What is Dogecoin (DOGE)?

Luis Clark
Luis Clark
Luis is a personal finance expert who has been passionate and writing about crypto for more than five years.
Table of Contents
    Add a header to begin generating the table of contents
    1. Home
    2. »
    3. Cryptocurrencies
    4. »
    5. What is Dogecoin...
    Table of Contents
      Add a header to begin generating the table of contents

      What is Dogecoin (DOGE)?

      Dogecoin is an open-source, peer-to-peer cryptocurrency that was created by its founders as a joke payment system poking at the wild speculation in the crypto space at the time. The altcoin is considered both the first “dog coin” as it has an image of a Shiba Inu dog for a logo and the first “meme coin”.

      Launched in 2013, Dogecoin’s blockchain derives its underlying technology from Litecoin. Standout features of Dogecoin include its scrypt algorithm, unlimited supply, and low price. 

      what is doge crypto

      Who is the Founder?

      Jackson Palmer and Billy Markus created Dogecoin. Jackson Palmer, the product manager at Adobe Inc, in Sydney, Australia created Dogecoin in 2013 as a satire reflecting the cryptocurrency hype at the time. Once, he got positive interest on social media, he purchased the domain dogecoin.com. Billy Markus, on the other hand, who was a software developer at IBM, looked forward to creating a cryptocurrency but faced issues concerning promotion. So Markus collaborated with Palmer to create the software behind the real Dogecoin.  Billy Markus based the altcoin’s code on Luckycoin, which was derived from Litecoin. So Dogecoin is a Proof-of-Work coin that uses Litecoin’s scrypt technology Markus and Palmer launched Dogecoin on the 6th of December 2013.

      How does Dogecoin Work?

      Dogecoin is indirectly based on the build of Bitcoin as it was developed as a hard fork of Luckycoin, which was a Litecoin (LTC) hard fork. Litecoin is the first hard fork to be developed after the cryptocurrency split from Bitcoin. 

      That said, Dogecoin borrowed Litecoin’s scrypt-based consensus mechanism, which gives the meme coin several similar functionalities to all of Bitcoin’s hard fork derivatives. 

      The scrypt-based consensus mechanism in DOGE’s Proof-of-Work protocol also limits miners from utilizing ASICs when mining the altcoin. This is to prevent centralized mining. 

      As with Bitcoin, users of the Dogecoin blockchain use individual computing power to fuel block creation and secure the network while verifying transactions. But unlike Bitcoin, dogecoin differs in the fact that it possesses a thin architecture that allows DOGE to process transactions faster than Bitcoin.

      Key Features of Dogecoin (DOGE)

      Dogecoin Foundation

      dogecoin foundation

      The Dogecoin Foundation is a non-profit organization that was established in 2014 by the Dogecoin team. Members of the Core development team and other advisers were added to the DOGE Foundation in 2021. 

      The DOGE Foundation aims to provide support and governance for the Dogecoin Members. And the Foundation achieves this support for Dogecoin through advocacy and development. It also provides Dogecoin trademark defence to prevent fraud and abuse. 

      The Foundation provides a road map for the future of Dogecoin and also works with developers in the DOGE ecosystem to create libraries that will standardize and streamline implementations of Dogecoin.

      Libdogecoin v.0.1

      Libdogecoin is a C-library of the Dogecoin network’s building blocks that allows developers to build Dogecoin-compliant products. With Libdogecoin, developers do not need to worry about the deeper specifics of the crypto functions. This will enable users who do not have advanced technical knowledge to still build products that are compliant with Dogecoin’s standards. 

      Libdogecoin contains a set of callable functions that can be implemented in external projects. Since it is a pure library, it does not provide a runnable node facility. With Libdogecoin, connecting bits into an engine can be done through the networking libraries of the host language at the level above. 

      Libdogecoin supports multiple languages including Node.js, Ruby and Python. 

      Other features of Libdogecoin include:

      • Generating and storage of private and public keys
      • Transaction generation, manipulation, and signing 
      • Generating recoverable signatures 
      • Native constant time AES (+256CBC) cipher implementation, this includes NIST test vectors
      • Address generation
      • Native implementation of SHA256, SHA512,RIPEMD-160,SHA512_HMAC including NIST testvectors
      • Base58check encoding
      • BIP32 hierarchical deterministic key derivation

      Weaknesses of Dogecoin (DOGE)

      Dogecoin is a highly inflationary cryptocurrency. This is caused by the lack of a lifetime limit to the supply of DOGE. Just as with any other product, the lower the supply of an acceptable cryptocurrency, the higher the demand. But with Dogecoin the supply is unlimited.

      Unlike coins with limited supply, the long-term possibility of the value of the coin increasing tremendously is quite uestionable.

      How is Dogecoin (DOGE) Created?

