Investing In Dogecoin (DOGE) – Everything You Need to Know

Dogecoin (DOGE) is a cryptocurrency that began as a joke in 2013, inspired by the “Doge” meme featuring a Shiba Inu. Created by Billy Markus and Jackson Palmer, it aimed to be a more accessible and less serious alternative to Bitcoin.  With no supply limit, it's used for small transactions and online tipping.  Despite its humorous start, Dogecoin has grown into a recognized digital currency with a strong, charitable community.

How Does Dogecoin (DOGE) Work?

To understand Dogecoin (DOGE) it is important to first learn how the project functions.  So, let's take a closer look at its technical aspects, including its consensus mechanism, programming languages, transaction processing times, and broader capabilities, while also considering the network's security, scalability, and community engagement.

Consensus Mechanism and Security

Dogecoin utilizes a proof-of-work (PoW) consensus mechanism, which requires miners to solve complex mathematical problems to validate transactions and secure the network.  Originally, Dogecoin employed the Scrypt algorithm for its PoW, differentiating it from Bitcoin's SHA-256.  Scrypt was chosen because it is less memory-intensive and was believed to be more resistant to ASIC mining, although ASIC miners for Scrypt eventually became prevalent.

To enhance security and mitigate the risks of network attacks, Dogecoin adopted Auxiliary Proof of Work (AuxPoW) in 2014, allowing it to be merge-mined with Litecoin. This means that miners can mine both Litecoin and Dogecoin at the same time without additional energy consumption, significantly increasing the hashing power securing the Dogecoin network, and making it more resilient against attacks.

Programming Languages and Software Development

Dogecoin's codebase is inherited from Bitcoin and is primarily written in C++.  This approach was chosen as it ensures a robust and efficient software backbone, enabling the network to handle a large number of transactions securely.  The development community regularly updates the Dogecoin code to enhance its features, security, and user experience, contributing to its longevity and adaptability.

Dogecoin (DOGE) Transaction Processing and Capabilities

Dogecoin's block time is set at 1 minute, which is much faster when compared to many legacy networks.  This enables Dogecoin to process transactions more quickly, making it an attractive option for microtransactions and online tipping.  The network's design to handle a larger volume of transactions with minimal fees has made Dogecoin a popular choice for small-scale transfers.

One of Dogecoin's standout capabilities is its suitability for microtransactions, thanks to its low transaction fees and quick confirmation times.  This has fostered a vibrant community that uses Dogecoin for tipping content creators, charitable donations, and crowdfunding initiatives.  The Dogecoin community is typically known for its friendly and welcoming ethos, often rallying around various causes and projects.

Unlimited Supply and Inflation

Unlike many cryptocurrencies that have a capped supply, Dogecoin has an unlimited total supply. After the initial 100 billion coins were mined by 2015, the protocol was changed to allow 5 billion new coins to be created every year indefinitely.  This decision was made to maintain the incentive for miners and to keep transaction fees low, but it also means that Dogecoin is inflationary by design.  The inflation rate decreases over time as the fixed number of new coins represents a smaller percentage of the total supply.

While the decision to forgo a hard-cap may help the project to continue functioning as a viable currency, it essentially means that the digital asset community does not view DOGE as a good store of value.

Network Scalability and Environmental Concerns

The scalability of Dogecoin, like other PoW cryptocurrencies, is a subject of discussion.  While its faster block time allows for quicker transactions, it also means that the blockchain size grows rapidly, potentially posing challenges for node operators in terms of storage requirements.  Additionally, the environmental impact of PoW mining activities, including those associated with Dogecoin, has been a concern, prompting discussions about more energy-efficient consensus mechanisms.

What is ‘DOGE'?

DOGE coins are the tokens used within the Dogecoin network to transfer value from one participant to another.

History of the Dogecoin (DOGE) Network

Dogecoin's journey from a humorous meme to a significant player in the cryptocurrency space is both unique and fascinating.  Below is a closer look at the timeline of the network, and how managed to establish itself as the top memecoin.

2013

• December: Dogecoin was created by Billy Markus, a software engineer from Portland, Oregon, and Jackson Palmer, a product manager at Adobe Systems in Sydney, Australia.  The project was launched as a fun and friendly alternative to Bitcoin, inspired by the popular “Doge” meme featuring a Shiba Inu dog.

