Cryptocurrencies have been gaining massive popularity for quite some time now. The cryptocurrency craze is real, and the soaring prices of bitcoins are just enough proof.
Cryptocurrencies are basically digital assets that are designed to work as a medium of exchange, all electronically. There is no paper evidence for the same, and it all happens via the internet and with the help of a robust network system.
They used decentralized control, so there is no central authority issuing crypto coins.
- How Does Dogecoin Work?
- Understanding The Tech Behind Dogecoin
- Digging (Mining) Dogecoin
- How Do You Buy Dogecoin?
- 3 Best Wallets to Store Dogecoin
- Is DogeCoin Infinite, Secure, and Safer than Bitcoin and ETH?
- Will DogeCoin Ever Have a CAP?
- Current Scenario
- Is DogeCoin Situation Same as GameStop Situation?
Like bitcoins, Dogecoin is a cryptocurrency invented by Billy Markus and Jackson Palmer, two software engineers from IBM and Adobe.
They initially invented Dogecoin as a joke to make the payment system fun, instant, and free from banking fees. In 2013, the idea came up, and recently, Dogecoin prices have skyrocketed after becoming Reddit traders’ targets.
Dogecoin was first launched on 6th December 2013. The domain dogecoin.com witnessed over a million visitors within the first 30 days. On 19th December 2013, Dogecoin jumped nearly 300 percent in value in a matter of 72 ho9urs. From $0.00026 to $0.00095.
However, the skyrocketing did not last long, and Dogecoin saw its first crash after 3 days, dropping down by 80%. The happiness of Dogecoins investors was short-lived.
The Christmas of 2013 was when there was a significant theft of Dogecoin, stealing millions of coins through a hack on the online cryptocurrency wallet platform – Dogewallet.
This spiked tweets around Dogecoin, making it the most controversial and talked about event of that time. The publicity soared, but referring to an adverse event.
The Dogecoin community started an initiative – SaveDogmas, to help donate coins to the people who lost them in the crypto hack. One month later, there was enough money to cover all the stolen coins.
January 2014 was when the trading volume of Dogecoin surpassed that of bitcoin and other cryptocurrencies combined. The market capitalization, however, was still behind that of Bitcoin.
In April 2015, co-founder Palmer announced an ‘extended leave of absence’ from the cryptocurrency community. And from 2017 to early 2018, Dogecoin peaked at $0.017/coin, putting the total market capitalization near $2 billion.
As the pandemic hit the entire world, Dogecoin prices kept on increasing, pricing it at $0.7376 per coin.
How Does Dogecoin Work?
Dogecoin’s coding is almost a direct copy of Bitcoin. Co-founder Billy Markus once stated that it only took 3 hours to create Dogecoin. He described how all he had to do was press the control F function to scroll through Bitcoin’s code and replace it with Dogecoin’s.
He did make a couple of adjustments, through, to further the concept. The adjustments were majorly like changing the term mining to digging.
Markus decided on a 1 minute block time for Dogecoin, referring to how often a new ‘block’ of transactions will add to the ‘chain’ of transactions.
Its thread follows a block reward schedule where the first 100,000 blocks get a random reward between 0 and 1,000,000 DogeCoins. Every subsequent 100,000 blocks thereafter halve the reward of the previous reward’s maximum.
Understanding The Tech Behind Dogecoin
Dogecoin uses the Scrypt hashing algorithm instead of Bitcoin’s SHA-256. This is supposed to be ASIC resistant, which means that Dogecoin is meant to be mined with computer processors (CPUs) or graphics cards (GPUs).
This leads to a result in a lower hash, though ASICs like the Antminer L3+ run Skrypt.
Digging (Mining) Dogecoin
Before moving further, let us understand what mining means in cryptocurrency. Crypto mining means gaining cryptocurrencies by solving cryptographic equations through the use of technology/computers.
This process involves validating data blocks and adding transaction records to a public record (ledger) known as a blockchain.
In the Dogecoin ecosystem, you have diggers and not miners. These network nodes validate new transactions and add blocks. However, mining, or let us say, digging Dogecoin, is less competitive than Bitcoin.
The developers behind this coin never really did a pre-mine. Pre-mines would have helped developers build up reserves before the network went public.
Some 5.2 billion DOGE are mined each year.
How Do You Buy Dogecoin?
Dogecoin is available on select exchanges currently.
You can purchase dogecoins directly using a debit or credit card.
However, you need first to fund your account and then convert your fiat money to Bitcoin, ETH, or any other currency with a fiat pairing.
3 Best Wallets to Store Dogecoin
There are a lot of ways to store Dogecoin. However, the following are the top 3 picks to store Dogecoins securely –
- Jaxx Wallet: This is one of the best ways to store your Dogecoins.
This wallet is available on both Apple and Android devices for free.
You can store Dogecoin and an excellent assortment of other coins using this app.
Additionally, you can also trade your coins directly from this particular wallet.
- Ledger Nano X: This wallet is one of the most advanced wallets to exist as of now.
It is highly secure and assures the safety of your digital assets.
It ensures to offer the best level of protection via a certified secure chip.
- Coinomi: Coinomi is a security-first, multi-chain wallet. It is adaptable to both mobile & desktop, providing native support and true ownership for more than 125 blockchains and thousands of different tokens.
Is DogeCoin Infinite, Secure, and Safer than Bitcoin and ETH?
Well, unlike Bitcoin, there is no limit to the amount of Dogecoin creation.
