Everything You Need to Know About Dogecoin: The Beginner’s Guide
If I say DAI or Algorand, would you know what I"m talking about? Probably not!
Dogecoin, though, is a name you'll recognize blindfolded.
This cryptocurrency has been trending nonstop on Reddit and Twitter, making it incredibly popular. It was the first “meme coin”, but that didn't stop it from receiving praise from Elon Musk, who even adopted it as a payment method for Tesla.
What once began as a joke eventually became one of the most logical ways through which cryptocurrency users tip creators online, conduct online purchases, and engage with each other.
Dogecoin isn't a cryptocurrency that brought any technological advancements. It didn't even do anything too special.
Dogecoin creators only created it to make fun of the other altcoins that came out at the time. Eventually, the currency became much more than a simple parody. Where did all this success come from? What made Dogecoin such a special token for investors?
Let's take an in-depth look at Dogecoin's antics and see what exactly sets it apart from the other cryptocurrencies.
Throughout this article, you'll learn the ways you can get your hands on some Dogecoin tokens, so keep that in mind and let's dive in.
History of Dogecoin: How It All Started
On December 6, 2013, Jackson Palmer and Billy Markus created Dogecoin. They decided to adopt a tongue-in-cheek take on altcoins, which at the time were gaining much popularity among crypto speculators.
At the time, Markus created the token in just a few hours as a parody of the most well-known cryptocurrency, Bitcoin. It was meant to be absurd since the crypto community used to be very elitist and limited. That's why Dogecoin creators envisioned a fun, inclusive, and light community.
Back then, Jackson Palmer was a product manager at the Sydney, Australia office of Adobe Inc., while Billy Markus was a software developer at IBM in Portland, Oregon. Palmer created the token, and when Markus found out about it, he reached out to get permission to build the software behind the token.
Initially, Dogecoin gave miners a randomized reward for block mining. That changed in 2014, and Dogecoin gives miners a static reward worth 10,000 DOGE tokens.
In 2013, while Bitcoin's value fluctuated only at around $1,000, many people started taking cryptocurrencies a lot more seriously, maybe a little bit too seriously. The two creators sat down and made something quite interesting. They took the Shiba Inu dog meme and adopted it as their mascot. Needless to say, since memes were and still are prevalent in many online communities, this fresh approach to cryptocurrencies excited the internet.
Dogecoin Creation
To create the Dogecoin token, they borrowed the Scrypt-based Proof-of-Work (PoW) consensus algorithm that Luckycoin was using at the time. PoW is a system that designates who updates the transactions within a blockchain network. It's typically linked to the computational power miners, or nodes, that contribute to validate transactions.
Luckycoin (LKY) was an open-source, peer-to-peer currency that relied on advanced cryptographic algorithms for protection; over time it became obsolete. Luckycoin also borrowed much of its technology from Litecoin, so you also have a connection here. Litecoin (LTC), an international payment method, is a cryptocurrency that a former Google Engineer, Charlie Lee, founded in 2011.
Litecoin used Scrypt, a hash function alternative to another function known as SHA-256. These functions are computationally intensive and that's why they require raw computational power to generate many possible solutions. In 2014, the Dogecoin code changed, merging the Litecoin and Dogecoin processes, allowing them to use the same mining process.
Popularity
This "meme coin" spawned a wave of fans across the internet, and now, has one of the largest crypto communities out there. It's known as a beginner-friendly and welcoming coin. It also has a good reputation for its charitable donations and many other good causes.
The Dogecoin community refers to themselves as Shibes. They speak their own language, which you need to see for yourself to grasp. Generally speaking, the community is mostly in it for the fun factor. Such fun! (Shibe language).
Since Dogecoin has become such a popular altcoin, let's check what makes it tick.
Dogecoin Features
Dogecoin is based on blockchain technology, just like almost every other cryptocurrency. The blockchain is essentially a large database, known as a public ledger, that stores transaction information. Miners need to solve a cryptographic puzzle to validate transactions while getting rewards in return.
Once that happens, each transaction you make with Dogecoin gets stored on the Dogecoin blockchain network. Note that the blockchain isn't on a single hard drive, for example, or a single central server; it's stored across literally thousands of computers, known as nodes.
That's the main reason why they"re called decentralized networks. They aren't hosted on a centralized server or location but spread out globally.
