What is Dogecoin (DOGE) in simple words: history, course and how to buy

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2019-08-22 00:00:00:

Dogecoin (DOGE, Dogecoin) is a rather unusual cryptocurrency. While the creators of most other electronic currencies and payment systems try to surprise and attract potential users with certain technological moves and unusual solutions, Dogecoin is gaining popularity in a completely different way.

As a symbol of Dogecoin, the developers used the image of a red dog of the Japanese breed Shiba Inu - a meme that at one time flooded the Internet. The name of the cryptocurrency is actually translated into Russian as "Dogs Coin".

Another cryptocurrency, Litecoin, was taken as the basis for the creation of Dogecoin . Despite the fact that there are very few differences between these two currencies, their value is currently quite different. For this reason, Litecoin and Dogecoin are rarely linked together at this time.

In our service, these two cryptocurrencies are presented and cryptocurrency exchanges are available in both directions:

Dogecoin was not originally planned by the developers as a serious investment project. The main goal of the creators was in a sense to amuse the Internet community. Nevertheless, the comic currency quickly gained popularity and significantly increased in value, entering the ten most popular electronic currencies.

Currently, according to the creators themselves, Dogecoin is considered by them as an electronic currency for the Internet community and they have no goal to compete with the titans of the e-commerce market. Nevertheless, the developers are constantly working to improve the convenience of settlements using Dogecoin on the world wide web.

History of cryptocurrency

Dogecoin was created by American programmer Billy Markus. The main idea of the developer was to create a cryptocurrency that would be available to every willing user, regardless of his financial capabilities, as an alternative to expensive Bitcoin. In addition, the developer wanted to differentiate his brainchild from the conflicting reputation of other virtual currencies.

Another programmer, Jackson Palmer, who worked in the marketing department of Adobe Inc., also took an active part in the implementation of the project. in Sydney.

When creating the Dogecoin cryptocurrency, another electronic currency was taken as its basis - Luckycoin, which in turn was based on Litecoin. For creation, the Scrypt technology is used, which means that it is impossible to use SHA-256 equipment for cryptocurrency mining. In addition, creating ASIC and FPGA equipment for mining electronic coins is also quite difficult.

The Dogecoin network went live on December 6, 2013. Initially, it was planned to limit the issue of dogoins to hundreds of billions of electronic coins, but later it was decided to make the emission of cryptocurrency infinite.

On December 19, 2013, in just three days, the price of dogoin increased by almost three hundred percent. The sharp increase in value happened at a time when most of the popular virtual currencies were going through hard times due to the decision of the PRC government to impose a ban on Chinese banks from investing in the cryptocurrency economy. Three days later, Dogecoin faced its first major failure. The cost of the cryptocurrency fell by 80%, mainly due to the possibility for miners to capture large pools, having at their disposal computing equipment of rather weak power.

A week later, on December 25, 2013, the first major theft of Dogecoin electronic currency occurred. Several million virtual coins have been stolen through a hacker attack. This incident, despite its negative nature, brought huge popularity to the Dogecoin network. To help victims of the hacker attack, users of the Dogecoin network organized the "SaveDogemas" campaign aimed at collecting voluntary donations in favor of those who had their funds stolen. The amount of damage was reimbursed within approximately a month.

At the beginning of 2014, the trade turnover of Dogecoin for a certain period of time outstripped the volume of the trade turnover of bitcoin and other electronic currencies. However, the market capitalization of the “dog coin” was significantly lower than that of Bitcoin. At the beginning of 2015, Dogecoins capitalization was $ 13.5 million ( on cryptocurrency capitalization ).

In April 2015, Jackson Palmer announced his departure from the project, which gave rise to a lot of rumors about the imminent collapse of Dogecoin. Nevertheless, the network still functions well today, thanks to a large number of users and a decentralized device.

In early 2018, Dogecoins market capitalization reached the $ 2 billion mark. Today, Dogocoin is a virtual currency with a fairly large community. Many netizens are actively involved in collecting donations for charity.

In early July 2019, Binance, the largest cryptocurrency exchange, included Dogecoin on its list, after which the value of the “dog coin” rose sharply by more than thirty percent.

