It took a few random tweets from Elon Musk calling Dogecoin his “favourite cryptocurrency” and “it’s the people’s crypto” and all of a sudden, the ‘joke’ cryptocurrency is ‘rocketing to the moon’. The Internet currency surged more than 600% in the first week of February 2021 and once again, the meme coin is a viral sensation.
Funny thing, just for a laugh, Astrobotic plans to send Dogecoin in the form of a paper wallet to the moon through United Launch Alliance.
Dogecoin’s surprising surge this week pushed its total market value to about $9.6 billion which makes it the seventh most-valuable cryptocurrency, according to CoinMarketCap data. Bitcoin still leads way out front with a total market value of about $160 billion. Dogecoin’s market capitalisation sits around $1.4 billion.
What is Dogecoin?
Dogecoin is an decentralised, open source, peer-to-peer digital currency “favoured by Shiba Inu fans worldwide”, according to its quirky site. The digital coin was created a softfork to reach a broader demographic than Bitcoin. It’s an altcoin and marketed as the Internet currency you can use to buy and easily send money online.
Co-founder Bill Markus based Dogecoin’s protocol on existing cryptocurrencies such as Litecoin and Luckycoin. These coins use scrypt technology in their proof-of-work algorithm.
The use of scrypt means that miners cannot use SHA-256 Bitcoin mining equipment. Instead, Doge miners must use dedicated FPGA and ASIC devices for mining which are renowned for being more complex to produce.
What is the difference between a cryptocurrency and an altcoin?
Bitcoin is the first-ever digital coin and the original cryptocurrency.
Dogecoin is an altcoin. An altcoin is any cryptocurrency that is not Bitcoin. There are over 5 000 altcoins on the market at the moment and they’re all created as a hardfork off the complex blockchain technology that led to the creation of Bitcoin.
Altcoins use the same decentralised, open source, peer-to-peer protocol as Bitcoin but often with more features to give them greater functionality. This includes faster transaction time and making it a more useful coin for payments, money transfers and smart contracts.
Why Dogecoin is a joke
Dogecoin has been a standing joke for a long time. It was more of an Internet meme coin than a serious proposition but to everyone’s surprise, Dogecoin is now the seventh most-valued cryptocurrency, thanks to the likes of Elon Musk, Snoop Dogg, TikTokkers and the subReddit community who’ve been giving it a big push on Twitter.
Dogecoin was created as a ‘sarcastic joke’ by Jackson Palmer in 2013, who literally set up the meme platform in three hours one Sunday evening. Palmer was a product manager at Adobe Systems in Sydney at the time and he created the code as a fun version of Bitcoin. His coin features the face of the wildly popular Shiba Inu dog from the Doge meme.
Bill Markus, a software engineer at IBM, saw the buzz generated by the Doge community and developed software for Palmer to accompany his product. The cryptocurrency became a viral sensation and jumped a staggering 300% in value after only two weeks of being launched.
How does Dogecoin work?
Dogecoin is an inflationary coin. In other words, there are no finite number of Dogecoins to be mined and the supply of Dogecoins is unlimited.
Bitcoin is a deflationary coin because there’s a ceiling on the number of coins that will be created. Bitcoin’s supply is capped at 21 million digital coins that can be mined in total. Once Bitcoin miners have unlocked all the coins, the world’s supply will essentially be tapped out.
The unlimited supply of Dogecoin falls in line with what the creators wanted; a more versatile and affordable cryptocurrency and a newcomer-friendly community. The price of Dogecoin will never be driven by scarcity as there is no supply cap.
Dogecoin is based on Luckycoin’s protocol which is derived from Litecoin. The altcoin uses Litecoin’s scrypt technology and is a proof-of-work coin. Markus, the software developer, initially used a randomised reward for block mining but that has since been changed to a static reward.
What is scrypt technology?
Scrypt is a key source function that uses a special kind of hash function that is really good at creating secret cryptographic keys. The purpose of the Scrypt hash is to take input data and create a fingerprint of that data. Think of it as data DNA.
