What is Dogecoin (DOGE)?

What is Dogecoin (DOGE)?

dogecoin
The world’s most useful joke currency [Adrian Today/Shutterstock.com]
Dogecoin (DOGE) is one of the most interesting cryptocurrencies in the industry, and one which every crypto user should own (at least a tiny bit). Dogecoin is digital cash, just like Bitcoin (BTC), but the community that has developed around it has given this coin a life of its own. We’re not saying that buying at this Dogecoin price will make you rich (but it’s happened before with DOGE), but bringing it into your digital wallet will give you a kind ofjoy that no other crypto can provide.

The Dogecoin price has fallen as low as less than one penny (that’s $0.002 per coin as of January 8, 2019). At its all-time-high early in 2018, the Dogecoin price was more than $0.02 per coin! That might not sound like much, but Dogecoin value returning to former heights would represent 1,000%+ returns, something nearly unheard of in modern investing!

What is Dogecoin Used For?

Founded way back in 2013, Dogecoin was created for digital payments. And for memes. DOGE’s famous Shiba Inu dog mascot speaks to the heart of the internet humour of the past decade. Creator Billy Markus made Dogecoin as a joke (if digital money can exist, then even something ridiculous can be digital money). To his surprise, the web took this joke seriously, and DOGE value cultivated a market cap of more than $60 million just a month after its genesis block.

The Community Behind Dogecoin

DOGE’s success is in the hands of its community. Dogecoin is often used for digital payments, cross border transactions, and trading investment (just like any other cryptocurrency). But the community frequently comes together to make Dogecoin something more than a simple Bitcoin or Litecoin clone.

In years past, Dogecoin users have banded together to sponsor a NASCAR racer, to send the Jamaican bobsled team to the Olympics, and to fund numerous worthy charities. There’s nothing that keeps Bitcoin from doing the same, but because Dogecoin was founded on frivolity and cooperation, DOGE users choose to operate this way.

The Shibu Inu mascot whose face is pictured on all coins has given birth to more web slang than almost any other doge you can name. Phrases like “much amaze!”, “so excite”, and “wow” are all meant to mimic what a dog might think when experiencing its day-to-day life. Doge slang has even been analysed by linguists, who have sussed out its unique particularities.

“What are these unique particularities?”, you ask. Well, the spelling of everyday words is the same, or simplified, in the way a child (or doge) might spell them (they’re written in comic sans, whenever possible). Complex ideas are reduced to single words or two-word phrases (“much eat”, “so trick”). Modifiers like “So” and “Much” are also paired with verbs, something that never happens in good English.

There are other variations and rule twists. If you want to know more about the nuts and bolts of Doge-English, click the link you just passed by. Once you get the hang of the muddled rules that guide this internet dialect, you’ll find it’s totally natural to use. Many creative.

How Does Dogecoin Work?

dogecoin on dark background
Dogecoin is easily mined with cheap hardware [Tashatuvango/Shutterstock.com]

Dogecoin works like many other cryptocurrencies. Power users called “miners” use computer power to check that DOGE transactions are authentic, and to secure the network against hackers and the like. Normal users buy, sell, and trade Dogecoin for all kinds of purposes. You can buy a dog bed at Overstock.com with Dogecoin. You can tip excellent content creators with DOGE on Reddit and Steam. The possibilities are endless.

Dogecoin was created as a fork of Litecoin. This means that the Litecoin software was copied, then adapted to function slightly differently for Dogecoin’s unique purposes. Litecoin itself is a hard fork of Bitcoin, so in reality, Dogecoin is in the direct lineage of Bitcoin itself.

Real World Applications for Dogecoin (DOGE)

The main real-world applications for Dogecoin are:

  • Retail sales (buying stuff from stores, physical and digital)
  • Cross-border transactions and remittances (sending money to family overseas, buying foreign investments, etc.)
  • Tipping online (Facebook, Reddit, Steam, Twitter, etc.)
  • Giving, charity, and socially positive stunts (Olympics, NASCAR, etc.)

The Dogecoin community is very active online. Go to somewhere like Reddit to see it in action. At the end of the day, Dogecoin can be used for any purpose for which money can be used.

What is the Difference Between Dogecoin and Bitcoin?

The differences between Dogecoin and Bitcoin are mostly technical (ignoring the huge cultural differences of the two cryptocurrencies). Dogecoin adds billions of coins to its supply each year, with no cap to come. Bitcoin adds coins through mining, as well, but has a cap of 21 million which will kick in in the mid-2100s. Both cryptocurrencies use basic cryptographic hash techniques that made the first way of cryptocurrencies possible. This means that Dogecoin price GBP will always be lower than Bitcoin, coin per coin, but this says nothing of their relative investment potential.

Similar technologically, the way DOGE and BTC are used makes the bigger difference. There are simply fewer people using Dogecoin at any time than are using Bitcoin. Bitcoin is trying to be the most popular cryptocurrency in the world. This leads to high international traffic, which makes Bitcoin (often) more expensive and slow than DOGE.

If the tables were turned, and Dogecoin was magically the world’s #1 cryptocurrency, DOGE wouldn’t be able to handle all of that traffic. In fact, Dogecoin hasn’t had any significant technical update in several years! From a technical standpoint, DOGE is a dead project. But from a user standpoint, it’s as active as ever (though admittedly a little depressed with crypto prices suffering as they are in late 2018/early 2019).