Today, Dogecoin is supported by a large number of large investors, which makes them hope for the future development of the cryptocurrency. Apart from the named Binance, Dogecoin is listed on a number of major exchanges such as Bittrex and Poloniex.

The coin value is characterized by enviable stability. The course remained stable for several years and slowly increased. The stable nature is primarily associated with the popularity of the currency, since the more buyers there are, the more stable the value.

Distinctive features of Dogecoin from other cryptocurrencies

Despite the fact that the basis for the creation of Dogecoin was the Litecoin network, developed in turn by modifying the Bitcoin program code, Dogecoin has many differences from other cryptocurrencies. Common to all virtual currencies are the principles of operation based on the complete decentralization of the network, the use of the Proof-of-work protection system and transaction processing methods.

Among the main features of dogcoin that distinguish it from other cryptocurrencies are the following:

The Scrypt algorithm is used to encrypt data on the network, instead of the standard SHA-256, which makes mining this cryptocurrency very simple and does not require complex equipment.
Initially, a limit was set on the issue of coins of one hundred billion, but in the future, the creators decided to make the issue unlimited.
Very low transaction fees compared to other network fees. As a rule, the amount is never more than one cent, while on the Bitcoin network, the commission can reach $ 10.
High transaction processing speed achieved by reducing the time between block additions.
The low cost of coins allows any interested user to purchase them, regardless of the amount of capital he has.
Dogecoin has a practical application - network users use it to make payments for various goods and services on the Internet. In addition, the circulation of Dogecoin is not prohibited even in those countries where Bitcoin cannot be used.
Dogecoin coins can be mined without spending significant funds and without using complex expensive equipment.

In technical terms, Dogecoin also has a number of differences from other cryptocurrencies, despite the fact that it is considered by many to be an exact copy of the Litecoin network.

The block opening time in Dogecoin is one minute (for comparison, in Litecoin - two and a half minutes).
The time required to confirm the transaction is six minutes (in Litecoin - fifteen minutes).
The block reward was randomly calculated for some time and was rather volatile. Starting from 2014, the reward is 100 thousand coins and a percentage of the transaction fees.

How Dogecoin works

Just like most cryptocurrencies, Dogecoin was created on the basis of blockchain technology and operates on the principles of cryptography. When a new block is formed, two cryptographic keys are created in the chain - public and private. Using the public key, each user can get acquainted with the information about the block. The private key is required to provide access to the owner of the generated block.

It currently takes approximately six minutes to create each block on the Dogecoin network. Compared to other cryptocurrencies, this is quite fast, which allows Dogecoin to be used for minor settlements or small amounts of money transfers.

Initially, the developers planned to set a limit on the maximum number of coins issued at one hundred billion. But after more than a year after the start of the project, the number of tokens reached 98 billion, it was decided to remove the limit and make the issue of coins unlimited.

Currently, about 5.5 billion new Dogecoins are issued each year, which, according to many experts, has a negative impact on their value, and also makes Dogecoin very sensitive to inflation.

The key property inherent in Dogecoin that fundamentally distinguishes it from most other cryptocurrencies is its inflationary nature. Most other virtual currencies are deflationary.

This means that most of the cryptocurrencies, in particular, Bitcoin , are arranged in such a way that their emission is strictly limited to a certain number of tokens that can go into circulation.

The main disadvantage of this approach is that it promotes and stimulates the continuous accumulation of coins, as their value is expected to rise significantly in the future. Another problem is that with the achievement of a significant market capitalization of the cryptocurrency and a significant reduction in the reward for the extraction of new electronic coins, which decreases exponentially, sooner or later there will come a time when miners will lose any incentive to further support the system.

Dogecoin takes a different approach based on inflation. Thus, it is possible to maintain the production of new tokens, despite their low cost. The newly mined coins replace the lost ones in circulation, thus contributing to the retention of a stable supply of approximately one hundred billion active tokens. Since the majority of Dogecoin users perceive this cryptocurrency primarily as a medium of exchange, and not as an investment, an inflationary approach may well lead to success.

Dogecoin has a constant release rate of 10 thousand new tokens per minute. According to its creators, the key goal of the cryptocurrency is to keep one hundred billion coins in constant circulation. After the emission of 100 billion coins, the issue continues and the miners receive the required reward. This allows you to keep the required number of coins at a constant level, compensating for lost wallets and coins lost in other ways.