Dogecoin Mining Process
To understand how all this works, we need to dive a little bit deeper into the mining process. Whenever a node that powers Dogecoin wants to verify a transaction and confirm its authenticity, it enters into a specific type of lottery.
That involves guessing a code given to the newest block of transactions that gets added to the blockchain. The node that guesses right gets DOGE tokens as a reward, and the transaction gets permanently recorded.
Now, imagine this happening every minute!
This makes the transaction time of Dogecoin a lot quicker compared to coins it's based on, like Litecoin. It also means Dogecoin is a much faster option for online purchases and worldwide money transfers. As a result, many online platforms use Dogecoin as a tipping mechanism. You can send your favorite content creators quick tips through DOGE tokens.
Most live streamers on Twitch or YouTube have announcements whenever someone tips them. That's why DOGE can be convenient for someone who wants to get some feedback from a content creator in the form of a “thank you” message.
To receive Dogecoin (DOGE) tokens or tips, you need a cryptocurrency wallet that fully supports the token. You also need a Dogecoin wallet to buy Dogecoin, store it, and eventually send DOGE to another user.
What is DOGE and how has it performed so far?
The Dogecoin (DOGE) Cryptocurrency Token
DOGE is the ticker symbol for the native cryptocurrency token that powers the Dogecoin blockchain. It's a reward for the nodes, so they continue confirming and validating the transactions that occur on the network.
Aside from that function, you can also use DOGE as an exchange medium and transfer it from one cryptocurrency wallet to another.
Dogecoin doesn't have a finite token number, which is different from other cryptocurrencies. That means you can mine Dogecoin indefinitely, unlike Bitcoin, since Bitcoin caps its tokens at a 21 million coin lifetime cap. That's the maximum that Bitcoin can ever award miners.
The infinite number of DOGE tokens could make it a highly inflationary token as a result. That also eliminates the cryptocurrency's scarcity factor, as you can always mine new DOGE tokens.
DOGE has grown to see adoption in the real world as many companies started accepting DOGE as a payment method for either products or services. Yet, aside from it being a currency, it has no other technological developments.
That just makes it a basic token you can mine and use to buy things, services, or tip your favorite content creators with. That's it!
That said, if you were to send Dogecoin to the wrong address, you need to be aware that it's an irreversible process. The developers don't have special access or the ability to reverse transactions and recover funds. That's because Dogecoin is a fully decentralized project.
How Dogecoin Transactions Works: a Step-by-Step Explanation
To further illustrate the functionality behind the Dogecoin blockchain, we created a step-by-step guide to walk you through how it works.
Digital Wallet: It all starts with a digital wallet like Atomic Wallet. All Dogecoin network users need to have a digital wallet with two keys; a public and a private key. You can request a transaction with another user if you know their wallet ID and their public key.
Miner Alert: Once you make a transaction request, the application needs to alert the Dogecoin miners worldwide to process the transaction. That's where the miners enter the big picture.
Transaction Verification: Here, the Dogecoin miners validate if the sender has enough Dogecoins to make the payment or not. After they successfully verify the transaction, they can approve the transaction request. Each miner is in direct competition with other miners to collect all the pending transaction data, known as the nonce.
Hash Number Creation: The miners then apply this mathematical function to create a correct hash number for that specific nonce in the transaction, which at this moment in time is still pending. The miner that successfully produces the specific nonce's correct hash number gets rewarded 10,000 DOGE tokens.
Transaction Confirmation: After that, both users involved in the transaction get confirmation that the transaction was approved. The requested DOGE amount reaches the receiver's wallet, and it's a done deal.
That's everything you need to know about how DOGE transactions work on the back-end.
DOGE's Price Evolution
Dogecoin's history is quite interesting when it comes to its pricing and the way it has evolved and grown in value. Dogecoin's first-ever recorded value on CoinMarketCap puts the token at an opening price of $0.0002685.
That's essentially the token's value point when it was created.
That said, after its starting point, the price didn't see much fluctuation until 2017, where Dogecoin experienced sustained growth in value where it hit higher than $0.0007463. In January 2018, the token reached $0.02 during what we now call the "cryptocurrency bubble." During this crypto bull run, Dogecoin's market capitalization surpassed $1 billion for the very first time.
Dogecoin reached its all-time highs on May 8, 2021, when the token reached $0.731578.
