What Is Dogecoin (Doge) And How Does It Work?
From a simple joke to the phenomenon supported by Elon Musk, let’s trace his amazing journey. Inspired by an internet meme and becoming a successful cryptocurrency, Dogecoin has undergone a striking evolution over the past decade. What is it, why such a craze and above all, should you invest in Dogecoin?
What Is Dogecoin?
As of January 2022, Dogecoin is one of the top 12 cryptocurrencies by market cap; a great performance for a project inspired by a famous meme that was initially just a joke. Which brings up the question: concretely, what is Dogecoin? Classified as an altcoin, a term that refers to all cryptocurrencies that emerged after Bitcoin, it is also based on blockchain technology and its price can be volatile.
However, unlike other crypto-assets like Bitcoin, the number of Dogecoins that can be put into circulation is theoretically unlimited. According to one of its inventors, the community that supports the project wants to be “jovial and open”. So, where does Dogecoin come from and how can it be described?
Who Invented Dogecoin, And Why?
Let’s start with the genesis of the project. Dogecoin has been around for a long time: it was created in 2013 by two software engineers, Billy Marcus and Jackson Palmer, from a simple joke. It merged two of the biggest trends of that year (Bitcoin and the “Doge” meme based on the photo of a Shiba Inu dog) to develop an entirely new cryptocurrency. Marcus and Jackson wanted to create a crypto asset that would be accessible to the general public, so they designed Dogecoin with open source software that allows anyone to view the source code.
After timid beginnings, Dogecoin has gradually evolved into one of the most popular cryptocurrencies. Tweets from one of his staunchest supporters, Elon Musk, sent his stock skyrocketing in early 2021. Then, in December of the same year, the billionaire even went so far as to announce that his company, Tesla, would accept Dogecoin as a means of payment for certain derivative products. This marked a turning point in the existence of Dogecoin, which went beyond its status as a “joke” to become a major player in the world of cryptocurrencies.
How Does Dogecoin Work?
Dogecoin is a cryptocurrency based on blockchain technology with quite a pedigree. It comes from a fork of Luckycoin (that is to say that a new cryptocurrency was created from the latter), which is, in turn, a fork of Litecoin, itself derived from a fork bitcoin. In short, the history of Dogecoin goes back to Bitcoin, although they are two completely different cryptocurrencies.
Dogecoin relies on a process called “ auxiliary proof-of-work,” which means that DOGE miners can also work on certain other assets using proof-of-work, such as Litecoin, at no additional cost. In the Dogecoin ecosystem, as with other cryptocurrencies using proof of work, miners must compete to solve complex mathematical problems in order to validate transactions as quickly as possible and thus obtain a reward. For each block of Dogecoin mined, miners receive 10,000 Dogecoins.
What Can You Buy With Dogecoin?
Ultimately, what is Dogecoin used for? Currently, nearly 2,000 businesses accept Dogecoin as a form of payment. From luxury cars on bitcars.eu to trips offered on travolier.com, you can use Dogecoin to buy all kinds of goods and services. You can even convert and spend your Dogecoins via a prepaid Mastercard offered by Bitpay, usable anywhere card payment is accepted.
Should You Invest In Dogecoin?
Before investing in a cryptocurrency such as Dogecoin, you should ask yourself the following questions: do you have a good understanding of how cryptocurrencies work so that you can make an informed decision?
Cryptocurrencies are a risky investment. Are you ready to lose all the sums invested? How much are you looking to invest in total and over what time horizon? Once you answer it, you will be in a better position to decide if investing in Dogecoin is the right decision.