      Since Dogecoin operates on the Proof of Work protocol, DOGE can be mined just like Bitcoin. Miners can verify and validate transactions, as well as, secure the network from malicious entities and potential breaches. One Dogecoin block is created every minute with a block reward of 10,000 DOGE That said, Dogecoin founders Billy Markus and Jackson Palmer initially developed the meme coin with a max market cap and supply limit of 100 billion DOGE. However, the team removed the limit only a couple of months after the launch. Dogecoin now has an inflationary supply after this change of monetary policy, generating 5 Billion new DOGE every year.
      mining dogecoin

      Mining Dogecoin (DOGE)?

      Dogecoin is mined using computational power offered by network participants to create new blocks and solve mathematical equations to validate transactions. And as already stated, miners receive 10,000 DOGE for every generated block. 

      Here’s how to mine Dogecoin: 

      • Solo mining
      • Participating in a mining pool
      • Using a cloud miner

      Each of these Dogecoin mining methods has its benefits though solo mining is quite impractical without a powerful mining rig because of rising competition on the blockchain.

      Solo Mining

      To mine Dogecoin as an individual, you’ll need to use a personal mining rig to solve transaction blocks for rewards. If you do succeed with this approach you’ll get the 10,000 DOGE reward in full without having to split your earnings with other miners. 

      That said, the disadvantage of mining the meme coin individually is that rewards are inconsistent and infrequent. You’ll have to compete with entities like mining pools that utilize the combined computing resources of numerous miners to solve computational problems. This ultimately puts solo miners at the disadvantage, as even with a massive mining rig you would need to wait for months on average between each reward.

      Mining Pool

      Mining pools are a convenient option for individual mining. This type of mining combines the resources of several miners to boost the chances of solving computational problems. So when a particular member of a pool mines a block, the 10,000 rewards are shared with all members of the pool. 

      While merge mining Dogecoin is profitable, the share isn’t equal as each member receives rewards proportional to the hash power they contribute. So just as with solo mining, you’ll still need to have a powerful rig to get quality rewards. Also, mining pools keep a percentage of the reward which is anything from 0.5% and 4% on average. This is for the service they provide.

      Cloud Mining

      The final option for mining DOGE is cloud mining. If you choose to mine Dogecoin with cloud mining, you’ll have to pay a monthly or annual fee to a provider that rents computing hash power. So the cloud provider will mine DOGE for you in exchange for fees and will share the mining profit according to your rented hash power. 

      With Cloud, you don’t need to own specialized mining equipment which is a huge advantage when compared to pool mining or solo mining. You just pay a fee and wait for the cloud provider’s mining returns. 

      Typically, your profits may fluctuate depending on the mining difficulty and network activity of the Dogecoin chain. So though the fee you pay to the cloud mining providers is fixed, the profits are typically variable. The primary con of Dogecoin cloud mining is that there are few reliable service providers. And a lot of cloud mining providers do not support Dogecoin mining as they prefer to support Ethereum or Bitcoin mining. 

      That said, some of the popular companies that offer Dogecoin cloud mining include Genesis Mining and NiceHash, which use the merged mining format alongside Litecoin.

      Which Blockchain does Dogecoin (DOGE) Use?

      DOGE uses a custom blockchain called the Dogecoin blockchain which derives its underlying technology from Litecoin. Standout features of this blockchain include its use of a scrypt algorithm, unlimited supply, and low price. The current Dogecoin blockchain size is 62.26 GB.

      How to Use Dogecoin (DOGE)?

      Communities that use Dogecoin tip their members in DOGE for participating in the community. For instance, on Reddit, DOGE is used as a tipping system. Also, Dogecoin is used as a reward on Twitter for the creation or sharing of quality content.  It is also used for tipping online content creators and for crowdfunding.

      Dogecoin is also accepted by some merchants as a means of payment. For instance, the Dallas Mavericks and Elon Musk’s SpaceX and Tesla accept DOGE. 

      Other companies that accept payment in DOGE include AirBaltic, Newegg, AMC Theaters, Twitch, Easy DNS, and GameStop.

      How to Buy Dogecoin (DOGE)?

      how to buy dogecoin

      You can buy Dogecoin on popular exchanges like Binance, Huobi global, Kraken, Bittrex, FTX, Uphold, Coinbase, Kucoin, Bybit, and any other exchange that supports the cryptocurrency

      You can check CoinMarketCap for the full list of all the exchanges that allow people to buy and sell Dogecoin. 

      You will need to do your research before choosing which crypto exchange to use. You should choose an exchange with good security, as this will guarantee the safety of your crypto assets. 

      Once you decide which exchange to use, the next thing to do is to create an account on the platform and verify the account. After this, you can proceed to buy and sell Dogecoin on the exchange. Most exchanges will allow you to buy Dogecoin using fiat currency or another cryptocurrency. Buying with fiat currency is often faster and easier.

      How to Store Dogecoin (DOGE)?

      You can store Dogecoin in a wallet on the exchange where you bought the coin or you can move the cryptocurrency to an external wallet outside the exchange. Ensure you choose an exchange that will keep your digital asset safe.

      Dogecoin can be stored in both software (hot) wallets and hardware (cold) wallets. Hardware wallets like Ledger Nano S and Ledger Nano X and Trezor Model T all support the storage of Dogecoins. 