Advantages and disadvantages

Dogecoin has a number of properties that set it apart from other cryptocurrencies. Among the main advantages are:

Dogecoin is great for the category of users who do not have enough capital to invest in more expensive cryptocurrencies. Dogecoin provides an opportunity for beginners to get used to the virtual currency market and gain the necessary experience in e-commerce.
Dogecoin allows for fast and inexpensive transactions.
Pretty solid community. The cryptocurrency, which was conceived as a joke, has been operating since 2013 and is gradually gaining popularity, contributing to stable, albeit slow, growth.
Dogecoin is among the first 15 cryptocurrencies in terms of their market capitalization, which allows us to speak of its high stability and user confidence.
The cryptocurrency is completely private, decentralized and has a strong security system.
No scaling issues like most other cryptocurrencies.
The transaction speed is very high with extremely low commission rates.
Dogecoin is supported by many exchanges and internet platforms.
The opportunity to acquire the first Dogecoin coins is completely free.

In addition to the above, Dogecoin copes much better with the role of a means of payment than, for example, Bitcoin, although this is its main purpose. Considering the listed advantages, Dogecoin is excellent for many users of the Internet community and for making payments on the network.

In addition, it should be said that one of the main advantages of Dogcoin is a high level of security. Decentralized systems are without a doubt much better at providing security than their centralized counterparts. The absence of a monitoring server ensures a high degree of protection. Sooner or later, blockchain will be universally recognized as the best technology today in terms of user security. Dogecoin is one of the few networks that truly implements the principle of decentralization. Most cryptocurrencies do have some centralized properties.

Another important property that distinguishes Dogecoin favorably from traditional methods of settlements and transfers of funds is that, unlike the banking sector, only the user controls transactions. Therefore, no transaction can be canceled for reasons beyond the control of the user. It does not matter to whom and where the funds are transferred, payment for which goods is made - the transaction will go through in any case.

However, despite the many advantages, Dogikoin also has disadvantages:

Weak technical support. The Dogecoin development team is not as large as the titans of the cryptocurrency market and their aspirations are not so ambitious.
Price volatility. Dogecoins value is constantly fluctuating and is rather difficult to predict. This statement is generally true for any cryptocurrency, but this is especially evident in the example of dogoin. Even the self-stabilization system, which requires careful and large-scale revision, does not save from sharp changes in the course.
Dogecoin gained popularity primarily due to marketing moves and did not offer anything unique and special in terms of technology. This makes this cryptocurrency very vulnerable in the struggle for a place in the sun with more advanced and innovative competitors.

Of course, one of the main weaknesses of Dogecoin is its initial comic nature, which negatively affects the growth of the value of this cryptocurrency. The creators of the project apparently do not yet know how to develop their offspring, so the network largely functions only thanks to loyal users. This approach negatively affects the value of the electronic coin and does not add points to it in the competition.

Does Dogecoin mining exist?

The Dogecoin network uses the popular Scrypt algorithm to encode information, which is also used in the Litecoin network. The peculiarity of this algorithm is that it has reliable protection against mining systems built on the basis of ASIC devices, which means that the mining of cryptocurrency based on the Scrypt algorithm using ordinary personal computers will remain relevant and profitable for a long time.

Dogecoin uses a Proof-of-work self-regulation system. This means that the release of new tokens occurs when blocks of the chain with a "nice" value are found. Considering that Dogecoin is a relatively young system, and the emission of cryptocurrency in it is not limited, the complexity of mining coins is relatively small, for which central processors of personal computers are used, as well as farms based on graphic processors (video cards).

In the past, the difficulty of mining cryptocurrency was very volatile and changed every four hours. The reward for the formation of a new block was calculated randomly and could be equal to a value from zero to the maximum possible mark. This property did not delight most miners. Some of them have repeatedly reported bugs on the network, not realizing that this feature was originally written in the system. Currently, after making some changes, the reward for finding a new block is constant and equals 250 thousand coins. The difficulty of mining gradually changes with each newly discovered block, and the reward is halved after every 100 thousand blocks are found in the chain.

