What is Dogecoin?
Dogecoin is a cryptocurrency like Bitcoin or Ethereum. Dogecoin was initially created as a joke for crypto enthusiasts and got its name from a meme that was once popular. Despite this extraordinary origin story, its popularity exploded in summer of 2021. Since then, Dogecoin has become the fifth-largest cryptocurrency by market value. Dogecoin’s History Software engineers Billy Marcus and Jackson Palmer created Dogecoin in late 2013. Palmer branded the cryptocurrency’s logo using a meme containing the deliberately misspelled word “doge” to describe shiba inu dog. In his early days, Bitwave CEO Pat White said, “Doge really started having fun with Bitcoin.” Initially, a community of enthusiasts organized promotional demonstrations to raise Dogecoin’s profile, for example, raising money to send the Jamaican Bobsleigh team to the 2014 Olympics or sponsoring a NASCAR driver. In early 2021, Dogecoin gained cult status on Reddit’s WallStreetBets message board. “The joke is on Wall Street this time,” said Mati Greenspan, portfolio manager and founder of Quantum Economics. “What you have is a situation where young people in TikTok perform thousands of percentage points better than even the smartest suits,” he added. Today Dogecoin is a cryptocurrency whose value explodes and earns more than 5,000% in 2021.
Tesla CEO Elon Musk (among its boosters), who referred to Dogecoin as his favorite cryptocurrency. Musk also called Dogecoin “the crypto of the people” and promised to place a physical Dogecoin token on the moon. “Doge’s long-term foundations are solid. It’s a buying opportunity,” said Jehan Chu, managing partner at Hong Kong blockchain venture capital firm Kenetic Capital. “Unlike many other cryptocurrency projects, dogecoin is the funniest currency in the world,” Alex Thorn, head of research at TSX-listed investment management investment firm Galaxy Digital, said in a research report last week.
The Elon Musk Effect
The CEO of Tesla and SpaceX has spent years talking about coins. Musk’s tweets, which sometimes included references to Dogecoin, often pushed prices to record highs. “You have a man who looks like a cult leader,” said Asheesh Birla, managing director of Ripple, which manages an alternative cryptocurrency used for payments. Musk, however, is not alone in celebrity endorsement of Dogecoin. Dallas Mavericks owner Mark Cuban, Snoop Dogg and Kiss bassist Gene Simmons gathered publicly behind Dogecoin and repeatedly voiced their support on social media platforms. Jonas Brothers singer and guitarist Kevin Jonas tweeted his purchase of Dogecoins in February 2021, but did not disclose the extent of his investment. He tweeted: ‘All I’m saying is… #Doge.’
How Does It Work?
Dogecoin is a cryptocurrency that works on blockchain technology similar to Bitcoin and Ethereum. Blockchain is a distributed, secure digital ledger that stores all transactions made using a decentralized digital data. All owners carry a 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 safe. People called miners use computers to solve complex mathematical equations to process transactions and register them in the Dogecoin blockchain, the “proof of work” system. In exchange for processing transactions and supporting the blockchain ledger, miners then earn additional Dogecoins that they can keep or sell on the open market. Dogecoin can be used for payments and purchases, but it is not a very effective value store. The main reason for this is that there is no lifetime limit on the number of Dogecoins that can be created by mining – that is, the cryptocurrency is quite inflationary by design. Blockchain rewards miners for their work by creating millions of new Dogecoins every day, making it very difficult for speculative price gains at Dogecoin to withstand over time.
In these years, Dogecoin’s value jumped with the rest of the cryptoverse during the interest peaking at the end of 2017 and in 2018 it fell along with the rest of the cryptoverse. At its highest level, Dogecoin was trading at $0.018 and had a market capitalization of more than $2 billion. In the summer of 2019, Dogecoin, along with the rest of the crypto market, saw another increase in its value. Dogecoin enthusiasts were happy when crypto exchange Binance listed this coin.
The Value of Dogecoin
Currently, discussions are ongoing about the value of this coin, as there are very few usage options for the token. Although more sellers are starting to accept Dogecoin as a payment method, it is nowhere near the level of adoption required to be used instead of any real currency. “These days it’s all a big marketing act,” said Mike Bucella, managing partner at BlockTower Capital. Unlike rival cryptocurrencies like Ethereum, which allow programmers to build apps on their platforms to do things like lend and borrow, there’s not much anyone can do with Dogecoin. “If you look at the protocol itself, I don’t even know if there’s anyone who’s added new functionality or code to it over the last few years,” ripple’s managing director, Asheesh Birla, said. “Dogecoin doesn’t really have a development team behind it.” Given these limitations, the run at Dogecoin seems entirely speculative. Dogecoin has value because other people believe it has value. And because they believe that someone else is willing to buy it at a higher price than them.
Should You Buy?
Dogecoin purchasers were well rewarded before 2021 began. Again, people are still a little wary, especially when it comes to buying Dogecoin as an investment. The continued flow of new currencies into the market has put endless downward pressure on the value of coin. It is also a matter of debate that there may be additional security risks compared to other major cryptocurrencies. There is criticism about security as follows: “It does not have the security that Bitcoin or Ethereum has. Also, there is no particularly robust mining community around Doge, so it may be subject to a mining-level attack. Buying all kinds of cryptocurrencies involves risk.”.
Dogecoin vs. Bitcoin
Dogecoin has several important differences compared to Bitcoin. First, it is faster and easier for miners to complete mathematical equations that complete and record transactions, which makes Dogecoin a little more efficient for processing payments. “In cases where the process takes 10 minutes to approve new blocks on the Bitcoin blockchain, it only takes one minute on the Dogecoin blockchain,” said Gary DeWaal, president of Katten’s Financial Markets and Regulatory Group. Another important difference is that there are no limits on the number of coins that can be created. There is a limit of 21 million Bitcoins, which limits the maximum number of coins that can be created. This means that miners are forced to work more and longer over time to earn a new Bitcoin and to some extent it helps to guarantee bitcoin’s ability to hold and grow its value over time.
Andrew Lapthorne, head of global quantitative strategy at Société Générale SA, said “an increasing number of strange and wonderful signs of market surplus.” Indeed, more than 50 memes are listed in the cryptocurrency coinmarketcap and have documented their prominence. Like all cryptocurrencies, the biggest inhibitor of its growth is its inability to use it for transactions. Nevertheless, unlike other cryptocurrencies, the particular problem for meme cryptocurrencies is that their use depends in part on the withdrawal of users to the meme. If investors lose interest in meme, the price collapses and it becomes worthless. One thing is certain: Dogecoin is one of the most speculative and volatile cryptocurrencies today.
How to Buy?
You can buy Dogecoin on a cryptocurrency exchange like Binance or Kraken. Platforms require you to set up and fund an account with US dollars or crypocurrency. The leading crypto exchange Coinbase does not support Dogecoin purchases. Some online brokers, including Robinhood and TradeStation, also allow you to buy Dogecoin in addition to traditional assets such as stocks, mutual funds and bonds. Wallets take a range of forms, from online services offered by exchanges such as Coinbase, apps on your mobile device and even a physical hard drive. “For many years, you can perform tasks on Dogecoin ‘taps’ to win Dogecoin instead of buying it,” said C. Neil Gray, partner at Duane Morris LLP in fintech practice areas. “Tasks included things like watching ads or filling out surveys. More recently, it has become difficult to find anyone who works.” he said.