The crux of Scrypt is it’s ‘slow by design’, meaning the software creates a fingerprint of the input data very slowly. Scrypt was first used by the cryptocurrency Litecoin as an alternative to the more well-known SHA-256 hash function.
Both functions are used as mining algorithms within the Litecoin and Bitcoin protocols and both operate within the proof-of-work consensus mechanism where a miner is required to find a nonce value. This is a variable selected by the miner.
What is a proof-of-work coin?
Proof-of-work forms the basis of many other cryptocurrencies. It describes a technology system that requires a reasonable amount of effort in order to frighten off silly or malicious use of computing power such as sending spam emails or launching denial of service attacks. In 2009, Bitcoin became the most widely-adopted proof-of-work protocol.
Join the Dogecoin community
What sets Dogecoin apart from Bitcoin and other digital currencies is its loyal, vibrant community that’s made up of fun-loving, friendly subReddits who are everyday traders and investors out to make money and have a good laugh at the same time.
It’s thanks to the persistent loyalty of the Doge community that at cryptocurrency that was created for laughs and served no purpose is now worth more than Western Union and Under Armour, the American sports equipment company that manufactures footwear, sports and casual apparel.
Check out the fun, crazy memes the Doge community put out and follow Dogecoin’s beloved mascot on Reddit.
How much is Dogecoin?
Dogecoin started trading at around $0.056 when it was launched in 2013. In the first week of February 2021, it rose to $0.0872 and then settled back at $0.084. Dogecoin experienced a meteoric 55% rise in 24 hours which eclipsed its all-time high of $0.078 set in January. Year-to-date Dogecoin is up more than 1.380%.
If you’re wondering why Dogecoin is so cheap at the moment, it’s because Doge is in a period of hyper- inflation because it’s still being mined. According to the Doge subReddits, the altcoin won’t hit its soft cap for months. They say this keeps Doge in abundant supply which exerts downward pressure on the price.
Should you buy Dogecoin?
The cryptocurrency market is highly volatile and trading any digital coins is high-risk and speculative. However, if you have an appetite for risk and spare funds to trade with, Dogecoin is a new and exciting cryptocurrency and it would be fun just to see what happens to this dog-crazy altcoin.
The surprising highs and lows of Dogecoin
The fact that Dogecoin even got off the starting blocks was a surprise and it’s surges and crashes have been just as fascinating. Dogecoin jumped nearly 300 percent in value in 72 hours when it was launched in December 2013. It suffered its first major trading crash after China forbid its banks from investing in the Bitcoin market, dropping by 80% in value.
Dogecoin suffered its first major theft shortly after it was launched. Millions of coins were stolen during a hack on the online cryptocurrency wallet platform, Dogewallet. The hacker gained access to the platform’s filesystem and modified its send/receive page to send any and all coins to a static address.
To help those who lost funds on Dogewallet after its breach, the Dogecoin community started an incredible initiative named “SaveDogemas” to help donate coins to those who had them stolen. Approximately one month later, enough money was donated to cover all of the coins that were stolen.
Dogecoin’s trading volume briefly surpassed Bitcoin’s in January 2014 but its market capitalisation has remained substantially behind the giant cryptocurrency.
From 2017 to early 2018 in what was known as the cryptocurrency bubble, Dogecoin briefly reached a peak of 0.017/coin, putting its total market capitalisation near USD 2 billion. In July 2020, the price of Dogecoin spiked following a TikTok trend aimed at getting the altcoin’s price to surge to $1.
Just when we thought Doge would retreat quietly to his kennel, Elon Musk and the enthusiastic Reddit community started having fun with the coin. In a matter of hours on 4 February 2021, Dogecoin reached a price of $0.05. This followed on the back of a 900% on 29 January when the altcoin hit an all-time high before sliding back.