Dogecoin mining was hugely popular in the early stages of the networks operation, however, due to the gradual decrease in the price, many users turned to other cryptocurrencies. At times, the situation was such that mining income could not even compensate for the cost of electricity. At the end of 2017, the value of Dogecoin went up again, which naturally forced miners to turn their attention to the "dog coin" again.

As with other cryptocurrencies, Dogecoin mining is the mining of virtual coins. The reward is awarded in the case of selecting a "nice" hash and forming a new block in the blockchain. The award goes to the miner whose technical equipment was the first to discover the "beautiful" hash.

In a more simplified form, it looks like this. Before verification, the dogocoin transactions are written to the block, where they are checked against previous transactions in the blockchain. In the event that no data is found that displays the same transactions, the new block is confirmed.

After that, these blocks are checked in the nodes of the Dogecoin system. The verification process is somewhat reminiscent of a lottery, where there are many sequences, one of which is winning. The condition for receiving a reward is the solution of a mathematical equation, due to which a new block is formed in the chain.

Of course, the process of mining new electronic coins is associated with significant energy costs and is time-consuming. Therefore, miners are rewarded for every block they discover.

The main mining methods for Dogecoin are:

self-mining of electronic coins;
mining of cryptocurrency in pools;
mining through cloud services.

A miner who intends to mine Dogecoin on his own personal computer must first of all pay attention to the equipment. Of course, the more power a computer has, the more and faster it will bring electronic coins, but it will also consume a lot of electricity. For this reason, at present, mining dogoins by means of a personal computer is the lot of beginners who are just mastering this way of earning.

For the extraction of cryptocurrency, central processing units of personal computers or graphic processors (video cards) can be used. The performance of video cards is several dozen times higher than the performance of the central processor in terms of its indicators, which makes the extraction of electronic coins with their help more reasonable.

For Dogecoin mining, not all video cards are equally good. According to many experienced miners, it is advisable to opt for ATI, which shows the best results with the same performance compared to other graphics processors. However, if there is no choice, then an Nvidia graphics card will do. In addition to technical equipment for self-mining of virtual coins, the user needs to install the appropriate software, which is different for different video cards.

If the user does not want to mine on his own and decided to mine in the pool, it will be necessary to install the required software and register in the Dogecoin mining pool. There are a great many pools on the Internet that you can join, but it is preferable to choose a large pool in order to avoid opening one of the blocks.

After registration, the user needs to create a Worker, for which he needs to open the appropriate tab and enter the username and password.

Further, it is recommended to set up automatic withdrawal of funds to a personal wallet, which is done in the settings of the pool itself. After that, as soon as a certain amount is collected, it is automatically transferred to the account.

Then you can proceed to the direct mining of coins. It should be said that graphics processors, as a rule, do not work at their full capacity. In order to fix this, special software is used. Besides, it is not always advisable to increase the frequency of the processor, and often it is necessary to reduce it.

Mining Dogecoin without a big investment is not as easy as it might seem at first glance. There are specificities and pitfalls that directly affect the profit. In particular, the reward for discovering a block is received by the user who opened them. If ten people are engaged in mining, then the reward is divided between them in accordance with the power of their personal computers.

At the same time, the number of miners does not in any way affect the speed of block detection. In other words, regardless of the number of computers, they will open the same number of blocks in a certain time.

For users who do not want to get involved with the purchase of the necessary equipment, independently configure the process, modify the graphics processors, there is another way to extract cryptocurrency. This refers to Dogecoin cloud mining. For this, special services on the Internet are used, which take on the solution of all technical and organizational issues related to mining, and provide their own computing power for rent to users. This method of mining has its own specifics and has a number of advantages, among which the following can be distinguished:

Relatively high profitability. Depending on the platform that is used for mining, you can achieve ROI in 3-18 months.
Savings on equipment and electricity. Most often, modern sites receive equipment directly from manufacturing plants. In addition, capacities are usually located in countries where the cost of electricity is relatively low.
The ability to quickly master mining. Most of the Dogecoin mining platforms can offer fairly cheap starter contracts. In addition, many of them constantly conduct various promotions, bonus and referral programs, and offer discounts. All this makes it possible for beginners to start mining cryptocurrency with even greater profit.