2014

• January: The Dogecoin community began using the currency to tip on social media platforms, fostering a culture of generosity.
• March: Dogecoin experienced its first major use case in fundraising when the Dogecoin community raised more than $30,000 worth of Dogecoin to help send the Jamaican bobsled team to the Sochi Winter Olympics.
• April: Another fundraising effort saw the Dogecoin community raise $55,000 in Dogecoin to sponsor NASCAR driver Josh Wise.
• September: Dogecoin implemented the Auxiliary Proof of Work (AuxPoW) mechanism, allowing for merge mining with Litecoin, which significantly increased the security of the Dogecoin network by leveraging Litecoin's stronger hashing power.

2015

• Dogecoin's community continued to grow, with users employing the currency for various charitable acts and microtransactions.

2017-2018

• During the cryptocurrency boom of late 2017 and early 2018, Dogecoin's value surged along with the broader market, gaining mainstream attention.
• Despite the market correction in 2018, Dogecoin maintained a loyal user base and continued to be used for tips and small transactions.

2020

• July: Dogecoin went viral on TikTok, with users encouraging a speculative buying frenzy aiming to increase the coin's value to $1.  This increased exposure led to a significant price increase, albeit temporarily.

2021

• Dogecoin gained unprecedented mainstream attention, partly fueled by mentions from high-profile individuals like Elon Musk, Snoop Dogg, and Mark Cuban.  Musk's tweets, in particular, played a significant role in Dogecoin's price movements.
• May: The price of Dogecoin hit an all-time high, reaching over $0.70, ahead of Elon Musk's appearance on “Saturday Night Live,” where it was anticipated he would mention the cryptocurrency.
• Throughout 2021, Dogecoin's adoption increased, with more merchants and platforms accepting it as a form of payment.

2022-2023

• Dogecoin continued to maintain its relevance in the cryptocurrency space, and it was supported by a passionate community and increased merchant adoption.  Despite the volatility common in the cryptocurrency market, Dogecoin's presence helped solidify its status as more than just a “meme coin.”
• The development team focused on technical improvements, including enhancements to the Dogecoin network to improve transaction efficiency and reduce fees.

Throughout its history, Dogecoin has shown remarkable resilience and adaptability.  What started as a joke has evolved into a digital currency with a multi-billion dollar market cap, a testament to the power of community and the evolving nature of the cryptocurrency space.

Future Developments and Considerations of Dogecoin (DOGE)

The Dogecoin development team and community continue to explore ways to improve the network's efficiency, security, and scalability.  Proposals for adopting layer-2 solutions, enhancing the protocol, and reducing the environmental impact of mining are part of ongoing discussions.  The unique position of Dogecoin in the cryptocurrency ecosystem—as both a functional, transactional currency and a community-driven project—highlights its potential for further innovation and adaptation.

How to Buy Dogecoin (DOGE)

Currently, Dogecoin (DOGE) is available for purchase on the following exchanges:

Uphold – This is one of the top exchanges for United States & UK residents that offers a wide range of cryptocurrencies. Uphold also offers Ethereum staking. Germany & Netherlands are prohibited.

Paybis – This truly global company offers services to residents from 180+ countries, including Canada, Europe, UK, & USA.

Kraken – Founded in 2011, Kraken is one of the most trusted names in the industry, with over 9,000,000 users and over $207 billion in quarterly trading volume.  This exchange offers trading access to over 190 countries, including Australia, Canada, and Europe, and is our most recommended exchange for USA residents. (Excluding New York & Washington state)

How to Store Dogecoin (DOGE)

Securing Dogecoin (DOGE) investments, especially for long-term holding or substantial amounts, necessitates a robust storage solution.

Hardware wallets, known for their enhanced security, are a top choice for safeguarding Dogecoin (DOGE) holdings. These devices store cryptocurrency offline in “cold storage,” effectively insulating them from online vulnerabilities and hacking threats.  A look at some of the best solutions can be found HERE.

For those unsure of hardware wallets, Dogecoin (DOGE) is also widely supported by non-custodial software wallets.  A look at some of the best software wallet solutions can be found HERE.

For Dogecoin (DOGE) users, choosing the right storage option is crucial, with hardware and non-custodial software wallets providing a secure solution for substantial investments and long-term holding.

Dogecoin (DOGE) – The Original Memecoin

Dogecoin's operation as a cryptocurrency involves a blend of technical sophistication, community engagement, and continuous adaptation.  Its consensus mechanism, programming foundation, transaction capabilities, and open-ended supply model define its functionality and appeal, while the community's ethos and projects underscore its distinct identity in the digital currency space.

Dogecoin (DOGE) was not only the first memecoin, it remains the most popular more than a decade after its creation.