Dogecoin (DOGE) is a cryptocurrency that was created in 2013. It was created by developers Billy Marcus and Jackson Palmer, who made it a joke coin inspired by the then popular “doge” meme depicting a Shiba Inu.
After some time, Palmer decided to step back from the project, believing that it has no future and that the joke is outdated, but the coin became a favorite of the cryptocurrency community, and it managed to remain popular to this day.
It recently caught the attention of Tesla CEO Elon Musk, who raised its price higher than ever.
Why Dogecoin was invented
As already mentioned, Dogecoin originated as a joke cryptocurrency. Its creator thought it would be fun to create a coin based on a meme.
Inspired by both the Doge meme and the cryptocurrency sector, Marcus and Palmer decided to create a peer-to-peer digital currency (P2P) that could reach more people than bitcoin.
At the time (December 2013) Bitcoin, and the entire crypto market, was largely unknown, used only by developers, online criminals, and tech geeks.
The sector’s short history has already been tarnished by its ties to cyber criminals, accusations of money laundering, tax evasion, and the like.
In addition, the creator of Bitcoin intended to use cryptocurrencies to take power away from banks – this did not make the crypto sector popular among financial institutions.
Palmer and Marcus decided to make a coin that would bring humor and lightheartedness to the controversial crypto industry, but also to distance it from controversial coins.
And so, on December 6, 2013, Dogecoin was born. Word spread quickly, despite the small size of the crypto sector at the time, and DOGE already had over a million visitors in its first month of existence.
How Dogecoin works and the technology behind it
Dogecoin’s mechanics are based on Litecoin, which was one of the earliest “altcoins,” often known as “silver to bitcoin gold.
DOGE uses Proof-of-Work technology, which means that it can be mined as BTC and LTC.
However, unlike Bitcoin and Litecoin, which are limited to 21 million and 84 million reserves respectively, DOGE has no maximum reserve and can be mined indefinitely.
At the time of writing, Dogecoin has nearly 129 billion coins in circulation, while LTC has only 66.7 million coins and Bitcoin has 18.6 million units.
Dogecoin is not a smart contract platform, so it has no dApps, DeFi protocols, and other advanced features.
Its main advantages are that it is cheap and fast. And it is also a popular choice for transferring money between exchanges, as it has very low fees. Much lower than bitcoin or Ethereum.
But because even fun money is still money, the Dogecoin community has found many uses for its cryptocurrency.
Of course, DOGE can always be used for trading and investing just like any other cryptocurrency.
But in January 2014, DOGE also took on a charity. The community raised $30,000 in DOGE for the Jamaican bobsled team to send to this year’s Winter Olympics.
They also raised $32,000 to supply Kenya with clean water. This has led many to realize that the Dogecoin community is one of its strongest assets.
Is Dogecoin real money
This is not a question where a simple “yes” or “no” is enough. Dogecoin does have a monetary value, and therefore it can be considered real money.
However, until it is officially recognized as money – and not just by DOGE, but by the rest of the crypto industry – it cannot technically be called money.
You can call it digital money, although most people consider it something below “real” fiat money.
It is worth noting that Elon Musk, the second richest man in the world in 2022, is a big fan of Dogecoin.
All in all, yes, DOGE is real money, even if skeptics may not think it is.
And while the lack of a maximum supply limit does not bode well for its future, DOGE can still be a valuable investment given how popular it is becoming.
Dogecoin fees and expenses
As mentioned, DOJ is a very cheap coin, so it is often used for money transactions. It has become a popular use, and for a long time, DOJ commissions were almost zero, just a fraction of a cent.
This was the case until recently, as 2021 brought a lot of attention to the coin.
As DOGE prices rose, so did commissions. Dogecoin reached its highest average commission around February 8, while its price rose as a result of viral attention from Elon Musk and users of crypto-oriented Reddit groups.
DOGE fans and holders initiated a special viral marketing campaign to offset the success of other cryptocurrencies, and it worked, increasing DOGE fees from less than $0.01 per transaction to $0.3125.
This was the highest fee in the history of Dogecoin. However, at the time of writing, DOGE is still quite popular, but its fees have fallen to a negligible amount.
In addition, Dogecoin also has withdrawal fees on some crypto platforms. Some platforms allow free DOGE withdrawals, but some have fees that can range from $0.05 to $0.11. Some platforms even charge a few dollars for large withdrawals.
What are the advantages of Dogecoin
The biggest advantages of Dogecoin are the high speed of transaction processing and the low cost of transactions.
As mentioned in the previous segment, even the highest transaction costs were only $0.31. It is almost nothing compared to Ethereum’s commissions, which can reach $50, or bitcoins, which are known to exceed $40 during particularly busy periods of high volume.
In addition, DOGE can be mined cheaply and can be used to send money to anyone, making it a great choice for international transactions almost instantaneously.
In addition, it can also be used for payments. Initially, it was not very popular because no one accepted it.
But over the years merchants willing to accept Dogecoin began to appear. Now more and more vendors are accepting it as a means of payment for goods and services.
Transactions are transparent, fast, and secure, so DOGE can be a good choice if you can find people who accept it.