As of writing this guide, Dogecoin has a value of $0.1766. It has a market cap of $23,425,661,293, and a circulating supply of 132.64 billion DOGE tokens.
The token's value has increased by $0.1763315 since its launch, reflecting an approximate 65,672.81% gain. That's truly exceptional and unseen anywhere but in the cryptocurrency world.
It simply showcases just how far this meme token has come in terms of value and market capitalization as a whole.
You can learn how to buy Dogecoin easily.
Dogecoin's Current State: What's Happened so Far
Dogecoin's value has been heavily shaped and reshaped through social media attention. Before diving too deep into that, let's see how widely adopted Dogecoin has become.
In January 2014, the Dogecoin community donated 27 million Dogecoins to fund the Jamaican bobsled team's trip to the Sochi Winter Olympic Games. At the time, these tokens were worth $50,000. By quarter end, the community also donated $11,000 worth of Dogecoin to build a well in Kenya and another $55,000 as a sponsorship for NASCAR driver Josh Wise.
This gives us an indication of just how passionate and engaged the Dogecoin community was and still is. Still, it's not all sunshine and rainbows. The Dogecoin blockchain has seen some very dark days.
That's because on December 25, 2014, a Dogecoin wallet, now known as “Dogewallet”, ended up getting hacked. The cyberattackers in this specific case ended up stealing 21 million DOGE tokens, which were worth around $12,000. The Dogecoin community ended up raising $13,000 to pay back the users who lost their money in this attack.
That doesn't mean this threatened its acceptance. Recently, on August 24, 2021, PAWS Chicago, an animal shelter from the Midwest city in the United States, started accepting cryptocurrency donations through DOGE tokens. They named them “Dogenations." They also accepted these donations in Bitcoin (BTC), Ethereum (ETH), and other cryptocurrency tokens, with the main goal of reducing the number of animals killed.
Its acceptance goes beyond charity. Unocoin, one of India's most popular cryptocurrency exchanges, started supporting Dogecoin (DOGE) on December 13, 2021. The next day, billionaire Elon Musk, CEO of Tesla and SpaceX, announced that Tesla would allow you to buy some merchandise through Dogecoin (DOGE), to see how it ends up going.
Elon Musk has been a prominent figure and supporter of the Dogecoin (DOGE) cryptocurrency token. In an interview with TIME Magazine on December 13, 2021, Elon Musk commented that Dogecoin is better for transactions because its total transaction flow is much higher than Bitcoin"s. That gives Dogecoin a more significant potential.
Blockchain Updates
On August 21, 2021, we saw the Dogecoin 1.14.4 launch. This update focused on many improvements, including:
- Enabling upcoming fee reductions
- Improving the synchronization speed by 2.5x
- Enabling users to add peers and import private keys and peer traffic visibility through GUI options
- Fixing security issues
On November 8, 2021, we saw the launch of Dogecoin Core v1.14.5, which was released and could be downloaded from the official Github release page. That was a minor version release. Still, it included important security updates and changes to the network policies and the Dogecoin Core community was advised to upgrade to this version. Users could seamlessly install this release over all existing 1.14 installations without uninstalling or re-downloading.
The main changes here are the important security updates and fee reductions. This release fixed two high severity vulnerabilities affecting many Dogecoin Core users, like:
- Remote code execution in Dogecoin QT (CVE-2021-3401).
- Sensitive information exposure on Unix platforms (CVE-2019-15947).
When it comes to the fee reduction updates, this release finalizes a new minimum fee recommendation for all participants on the network. These were the new recommended fees:
- The recommended minimum transaction fee was 0.01 DOGE/kb.
- The recommended dust limit remained 1 DOGE and should fall in a future release.
Will Dogecoin maintain its robustness and remain popular in the future?
Dogecoin's Future: How It Will Evolve
Dogecoin's future seems brighter than ever, especially with its extremely high level of mainstream adoption and appeal. Yet, it does have some risks associated with it.
The Positives
Shortly, we could potentially see much more development in DOGE tokens" utility purposes and the overall DOGE ecosystem. We could also encounter new protocol upgrades that could introduce new, interesting features, like smart contract functionality. That would allow it to be a solid rival to Ethereum and Bitcoin after its recent Taproot upgrade.
At the moment, Dogecoin's roots are solid within the cryptocurrency sphere's unique, niche market, where it has seen a solid level of growth in terms of value and popularity. While the original developers initially abandoned the project, Dogecoin's development continued. That's solid proof that the network can innovate itself and solve the new issues within the blockchain technology world.
