Dogecoin is a digital currency established in 2013 by two software engineers. Although it was originally created as a joke, the digital currency gained popularity in 2021, witnessing a significant increase in prices.
What is Dogecoin?
Dogecoin is an open-source, peer-to-peer digital currency founded in 2013 by software engineers Billy Markus and Jackson Palmer. Dogecoin is based on blockchain technology, similar to other digital currencies.
The concept of the digital currency is inspired by a popular internet meme. The meme features an image of a Shiba Inu dog referred to as “Doge.” The same image appears on Dogecoin.
Dogecoin originally started as a joke and remained in existence for many years without garnering much public attention. From May 2015 to May 2020, the price of Dogecoin averaged close to one-fifth of a cent. The currency gained fame with an increase in retail investment during the pandemic, along with recurring interest on Twitter from the famous billionaire Elon Musk. In fact, Dogecoin’s price surged to 74 cents on May 8, 2021, an increase of over 15,700% from the levels it was at the beginning of the year.
Special Features of Dogecoin
Dogecoin has some important features that distinguish it from other digital currencies. First, there is no cap on the number of Dogecoin that can be mined. This is in stark contrast to Bitcoin, the most popular digital currency to date, which has a maximum limit of 21 million coins. The unlimited number of Dogecoin could make the currency susceptible to severe inflation.
Another feature that distinguishes Dogecoin from other popular digital currencies like Bitcoin is the way it is mined. These coins are mined using Scrypt technology, making Dogecoin mining much faster than some other digital currencies.
Mining Dogecoin
The process of mining the digital currency involves completing mathematical and algebraic equations by individuals. This process can be solo or collective (known as pool mining). Due to the equipment required, mining Dogecoin can be quite costly.
Dogecoin differs from other popular digital currencies in its mining process. These coins are mined using Scrypt technology, which is often faster than other forms of cryptocurrency mining.
Dogecoin has a mining reward of 10,000 Dogecoin, and the block time for the currency is around just one minute, compared to about ten minutes for Bitcoin.
How to Buy/Invest in Dogecoin
You can purchase Dogecoin at any brokerage that currently trades it. Some of the most popular options include cryptocurrency markets like Binance and Kraken, as well as traditional brokerage like Robinhood. Some brokers are now also offering Bitcoin investment in implicit accounts and Roth IRAs.
You can buy Dogecoin using a credit card, debit card, or bank transfer. Depending on where you buy Dogecoin, you may incur certain trading fees.
Robinhood offers commission-free trading on digital currencies, while Binance and Kraken have a specific fee schedule. Transactions typically take between 40 and 60 minutes to process, but the time will vary depending on the trading platform you buy your coins from.
Digital Currency Wallets
When purchasing Dogecoin or any other digital currency, you will also need to acquire a digital currency wallet to store it securely. The wallet holds the private key to access your coins on the blockchain.
There are many digital wallets available in the market, but you can also use an external hard drive. These external hard drives are considered more secure than digital wallets because they store private keys offline, preventing hacking or unauthorized access.
Providing
Dogecoin has its own digital wallets for investors. These include other popular digital and physical wallets that are compatible with Dogecoin such as:
- Coinbase Wallet
- Ledger Wallet
- Trezor Wallet
- Trust Wallet
- Binance Chain Wallet
Notable Events
2021 was a year full of record-breaking milestones for Dogecoin. The digital currency started the year at half a cent. In early May, its price surged significantly to 72 cents. The price began to decline during May but still hovered around 30 cents for the coin.
The rise in Dogecoin’s price in 2021 can be attributed to several factors. First, retail investment surged significantly during 2020 and 2021, according to a Charles Schwab customer survey. While this increase in investment may not be directly related to Dogecoin, it may have contributed to the heightened trading activity.
Finally, many attribute the surge in Dogecoin’s popularity to Elon Musk’s repeated interest in the digital currency on Twitter. The renowned entrepreneur frequently tweets about this cryptocurrency. He notably drew attention to Dogecoin on May 11, 2021, when he posted a Twitter poll asking whether Tesla should start accepting Dogecoin.
Later that same month, Musk announced that he was working with Dogecoin developers to make improvements and create new efficiencies within the currency, inviting individuals to share their feedback with him and the developers.
Source: https://www.thebalancemoney.com/dogecoin-5188878
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