Dogecoin in a Nutshell

Dogecoin is an open-source decentralized cryptocurrency. By leveraging blockchain technology, a network of computer nodes record transactions of dogecoins which forms a highly secure decentralized system. Dogecoin originates from a change in the protocol (a “fork”) of Litecoin, so it is based on the same Scrypt algorithm as Litecoin. As Dogecoin allows no pre-mining and is distributed fairly, its philanthropic feature and tipping mechanism make it widely popular and acquire users rapidly.

Dogecoin’s Inception

Dogecoin was originally created in late 2013 as a joke by Billy Markus and Jackson Palmer. In 2013, the Bitcoin bull run started and cryptocurrencies became a hit. Jackson Palmer tweeted "Investing in Dogecoin, pretty sure it's the next big thing. " Surprisingly, the “joke” won support of many netizens. Jackson then created the dogecoin.com website and posted a picture of a gold coin with the head of a Shiba Inu dog on it. The interesting dog-themed design inspired Billy Markus to create a new digital currency. He solely developed Dogecoin and the joke became a reality.

Dogecoin was a near-instant success and gained great popularity on sites such as Reddit, where it was used as a tipping currency. Just two weeks after its inception, Dogecoin surpassed Bitcoin in daily trading volume. Within the first month, its website attracted more than one million visitors.

Principles of Dogecoin

Dogecoin, like Bitcoin,  is built on blockchain technology. With PoW (Proof of Work) as its consensus algorithm, new coins are acquired through mining. Miners receive new transactions from other nodes in the network, integrate them in a block in accordance with the rules, and then try to solve a puzzle. When a miner solves a puzzle first, he is granted permission to create a new block in the blockchain, thereby confirming the transactions contained within it. The miner will receive 10,000 Dogecoins as a reward for each mined block. In addition, the miner will receive transaction fees for transactions in the block.

Unlike Bitcoin, Dogecoin uses an “auxiliary” mining approach to address security concerns. In 2014, developers decided to run Dogecoin in an auxiliary verification mechanism (AuxPoW) and integrate its mining with Litecoin for strategic and security reasons. As a result, mining either type of cryptocurrency can now produce both of them at the same time. Technically, all Scrypt coins that are more difficult to mine than Dogecoin use auxiliary mining, but only Litecoin has the right to set the standards for merged mining. The mainstream mining pools that currently support DOGE are Antpool, ViaBTC, Multipool, Prohashing, Trustpool, and AikaPool.

For anyone who intends to mine Dogecoin, there are three types of hardware to choose from: computer processors (CPU), graphics cards (GPU), or ASIC mining machines

Although CPU mining is still possible at the current stage, it will damage computers and shorten their life span due to overheating.

GPUs are more powerful than CPUs as graphics processing units. If you prefer to mine with GPUs, you may opt for devices such as the Asus RX Vega 64, GTX, and Pulse RX 580.

ASIC mining machine is the best hardware choice for Dogecoin mining, but they are more expensive. The top ASIC mining machines that currently support Dogecoin mining include Antminer L3, BW L21 mining machine, and A2 Terminator.

Advantages of Dogecoin

Dogecoin, which uses the Scrypt algorithm, confirms transactions faster than Bitcoin, with confirmation taking one minute versus ten minutes for Bitcoin. Moreover, with affordable prices, high quantity, fast transfer speed, and high suitability for online tipping, Dogecoin ticks all the right boxes for the general public and thus enjoys a large base of users.

Dogecoin also has its own core cultures, including tipping, charitable donations, and grassroots support, and has attracted many users. Statistics show that the Dogecoin community on Reddit receives far more attention than LTC, next only to BTC. Many websites now accept Dogecoin as a method of payment.

100 billion Dogecoins were mined in the first year,  and 5 billion Dogecoins are released on a yearly basis with no cap. The inflation rate of Dogecoin has remained constant at 5% per year and has been decreasing. Its annual inflation rate will be down to only 2.5% after 20 years. Looking forward, the inflation rate of Dogecoin will be even lower than that of Bitcoin.

Milestones

December 2013: Dogecoin was created. 

October 2014: Twitch, a real-time streaming media video platform for video gaming, started to accept Dogecoin as payment.

November 2014: Dogetipbot, a popular Dogecoin tipping tool, raised nearly $446,000 in a seed round of funding.

June 9, 2015: The market cap of Dogecoin reached $100 million USD.

2019: Elon Musk voiced his support for Dogecoin.

September 2022: Dogecoin became the second largest Proof of Work blockchain by market cap.

January 2023: The Dogecoin Foundation launched a new developer fund.

Answer the following questions to test your Dogecoin knowledge:

1. What is the main Dogecoin culture?

2. How long does it take for a Dogecoin transaction to confirm?