      Dogecoins can also be stored in other wallets like Dogecoin Core and MultiDoge.

      Dogecoin Core

      Dogecoin Core is the best wallet for Dogecoin. It syncs with the entire blockchain and MultiDoge. Dogecoin Core was Formerly known as Dogecoin wallet. Dogecore works on Windows, Linux, and MACOS. 

      Dogecore is best for Doge holders who are into the mining of cryptocurrency. It is also great for personal and anonymous transactions.

      MultiDoge

      multidoge app

      This is a lightweight open-source wallet created by the Dogecoin development team. 

      Dogecoin wallet is based on Dogecoin which is a port of BitcoinJ. The wallet is ideal for daily DOGE transactions but not suitable for miners. 

      It is available on Windows, MACOS, and Linux. It has a user-friendly interface which makes it ideal for beginners.

      Best Place to Stake Dogecoin (DOGE)?

      Dogecoin is the second largest Proof of Work blockchain so you cannot stake DOGE on an exchange or individually in return for rewards. You can only really stake native tokens of Proof of Stake blockchains like Avalanche, Polkadot, and Cardano.

      What You Need to Know About the Future of Dogecoin (DOGE)

      Dogecoin rose to popularity through social media hype and celebrity influence. Celebrity figures like Elon Musk recommended the token on platforms like Twitter and this gave the coin mainstream popularity. Elon Musk has also mentioned adopting the coin for use in SpaceX and Tesla projects. 

      All this means that the future of Dogecoin is largely dependent on how the coin maintains its gained popularity and if celebrity figures keep promoting it

      Also, projects like Ethereum, Monero, XRP, Stellar Lumens and Bitcoin offer solutions to financial or real-world transaction issues but Dogecoin on the surface is simply a meme coin. So its real-world utility is largely dependent on community hype, which is a difficult thing to sustain. Real growth based on intrinsic value may be difficult to attain. 

      However, considering the objective of the Dogecoin community which is to make 1 DOGE = 1 DOGE, the goal of the Dogecoin community isn’t to boost the value of Dogecoin but to use the cryptocurrency for everyday transactions.

      Conclusion: Should You Put Your Money in Dogecoin (DOGE)?

      Dogecoin, as already stated, is driven largely by celebrity endorsements and acceptance by large corporations. So before you put money into the meme coin you’ll need to conduct personal research to know if both of those factors will rise in influence over the coin or drop. If corporations and celebrity figures stop endorsing and accepting the coin there’s a huge likelihood that the value of the coin will drop.

      Risk in Investing in Dogecoin (DOGE)

      Investing in any type of cryptocurrency, Dogecoin inclusive, is a risky venture. Dogecoin is a volatile asset which means that the price of the coin fluctuates to extreme highs or lows depending on the condition of the market. So there’s a huge potential that you’ll lose your entire investment if the market crashes.

      FAQ

      Most frequent questions and answers

      Elon Musk has stated previously that he owns Dogecoins, however, he has never indicated that Tesla owns DOGE. But the car brand has been accepting Dogecoin as payment. 

      DOGE does have a future but this is largely dependent on several corporations which have expressed interest in the meme coin adopting it fully. 

      Not really, DOGE has massive inflation challenges to overcome and a poor focus on data security.

      Here are 10 companies that accept DOGE:

      • Tesla
      • AMC Theaters
      • Bitrefill
      • GameStop
      • Keys4Coins
      • Twitch
      • Newegg
      • Air Baltic
      • Easy DNS
      • The Dallas Mavericks

      Dogecoin holders can hold their DOGE coins, use them to pay merchants that support the payment method, or exchange them for another cryptocurrency. Dogecoin can also be used for tipping online content creators.

      Dogecoin is a coin on the Dogecoin blockchain.

      Dogecoin can be used for anything that regular fiat currency can be used for in places where it is accepted as a means of payment. 

      No, Dogecoin is a public cryptocurrency as its transactions are public. 

      Dogecoin works on the Proof of Work protocol.

      Dogecoin is different from Bitcoin in so many ways. From the purpose of its creation to its usability. For example, Dogecoin was created as a parody of Bitcoin while Bitcoin was designed as a form of cash or a means to store wealth. Dogecoin is also more energy efficient than Bitcoin as it uses less power than Bitcoin’s SHA-256 algorithm. Dogecoin is also less secure than Bitcoin.

      Dogecoin gains its value primarily from celebrity endorsements as public figures like Elon Musk and Mark Cuban have recommended the coin. Dogecoin rose when these public figures endorsed it.

      The current market cap of Dogecoin is about $8.03B.

      Skrumble.com provides all its content for informational purposes only, and this should not be taken as financial advice to buy, trade or sell cryptocurrency or use any specific exchange. Please do not use this website as investment advice, financial advice or legal advice, and each individual’s needs may vary from that of the author. This post includes affiliate links with our partners who may compensate us. 

      To view our privacy policy read here.

      You may also be interested in:
      Scroll to Top