Dogecoin and Bitcoin also differ in the value and number of coins in each system. There will only ever be 21 Million Bitcoins. Supply and demand dictates that, if Bitcoin is desirable, then each of these units will have high value. Dogecoin has a supply of over 117 billion, and billions of new DOGE will be added to the circulating supply each year. This “inflationary model” may mean that DOGE doesn’t have the same kind of investment potential as Bitcoin, but committed users could drive up its price all the same.

How Can You Get Dogecoin (DOGE)?

There are many different ways to get Dogecoin, not all of which require you to spend money. You’ll have to drop some cash if you want to get a large position in DOGE, but all of these methods will put a little DOGE in your digital wallet.

Buy Dogecoin Directly From an Exchange or Broker

Digital exchanges like Poloniex sell Dogecoin in exchange for Bitcoin and other popular digital currencies. Exchanges like HitBTC also have high DOGE volume every single day. In most cases, you’ll have to first buy a popular cryptocurrency like Bitcoin from Coinbase or another exchange that accepts USD (or your local currency). Then this Bitcoin will be transferred to the exchange that sells Dogecoin, and can be directly traded for the same.

Brokers like eToro will let you invest in Dogecoin without buying it directly. A futures contract method called CFD (contract for difference) allows you to make speculations about the future value of DOGE, with funds locked into a contract which expires at a future date. If you predict that DOGE will gain (or lose) value over this time, and it does so, you’ll profit without any cryptocurrency ever changing hands.

Mining Dogecoin

It’s possible to mine Dogecoin from your PC. Miners can pool their computer resources, as well, getting a greater stake of new DOGE that’s added to the system each day.

Trading Dogecoin

People who use Dogecoin frequently trade it for other digital currencies, and vice versa. If you already have popular cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), or NEO (NEO), you can trade these coins for DOGE on numerous exchanges around the Internet.

Tipping/Giving Dogecoin

Dogecoin has a very high circulating supply, which makes each Dogecoin very cheap. For this reason, it’s a perfect cryptocurrency for tipping and giving. New Dogecoin community members are frequently gifted DOGE by other community members. A new Dogecoin brother or sister might be willing to toss some fresh DOGE into your digital wallet. And while we’re on the subject…

Dogecoin Wallets

Dogecoin is a digital currency. Pieces of data, your Dogecoin must be stored somewhere. There are many wallets that support Dogecoin, such as the Dogecoin.info online wallet and the Ledger Nano S multicurrency hardware wallet.

Whichever wallet you choose, make sure to make a careful record of this wallet’s “private key”. This is the secret code associated with your account. If you were to lose access to your wallet, you could use this private key to get your coins back. However, if someone else got access to this key, they could steal your coins.

Choose a convenient, low-security web or mobile wallet for Dogecoin you plan to use in the day to day. Choose a highly-secure crypto wallet that’s not connected to the internet (like the Ledger Nano S) for Dogecoin you’re holding long term as an investment.

Dogecoin FAQ

Why Has Dogecoin Lasted So Long?

The easy answer is: people use it! Dogecoin is very popular, not because it’s the best technology in the world, but because it’s fun and accessible. The Dogecoin community welcomes newcomers, markets itself well on the internet, and basically functions as an autonomous decentralised marketing agency for the coin. Other coins might have more to offer “under the hood”, but few have the charisma (and therefore the longevity) of DOGE. 

Does Dogecoin's Low Price Mean That DOGE is a Good Deal?

A common misperception among new crypto users is that inexpensive coins are a “better deal” than more expensive coins like Bitcoin. This is a misunderstanding of supply and demand. There are more than 100 billion Dogecoins, compared to Bitcoin’s 21 million. All other things being equal, Bitcoin will obviously be way more expensive, because there are fewer of them to go around. Only buy Dogecoin as an investment if you believe it has more return potential than other coins, not because it is cheaper on an individual level. 

Will Dogecoin Prices Bounce Back?

Nobody can tell the future, know for sure if cryptocurrency prices will rise, or whether or not Dogecoin will bring you happiness. But if cryptocurrencies of any kind are to succeed, Dogecoin stands a real chance to be one of the winners. Its dedicated user base is one of the most robust in the industry. So even those Dogecoin has always been a joke, it’s this sense of humour that gives it longevity. 

Without Development, Can Dogecoin Survive?

Normally we would say that any cryptocurrency without active development is dead in the water. However, Dogecoin is very simple technologically (at least compared to Ethereum or other more sophisticated projects). The Dogecoin protocol is on auto-pilot. As long as people enjoy Dogecoin, it will continue to be traded. 

Who Are Dogecoin's Biggest Competitors?

There have been many joke cryptocurrencies over the years (Monacoin, Jesus Coin, Garlicoin, among others), but none other has had the staying power of Dogecoin. Dogecoin’s real competitors are payment cryptocurrencies, like Bitcoin, Litecoin (LTC), and Nano (NANO). Dogecoin is unlikely to dethrone any of these competitors anytime soon, but it outperforms each of them when it’s on its own turf (the goofy side of the internet). 

(*Information in this article should not be taken as investment advice.)

Featured image source: Adrian Today/Shutterstock.com

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