Can Dogecoin be used anonymously
We should note right away that Dogecoin is not a private coin – a class of cryptocurrency designed for anonymous payments.
Thanks to blockchain researchers, most crypto transactions can now be easily tracked. Especially since exchanges require their users to verify their accounts.
So, if you create an account on the exchange and confirm your identity, and then buy Dogecoin and put it into your purse, anyone can find out who owns this purse and how many coins you have in it.
The only way to buy DOGE anonymously is to use P2P platforms, where you send individual money directly by bank transfer or cash, and they send DOGE to you.
This way, your wallet will not be tied to your identity.
The other option is to mine the coin and get it directly from the source.
But again, your identity will be known as soon as you connect your wallet to the exchange, where your account will be confirmed.
The last option would be to use crypto-mixers after buying coins on exchanges.
That way, people will still be able to know that you bought DOGE. But they won’t know which coins are yours and which wallet you have.
How safe is Dogecoin
Dogecoin is as safe as any other cryptocurrency. In other words, you are always exposed to risks when it comes to the inherent volatility of crypto-assets.
Also, if you leave your coins on an exchange, they can be hacked, and your coins can be permanently stolen from you. Using hardware wallets can help prevent this.
Dogecoin itself is a secure coin. It is decentralized, and as such, it is clearly not a scam.
It has never made any serious promises that would attract people other than the possibility of owning a very cheap token just for fun. So it has never tried to attract investors and trick them with some scheme.
The only real danger will be 51% attacks on the Dogecoin blockchain but given that the coin is popular.
Doge has over 1,300 full nodes. This should not be a serious risk, since anyone conducting a 51% attack would have to hack more than half of the devices running a full Dogecoin node.
So, apart from investing in it just to see its price drop, DOGE does not involve serious risks and dangers.
Which teams are working on Dogecoin development
Dogecoin was apparently worked on by Jackson Palmer and Billy Marcus, its co-founders and original developers.
For years, DOJ wandered rudderless through the crypto industry. But the rising price and interest in the token has recently revived its technological development.
Dogecoin has had several developers over the years, such as Michi Lumine and Ross Nicholl, who previously contributed to the coin for the last time in October 2019.
After the resurrection of DOGE in 2021, Nicholl and four other developers began working on updating the coin’s software.
They found that the biggest problem was actually scalability, as existing nodes allowed outbound connections. But not inbound, as node users did not disable their firewall to allow inbound connections from peer-to-peer nodes.
While DOGE does not have a large development team. It does have a dedicated community that tries to solve one problem at a time, which can be quite a challenge given that technical development at DOGE has not progressed much over the past few years.
What financial institutions invest in Dogecoin
So far, Dogecoin has not attracted large financial institutions. For the most part, financial institutions and institutional investors prefer to stick with Bitcoin and Ethereum, and some are exploring certain decentralized finance (DeFi) projects.
DOGE, on the other hand, has attracted Elon Musk as a major supporter.
Although it remains unclear whether Musk has ever actually invested in DOGE or not. He often posts seemingly humorous tweets promoting DOGE but has never confirmed the investment.
Dogecoin, like any PoW-based cryptocurrency, revolves around processing transactions and “solving” blocks, which are then added to the blockchain. In exchange, miners receive new DOGE coins, which they can then sell, use, or store.
Dogecoin uses the ‘Scrypt’ algorithm, just like Litecoin. However, its mining complexity is much lower than Litecoin’s, which allows the use of simpler and cheaper equipment to mine the coin.
Note that this doesn’t say cheap hardware – just cheaper than what you would need for some other cryptocurrencies like bitcoin.
Dogecoin’s blockchain time is only 1 minute, making DOGE 10 times faster than bitcoin and 2.5 times faster than lightcoin. On the other hand, the rewards are much lower.
For example, BTC miners get 6.25 BTC per block, which is about $363,600 at the Bitcoin price at the time of writing ($58,178 per coin).
DOGE gives its users 10,000 DOGE per block, which totals about $531. Multiply that by 10, which is how many blocks DOGE solves and BTC solves one, and you get $5,315.
So, while Bitcoin solves one block and gives its miners $363,600 for their efforts, DOGE can solve 10 of them, but only for $5,300.
Dogecoin has its own downloadable wallet for mobile or other devices, but it can also be stored in many other wallets such as Trust Wallet, Trezor, Ledger Nano models, and others.
Of course, storing DOGE in your exchange wallet is the easiest method, as it will be instantly available for trading.
However, this is not recommended because then you won’t own the private keys, and if you don’t have the keys – you can never truly say that you own the coin.
Also, funds can be stolen from the exchange if it is hacked. If you locked your DOGE in the fridge, only you would have access to it.
Is Dogecoin worth the investment
In the end, this is something investors have to decide for themselves. Dogecoin is a cryptocurrency, and cryptocurrencies are still unregulated, very volatile. DOGE developers have a lot of catching up to do.
So, while you might say Dogecoin is not the best choice, that’s not entirely true either.
The coin was never supposed to live that long, but it still charmed the community and managed to survive no matter what, even after its founder left, so anything is possible.
Another endorsement from someone with the influence of Elon Musk could well lead to another huge price hike.