There are a lot of platforms providing such services on the modern Internet, so you should choose very carefully. To do this, you should study the reviews about the site of interest, find out the working conditions and payments. With an insufficiently responsible approach to choosing a reliable service, there is a risk of running into scammers and losing money.

On the chosen platform, the user creates an account, chooses a suitable tariff plan, a monthly fee for using the service and capacity. Many platforms offer rather favorable conditions, discounts when paying for services in advance for several months or more, as well as other bonuses for users. Next, you need to specify the Dogecoin wallet to transfer funds and regularly check that they are arriving without interruption.

The algorithm by which electronic coins are mined is approximately the same for all cryptocurrencies, so all of the above is true not only for Dogecoin.

How to buy or sell Dogecoin?

The most popular way to acquire Dogecoin is to buy it with another cryptocurrency, in particular, bitcoin. In addition, there is the option of purchasing dogcoin through special exchangers. This method is not very convenient, especially since many exchangers treat Dogecoin with some caution.

A more convenient and profitable way is to buy coins on the exchange. First of all, in this way you can buy e-currency at the most affordable price, and in addition, if you have certain skills and ingenuity, you can get good money on trading currency pairs.

Regarding the value of Dogecoin, it is, as mentioned above, rather volatile. At the end of 2013, at the very beginning of its existence, the price of dogcoin was $ 0.0006, and the market capitalization of the network was equal to three and a half million dollars. During the first year of its existence, Dogecoin was accompanied by constant growth and its value has doubled.

In 2014, due to the arrival of new strong players on the cryptocurrency market, such as Monero , NEO and Stellar, the value of Dogecoin dropped to $ 0,0001.

Many predicted a quick death to Dogikoin, especially in 2015 after one of the creators, Jackson Palmer, left the project. Until 2017, the value of the cryptocurrency did not rise above $ 0.0003. Nevertheless, network users actively purchased tokens for use in settlements on the Internet, and capitalization, and with it popularity, gradually, but steadily increased.

According to a number of experts, the initial rise in Dogecoin price was mainly associated with a steady upward trend in the cryptocurrency market, after which there was a natural decline. Whether it is or not, in the spring of 2017, the price of Dogecoin surged to $ 0.003 and continued to rise. By the beginning of the next year, the value of the "dog coin" had reached two cents, and the market capitalization had surpassed the $ 1 billion mark.

Due to the fact that a number of states in Southeast Asia at the beginning of 2018 strengthened state control over the virtual currency market, the cost of many cryptocurrencies began to decline. Dogecoin did not pass this either, however, unlike many others, the "dog currency" rather quickly stabilized at the rate of 0.002 US dollars.

It must be said that the cryptocurrency, which was developed as a kind of comic project, reached one billion dollars of capitalization, which is not least due to the great popularity of the Internet meme, which was chosen as the symbol of Dogecoin.

At the time of this writing, the Dogecoin / USD exchange rate is $ 0.0029 per dogecoin. The market capitalization is 345,572,321 US dollars, which corresponds to the thirty-first place in the ranking of cryptocurrencies.

The Dogecoin rate to the ruble is 0.183394 rubles per coin, and the rate to the euro is 0.00256418 euros for one DOGE.

Where to store Dogecoin

The user is responsible for the safety of the electronic currency, so you should take the method of storing Dogecoin very seriously. There are the following main methods of storing cryptocurrency:

Exchange. In this case, funds are stored in the users electronic wallet, which is linked to a personal account. Restoring access to funds in the event that the exchange goes bankrupt is impossible, so you should choose the most reliable exchanges.
Dogecoin online wallet . These are special services on the worldwide network, where you can store, receive and transfer cryptocurrency.
Special software for a personal computer or mobile phone. In this case, the private keys are encrypted and stored on the device, which provides great guarantees for the security of electronic savings.
Hardware wallet. This method is the most reliable. For this, a flash drive or other device is used as an access key to a user account. It is possible to restore access to funds even if the key is lost.
There is another storage method - paper storage. For this, the user wallet number is generated on the walletgenerator.net website, after which the private key, along with the address, can be downloaded and saved in paper form.

