In the early months of 2021, Dogecoin impressed the world with its intraday high of 1,000%. Subsequently, thanks to Elon Musk, topics centering on the coin have gone viral. Dogecoin was created as a light-hearted alternative to traditional cryptocurrency, but it has grown in value. Today, we will help you understand Dogecoin and how it works.
What is Dogecoin?
In 2013, Dogecoin (DOGE) was created as a light-hearted alternative to traditional cryptocurrencies like Bitcoin. Unlike Bitcoin, which aims to be scarce, Dogecoin comes with a huge supply — 10,000 new Dogecoin are generated every minute, without any supply cap. Forked out of Litecoin in December 2013, the open-source digital currency was jointly created by Billy Marcus of Portland, Oregon, and Jackson Palmer of Sydney, Australia. Dogecoin’s creators envisioned it as a fun and light-hearted cryptocurrency that would gain more traction outside the Bitcoin core audience. For most of its existence, Dogecoin was viewed as a funny “memecoin”, loved by its community but with very little value. This changed in 2021: As of April, Dogecoin surpassed $50 billion, making it one of the top ten cryptocurrencies by market cap.
How Dogecoin works
Dogecoin is a cryptocurrency that runs on blockchain technology, similar to Bitcoin and Ethereum. Blockchain is a distributed, secure digital ledger that stores all transactions made using a decentralized digital currency. All holders carry an identical copy of the Dogecoin blockchain ledger, which is frequently updated with all new transactions in the cryptocurrency. Like other cryptocurrencies, Dogecoin’s blockchain network uses cryptography to keep all transactions secure. People called miners use computers to solve complex mathematical equations to process transactions and record them on the Dogecoin blockchain—a “proof of work” system. In exchange for processing transactions and supporting the blockchain ledger, miners earn additional Dogecoin, which they can then hold or sell on the open market. Dogecoin may be used for payments and purchases, but it’s not a very effective store of value. This is chiefly because there is no lifetime cap on the number of Dogecoins that may be created by mining, meaning that the cryptocurrency is highly inflationary, by design. The blockchain rewards miners for their work by creating millions of new Dogecoins every day, which makes it very challenging for speculative price gains in Dogecoin to hold up over time.
How to get Dogecoin
You can get Dogecoin in one of the following ways:
Firstly, you can mine Dogecoin with a computer. However, mining Dogecoin is highly demanding in terms of GPU. Plus, you will also need expertise in computer technologies.
Secondly, you can buy and sell Dogecoin with fiat currency on trading platforms. Some miners sell the Dogecoin they mined on crypto exchanges, and some purchase Dogecoin at a low point and then sell it at a high price for a profit. At the moment, large trading platforms in China include BTER and BTC38;
Thirdly, you can always get Dogecoin through rewards and gifts offered by individuals or companies on the Internet. As with other cryptocurrencies, once you purchase Dogecoin, you'd better move your coins to a crypto wallet.
Wallets for Dogecoin take many forms, covering cold wallets, hardware wallets (also known as cold wallets), hot wallets, desktop wallets, paper wallets, etc. In particular, cold storage involves keeping your cryptocurrency in an offline wallet that only you can access. Users should be reminded that they are fully responsible for the security of their crypto assets. Hardware wallets are a form of cold storage. The typical hardware wallets include Ledger and Trezor, both of which support Dogecoin. In addition, users must take good care of the key to their wallets. If the keys were lost, then your coins are gone for good. Apart from this, you also need to make sure that your computer is secure and protected by password, as your coins might be hacked due to any security breach.