There is currently no hard cap on the total supply of Dogecoins. Initially, Dogecoin did have a supply limit of 100 billion coins, but that was far more than what top digital currencies were allowing, anyway.
Additionally, if we talk about security – all cryptocurrency investments promise high returns but are very high risks. They’re not protected like most types of investments.
Dogecoin shares most technical characteristics with Bitcoin.
The Dogecoin network is said to be secure and provides real-time consensus. However, people should not be fooled by the current highs, as such highs do not last for a very long time in the crypto world. It is a highly dynamic game.
However, Bitcoins are safer and better. Here is why –
- Bitcoins are the world’s first crypto. It has existed for the longest time and has a limited supply. The limited supply enables prices to shoot as soon as demand increases. However, Dogecoin’s unlimited supply only makes prices skyrocket if and only if demand does, too.
- Bitcoin’s development is still in process, and the network’s code is constantly in check with regular updates. Dogecoin workers have not touched its code in years and have merely copied it from Bitcoin.
- Bitcoin has some reputed institutional investors who buy bitcoins to lower the supply. Due to Dogecoin’s unlimited supply, no institutional investor can ever do anything to make a difference in its price.
ETH (or ETHER) is safer than Dogecoins for similar reasons.
ETH has a limited supply, making it easier for people to invest and profit from it. It has the largest market cap, after Bitcoin.
It is an already established cryptocurrency, with its own technology, unlike the copied code of Dogecoin.
Will DogeCoin Ever Have a CAP?
According to the Dogecoin creators, there will never be a cap on Dogecoins. Since the supply of Dogecoins is way beyond abundance, it would not even matter if they ever even made one.
This is also one reason why the doge is only volatile at a fraction of a penny and most likely not to reach the moon.
The digital coin that was actually initiated as a joke soared over 800% after a board member on Reddit talked about making it equivalent to GameStop. This attention was partially encouraged by Tesla CEO, Elon Musk, making Dogecoin prices hit an all-time high.
Among several tweets made by Elon Musk on this topic, one read, “If major Dogecoin holders sell most of their coins, it will get my full support. Too much concentration is the only real issue IMO (in my opinion),”
However, the CEO’s random Twitter rambling took another turn as he tweeted a few more times praising Dogecoin. Elon has a considerable effect on the public whenever he makes any remark about anything. This is precisely what happened this time, too.
The dog-theme cryptocurrency has essentially been worthless since the design reflects on it to be inflationary with an unlimited supply – spitting out 10,000 new coins every few months. So how is something that has unlimited supply ever to be of any value?
Well, Mr. Musk has different thoughts on this. Despite the unlimited supply, inflationary nature, and inherent silliness of Dogecoin, the price shot up by 40% with one tweet by Musk that read ‘One Word: Doge.’ It went up from $0.003 to $0.005 in no time.
Some Reddit users took the indication of the billionaire supporting the rally and immediately ended up buying Dogecoins, increasing its demand and, eventually, prices. It took less than 24 hours for the cryptocurrency prices to go up by 800 percent.
Towards the end of January, dated around 29th, Dogecoin’s price stood at $0.057410. on the same day, it went up around 150 percent. It eased from $0.070755 late Thursday as it saw an urge of 800 percent in 24 hours.
The virtual currency hit an intraday high of $0.072330.
In 24 hours, it added a market value of $7.17 billion to its total value. The total market cap increased to $8.2 billion, making it the world’s 9th largest cryptocurrency.
Is DogeCoin Situation Same as GameStop Situation?
The Reddit group, SatoshiStreetBets, has been aggressively pushing the buying of Dogecoin and urging users not to sell it. They are trying to pump up digital currencies as much as possible.
The digital coin saw multiple crashes after reaching its all-time high, but the Twitter group is not losing hope and is constantly encouraging users to buy more.
People are trying to compare the Dogecoin situation with the GameStop theory. However, the situations appear entirely different.
A few days back, WallStreetBets was seen pushing the narrative of buying GameStop shares to create pain for hedge funds shorting or betting against the particular stock.
Covering losses by creating a situation of short-squeeze by purchasing these GameStop funds was the idea. This pushed the stock up even higher.
As we are aware, short-sellers borrow shares to invest in them and pocket the profit. They repurchase it at a lower rate in the futures market to gain this profit.
However, no such shorting dynamic from hedge funds is taking place with Dogecoin. Instead, it is only the group of people (The SatoshiStreetBets) trying to push the cryptocurrency higher to make personal gains.
This type of activity is not new to the cryptocurrency world. It has been going on for several years now, wherein a group of people takes charge to push a crypto-coin higher to make money.
It leads to more and more people buying cryptocurrency due to the hype.
The one who purchases early gains profit due to rising prices. However, those who buy towards the end, end up losing quite a colossal share of the amount.
This happens because the soaring up of these cryptocurrencies is a temporary phenomenon. The prices come back to normal, and purchasers near the top end up losing money.
The DogeCoin situation is on a temporary rise and has worried the cryptocurrency community. They believe it is a ‘seriously damaging’ situation, as many people can lose a lot of money due to the temporary hype.
This will result in many people gaining some share (who were smart and lucky enough to purchase it at a lower price and sell it at the peak), and many into losing huge sums of money (the one’s who purchased at the peak and will be forced to either sell at a lower rate or hold them till the prices shoot up again).
Like the stock market, even the cryptocurrency market is highly volatile, responding to situations humans create. It is not going to take long until Dogecoin prices drop back to what they were.