The Negatives
Still, the DOGE token risks a decline in value over time as more tokens enter circulation. The token supply is unlimited since you can always mine new tokens if they"re required. That leads to non-existent scarcity which affects the storage of value.
Additionally, if many vendors don't accept DOGE as a payment method, it won't evolve more than being a simple tipping mechanism or a form of transferring value.
Conclusion
Even though Dogecoin (DOGE) began its life as a lighthearted joke that poked fun at the crypto world's serious tone, it grew and evolved into a major digital currency. At the time of writing, it's the 12th largest cryptocurrency token in terms of market capitalization. That's quite impressive for something created as a joke, especially with the existence of 10,000+ cryptocurrencies on the market.
Dogecoin has one of the biggest communities out there. It has many friendly and helpful members who also work towards the token's further adoption. All this, combined with the solid real-world adoption and headline media attention, has contributed towards Dogecoin's success and growth in value.
The loyal Shibes community also constantly uses the coin instead of holding onto it as an investment. That's one of the main reasons why it's so heavily circulated. Despite some of the original creators behind the token leaving, the project has seen continued development and success due to the passionate and enthusiastic community.
That said, Dogecoin's value could still decrease over time since it has no mining limit, which removes the token's scarcity. Unless mainstream vendors properly recognize Dogecoin and add it as a payment method, it might lose a lot of utility in the long term and become a less desirable project.
FAQ
Is Dogecoin (DOGE) a legitimate cryptocurrency token?
While Dogecoin (DOGE) started as a "meme coin", it's a legitimate cryptocurrency token. You can trade it on just about any cryptocurrency exchange or brokerage. It has its system of validator nodes, known as miners, that validate the blocks of transactions on the network each minute. In turn, transactions get added continuously to the blockchain.
Where can Dogecoin be used?
Dogecoin has become available for various use-cases. For example, Reddit uses it as a tipping mechanism. You can also use it to buy merchandise at companies like Tesla, as per an announcement from the Tesla CEO, Elon Musk. It has also seen a lot of real-world utilization in many industries.
Who are the current developers behind Dogecoin?
Volunteers currently make up the Dogecoin team. The founding team consisted of Billy Markus and Jackson Palmer, who now go by the moniker “Shibetoshi Nakamoto". It's a spin on the name Satoshi Nakamoto, which is the pseudonym for Bitcoin's anonymous creator, or group of creators. Max Keller, Patrick Lodder, and Ross Nicoll are all members of the current development team.
How do I transfer Dogecoin (DOGE)?
To transfer the Dogecoin (DOGE) cryptocurrency token, you need to have a wallet that supports it. For example, you can use the Atomic Wallet, which fully supports it.
Once you have DOGE, all you have to do is click Send within the application. You'll have to specify the recipient's address and enter the coin value and the label, allowing easy transaction tracking. Check out our guide on How to buy Dogecoin.
Did Dogecoin start as a joke or meme?
The idea first gained a lot of traction from a Tweet by Jackson Palmer, who jokingly said that investing in Dogecoin is the next big thing. This received a lot of encouragement from his followers on Twitter, so he created the coin for fun. He wanted it to have a much less serious vibe when compared to other cryptocurrencies, which were extremely serious.
What are some of the most important features of Dogecoin?
Dogecoin isn't that feature-rich. Its only stand-out feature, and the reason why its community loves using it so much, is that it's extremely affordable. It's also generally used for tipping or buying something online. It also has a high-security level because it's fully decentralized.
How much has the price growth of Dogecoin been?
The earliest recorded value was $0.0002685, and the latest recorded value was $0.1766. That means the token has increased in value by $0.1763315 or 65,672.81%.
Resources
Dogecoin Twitter
You can stay in the loop about all the Dogecoin developments on the official Twitter website.
Dogecoin Facebook
You can stay up to date with Dogecoin on the official Facebook Page.
Dogecoin Telegram
You can engage with the community on the official Telegram Channel here.
Dogecoin GitHub
You can view all of the latest development updates on the official Dogecoin GitHub page here.
Dogecoin Discord
You can join the official Dogecoin Discord Channel here.
Dogecoin Reddit
You can find the official Reddit page here.
Dogecoin Official Website
You can visit the official Dogecoin website here.