Cryptocurrency emission

As mentioned above, initially the developers of the Dogecoin cryptocurrency planned that only one hundred billion coins would be issued. However, due to the very fast initial mining period, as well as the slight complexity of the mining process, 98 billion tokens were issued during the first year of the networks operation. In other words, in less than a year of the existence of the cryptocurrency, the emission was completed by 98 percent. Considering this fact, the developers decided to remove the limitation on the issue and allow the endless emission of dogoins. Currently, the release rate has dropped significantly and there are 120.6 billion coins in circulation today. This property is rather negative, since, given the endless release of new coins, their value will only suffer from this.

The future of Dogecoin cryptocurrency

For a long time, Dogecoin was considered a dead cryptocurrency by many experts. Despite this, its popularity is now attracting more and more attention of potential users. It is believed that this is not least due to the fact that Bitcoin cannot find a solution to the problem of increasing transaction time and network bandwidth. Accordingly, once this problem disappears, the value of other cryptocurrencies will drop significantly. Whether it is true or not, it is rather difficult to judge, because in the situation with the cryptocurrency, you cannot be sure of anything.

The small price of Dogecoin negatively affects the image of this cryptocurrency in many ways, especially given its already frivolous nature. In this regard, many users put forward ideas about restoring the restrictions on the emission of new coins, which would certainly contribute to an increase in the price of the cryptocurrency.

Dogecoin has experienced both ups and downs at various times. The cryptocurrency cannot boast of a large number of unique qualities, elements and technological solutions, and the last update took place back in 2015. According to many users, the number of disadvantages that Dogecoin possesses exceeds its merits. Despite this, this cryptocurrency performs its functions with the same success as in 2013. Given that the e-commerce market is constantly adding new entrants, the interest in Dogecoin from newbies is unlikely to fade.

It should be noted that Dogecoin cryptocurrency has some specific properties that may cause its value to rise in the future. Among those it is necessary to highlight the following:

High speed of transaction processing and extremely low cost of commission. The Dogecoin system can boast of a much faster and cheaper functioning than the recognized titans of the cryptocurrency market.
Large scope of application. Dogecoin cryptocurrency in the modern world is used in many areas of business, as well as in the social sphere. It is used to support charity events, organize public events, and finance sports projects. It is worth saying that, for example, the worlds largest project to improve the quality of drinking water also opted for Dogecoin to make the necessary calculations. Without a doubt, the popularity of this cryptocurrency is not least due to its social significance.
Active participation in the auction. Every day, Dogecoins turnover on cryptocurrency exchanges is several million US dollars. At the same time, it should be noted that the volume of purchases almost always exceeds the volume of sales. This means that netizens are still buying Dogecoin, hoping to increase its value. In addition, from time to time there are reports in the media that large investment companies have paid close attention to cryptocurrency.
Constantly increasing number of users. Dogecoin network members actively communicate with each other on social networks, discuss various events and attract more and more new users to the Dogecoin community. No other cryptocurrency can boast such significant support from the population. And as a rule, the most active ones do not stop at the discussion. Many people are making a lot of efforts to popularize the coin, helping an increasing number of commercial Internet sites accept Dogecoin as payment for goods and services.
Substantial support for Dogecoin from Asian companies, in particular Korean and Japanese.
Massive media interest. Dogecoin combines two traits that tend to be mutually exclusive. This is a frivolous and comic image of this cryptocurrency on the one hand, and a relatively long history of functioning and high user confidence on the other. This contributes to the fact that interest in Dogecoin does not fade, as well as the amount of news associated with it.
Social character. The Dogecoin network has a specific feature called tipping. This feature is that one user can "tag" another if he liked the content he posted. This approach is somewhat reminiscent of social networks. The user who has been "marked" receives a coin reward for this.

According to a number of experts, Dogecoin expects a steady increase, albeit without sharp leaps. Over the past few years, the value of the "dog coin" has been steadily increasing. The main factors that determine this are its availability and a gradual increase in market capitalization.

At the beginning of 2019, Dogecoins capitalization went up sharply. This is due to the growing popularity of cryptocurrency and, accordingly, an increase in its price.

However, a sharp rise in price is hardly worth expecting, due to the same unlimited emission of coins.

According to experts, by the end of 2019, the cost of Dogecoin may increase to $ 0.00521 per coin, and by the end of 2020 - up to $ 0.00676.