypto coin which targets doge lovers. It features a logo with the likeness of the Shiba Inu, a dog that is popular for the “Doge internet meme.” It was initially introduced as a joke currency but quickly developed its own online community of users. The altcoin has a real purpose as it acts as a virtual currency that allows easy transfer of money online.

The genesis of Dogecoin

Dogecoin

Dogecoin was launched on 6 December 2013. It was created by Billy Markus, a programmer from Portland Oregon. He hoped to create a fun currency that would reach a broader demographic than Bitcoin.

Initially, The Dogecoin network was intended to produce 100 billion coins, but later, it was announced that the blockchain would produce infinite coins.

Two weeks after launch Dogecoin jumped nearly 300% in value within 72 hours. Its price rose from $0.00026 to $0.00095.

In January 2014, the trading volume of the altcoin briefly surpassed that of Bitcoin and all other crypto coins combined. As, of the time of writing, the altcoin has a market capitalization of $520 million.

The purpose of Dogecoin

Dogecoin

The altcoin was initially intended to have two main purposes.

Firstly, to act as a satirical commentary on the sudden explosion and ridiculous valuations of cryptocurrencies that were coming out at the time.

Secondly, to be fun and more readily accessible to all than the dominant Bitcoin.

The altcoin has become a mainstay in the crypto world due to its fast transaction times, low transaction fees and relatively stable value. It means traders are using it as a means of exchange.

To get a sense of what makes Doge valuable, consider a person who wants to withdraw money from an exchange. If the currency of choice is Bitcoin, then this can be very expensive. However, a trader may prefer first to trade their Bitcoin for Dogecoin, withdraw and then convert it into something else.

Other traders use it purely for speculation which is possible because the price of each unit is so low. One can purchase millions of Doge without spending a fortune, and any slight price increase leads to reasonable gains.

The Dogecoin technology

Just like most cryptocurrencies, Dogecoin operates under the doge blockchain. Before a transaction is completed, it must be verified by different nodes (computers) across the network.

For example, if Alex was to send 20 Dogecoins to Sophia, this transaction must first be validated my nodes on the Doge blockchain to verify whether Alex has 20 Dogecoins.

If this is validated, 20 dogecoins will be transferred to the address of Sophia.

Modelled after Litecoin, Doge also runs on Scrypt algorithm. Meaning all changes and updates made on Litecoin will also be applied on Dogecoin.

Just like Litecoin, the time that is taken to process a Dogecoin transaction is much shorter than that of Bitcoin. Where the latter takes ten minutes to confirm blocks, Doge takes only one minute.

Inflationary Currency Model

Dogecoin

As opposed to bitcoin whose supply stands at 21 million coins, the number of coins on the Doge network is infinite. The blockchain employs an inflation model to ensure Dogecoin doesn’t deflate in time. Every year 5.256 billion coins are added on the network. And this pushes the value of Doge down and makes it suitable for making small payments.

It’s the same concept that is employed by most central banks in their national currencies. Most banks employ an inflation rate of 2% per year which isn’t far from that of Doge. Critics of the project argue that this type of model gives Doge a negative trait because it prevents the individual token value from rising.

Due to the low cost of individual tokens, transaction fees are also significantly lower than those of competitors. It usually takes less than a cent to send transactions across the network. The transactions are also fast and get confirmed quickly.

How to buy Dogecoin

Dogecoin can be bought from over 50 exchanges globally with over 250 trading pairs available. Some of the exchanges through which Dogecoin can be purchased through include; Poloniex, Bittrex, Cryptopia, Kraken and a host of others.

Poloniex: 

This is an American based exchange that was founded in 2014. If you intend to buy Dogecoin via this exchange, bear in mind that it doesn’t offer fiat pairs thus Doge/BTC might be the best option you will have.

If you do not own some Bitcoins yet, you should consider buying some via Coinbase as it accepts fiat payments.

Bittrex:

Founded in 2014, Bittrex is also an American based cryptocurrency offering a Doge/BTC pair. The exchange also offers fiat pairs but to buy a cryptocurrency as Dogecoin via the exchange, it requires a minimum of $10,000 deposit.

Kraken:

Kraken is another US-based cryptocurrency exchange founded in 2011. The exchange offers fiat options without a minimum deposit as is the case with Bittrex. This makes buying Dogecoin easier via this exchange.

The exchange also offers a Doge/BTC pair.

 Best Dogecoin wallet

After buying dogecoins, the next thing is to securely store them. A dogecoin wallet is a safe place where your coins can be stored.

There are many Dogecoin wallets available. We will take a look at our best pick of wallets for doge holders.

Ledger Nano S:

This is a fancier wallet type and is very popular among cryptocurrency holders for its high-security properties. The wallet stores Dogecoins offline making it hack proof.

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The hardware wallet also has a screen and provides 2 FA for extra security.

TREZOR:

Similar to Ledger nano, Trezor wallet supports dogecoins and stores the coins offline. This hardware wallet is also known to be among the high-end security wallets within the crypto space.

If security is of importance to you, then Trezor is one of the best wallets options you should consider using.

Jaxx:

This is another wallet where dogecoins can be stored. It is, however, different from the above wallets in that it is a desktop wallet which can be downloaded on Windows or Mac operating systems.

This dogecoin wallet can also be installed on IOS and Andriod devices.

In conclusion, even though there has been little development activity since the coin was launched, it’s still achieving the goals it set out to accomplish in the beginning. It’s still a low-cost token that is easy to acquire. Also, its community is amiable and always willing to help new users.

coinmag

Basil has three years of freelance experience writing on disruptive technologies. He focuses on breaking news and education pieces; helping to spread the gospel of Blockchain. He hopes to have his own blockchain company one day; helping the world through its innovative ledger technology.

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