If you’re looking for a user-friendly cryptocurrency with low transaction fees, Dogecoin could be the answer.
At first glance, you could be forgiven for thinking Dogecoin is a bit of a joke. The coin’s logo is the Japanese Shiba Inu dog from the Doge internet meme, and it was created following a flippant tweet by Jackson Palmer, who said: “Investing in Dogecoin, pretty sure it’s the next big thing.”
Dogecoin’s success, however, proves it’s no joke. The hype around its launch created an army of loyal fans, helping to turn it into a major cryptocurrency with a current market cap of over $300 million.
What is Dogecoin?
Dogecoin is a decentralised platform which allows you to trade the Dogecoin token (DOGE) and exchange value.
The coin was launched in December 2013 as a fun and light-hearted cryptocurrency with none of the controversy surrounding its more established peers.
It was based on an existing cryptocurrency called Luckycoin which originally gave people randomised rewards for mining a block (it changed to static block rewards in March 2014). Luckycoin itself is based on Litecoin – a “lighter” version of Bitcoin which uses Scrypt technology in its Proof-of-Work algorithm. As a result of being Scrypt-based, Dogecoin can only be mined by computers and not by ASIC hardware. This makes it less energy-intensive to mine.
Dogecoin was originally intended to have a hard cap of 100 billion tokens, but the cap was later removed.
What is it used for?
Like other cryptocurrencies, Dogecoin can be held as an investment or traded in the hopes of making a profit. Most Dogecoin fans, however, use the altcoin as a currency, taking advantage of its very low transaction fees, fast transaction times, and easy-to-use platform.
Dogecoin has also become the most popular coin with which to tip people over the internet to thank them for providing interesting content. In essence, it’s a digital currency that people can actually use rather than just invest in.
The Dogecoin community has frequently raised funds for charitable causes. In January 2014, it launched a fundraiser to raise $50,000 for the Jamaican Bobsled Team, which could not afford to go to the Sochi Winter Olympics. Meanwhile, the Dogecoin Foundation managed to raise 40,000,000 Dogecoin to build a well in the Tana river basin in Kenya.
Benefits of Dogecoin
Although Dogecoin is based on Litecoin’s Scrypt protocol, its block time is only one minute compared to Litecoin’s 2.5 minutes. This means Dogecoin offers faster transactions and confirmations.
A major difference between Dogecoin and other cryptocurrencies is it is inflationary rather than deflationary. Deflationary coins have a hard cap, and this can encourage people to hoard it in the hopes that its value increases over time. When the hard cap is reached, it’s no longer profitable to keep mining the coin.
Inflationary coins, on the other hand, ensure mining can be maintained and lost coins are replaced.
As well as offering fast transaction times and negligible transaction fees, what really makes Dogecoin special is its community. Its users are vast in number and passionate about promoting the coin among the general public and merchants. They believe it is the perfect coin for anyone looking to dip their toe into the world of cryptocurrency.
How to buy Dogecoin
Dogecoin is traded on more than 50 exchanges around the world. Most exchanges don’t enable you to buy DOGE with fiat, so you’ll need to buy a cryptocurrency that is listed in a pairing with DOGE and then trade it.
You can store Dogecoin in the official Dogecoin wallet, in another online or desktop wallet that supports the coin, or in a hardware wallet.
Conclusion
Dogecoin probably won’t ever be taken as seriously as Bitcoin – but, arguably, that’s part of its appeal. And with a loyal fanbase, fantastic community support on Reddit, and fast transaction times, it’s probably one of the best coins for crypto newcomers to get their hands on.
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Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.