So, if you’ve been watching all the hype and wondering, “Should I jump on the bandwagon and buy Dogecoin?”… bear in mind that Dogecoin, like every cryptocurrency, is volatile, trading it is high-risk and from one day to another, you don’t know if it’ll surge or crash.
Don’t buy Dogecoin with money you can’t afford to lose. If you’ve got spare cash and want to have a bit of fun, you can take a gamble on Dogecoin and see what happens.
Dogecoin isn’t nearly as useful as a payment coin than Bitcoin but it’s gaining some traction. It’s more popular as a tipping system, which is like giving someone a LIKE on a post but in Doge coins instead.
What you’ll love about Dogecoin is its vibrant, fun-loving community. Join it for a laugh and to learn some valuable trading insight from the Reddit folk.
How to get and trade Dogecoin
There are a number of ways to get Dogecoin. You can buy them off the Dogecoin website or through a retail broker, trade for them, get tipped in Doge by the community or you can mine Doge.
Mining is where miners use their computer to process Dogecoin transactions made by other people. In return, miners earn Doge. Mining requires a lot of technical expertise and is best left to advanced users only.
How to buy Doge from the Dogecoin website
It’s quick and easy to buy Dogecoin direct via its website: www.dogecoin.com
Visit the website and select Getting Started.
- choose type of wallet: Desktop or phone
- choose type of Computer Operating System: Windows, OSX or Linux
- Download a wallet
Click the link below to download Multi-Doge, a local Dogecoin wallet.
If you are asked to accept the download, accept the download.
Once the file finishes downloading, click the (.exe) file.
2. Install a wallet
Go through the installation process. Once you get to the license agreement, accept it to continue with the installation. Once you are finished with the installation, find the Multi-Doge shortcut and open it.
3. Use your wallet
On launch, your Doge wallet will have a loading bar on the bottom-left. You will have to wait 1 to 5 minutes for the wallet to synchronise. After it is synchronised with the network, you are now able to use your Dogecoin wallet.
What can Dogecoin be used for?
Dogecoin is described as an Internet currency because it can be used to buy goods and pay for services online as well as easily send money online.
You can trade physical, tangible items on the Internet through online communities such as Reddit and Twitter, place bets online, book accommodation and flights through merchants that accept Doge and you can even buy a house with Doge.
What is the Dogecoin tipping system?
The Dogecoin tipping system is where social media users tip traders, investors and content providers for posting interesting or noteworthy content.
Elon Musk recently tweeted that Dogecoin is his “favourite cryptocurrency”. He also removed Bitcoin from his Twitter bio. So, if Dogecoin is good enough for Mr Musk, it’s good enough for us.
Lots of the hype over Dogecoin has been for a bit of humour and the market hasn’t taken the altcoin too serious up until now. Like any cryptocurrency, be wary of the buzz and excitement around the coin and the lure of wild upswings in price.
Trade Dogecoin with caution because losing lots of money on a crazy gamble isn’t that funny!
While Dogecoin is a fun, new and rapidly-growing altcoin, it still has a long way to go in terms of market capitalisation and it’s not particularly useful as a payment mechanism. One of the reasons people use Dogecoin is to tip traders and investors for producing valuable content. Not many online brokers offer Dogecoin and it’s not widely accepted by merchants as a payment mechanism.
Somehow, Dogecoin has outlasted almost all of the early altcoins. It’s enjoyed a surprising price surge but it’s still very cheap to buy relative to Bitcoin. This makes Doge an excellent entry-level cryptocurrency. A unique selling point of Doge is its fanbase is part of a thriving online community who share loads of valuable content and trading tips.
There’s no harm in putting a bit of spare cash into the pot to buy Dogecoin and “see what happens”. But… don’t expect too much from one of the world’s wackiest cryptocurrencies.
The cryptocurrency market is unpredictable and extremely volatile. Trading Bitcoin and any of the alternative digital coins is associated with a high level of risk. Consider your appetite for risk before trading cryptocurrencies as you could lose a lot of money.
Featured Writer on SA Shares, Forexsuggest and Forextrading.africa