Dogecoin is a digital currency just like Ethereum or Bitcoin. However, it operates in a different manner compared to other popular cryptocurrencies. Initially, Dogecoin was created partly as a joke for the lovers of cryptocurrency and assumed its name from a popular meme. But despite its unconventional story of origin, the little-known crypto busted into popularity in 2021. As of today, Dogecoin is considered the top five most popular cryptocurrencies.
The History of Dogecoin
So, what is dogecoin and where did it come from? Dogecoin is a digital currency created by two software engineers, Jackson Palmer and Billy Marcus, in the close of 2013. Jackson Palmer decided to brand the logo of the cryptocurrency with a famous meme during that and deliberately featured a misspelled word “doge” that described a Shiba Inu dog.
How does Dogecoin work?
Just like other major cryptocurrencies like Bitcoin and Ethereum, Dogecoin runs on blockchain technology. Blockchain is a secure and distributed digital ledger where all transactions made are stored with the help of a decentralized digital currency.
Any holder has an identical copy of the Dogecoin blockchain ledger that’s regularly updated with every new transaction within the cryptocurrency. Similar to other cryptocurrencies, the blockchain of the Dogecoin network makes use of cryptography to secure all transactions.
There are people who mine using computers to solve complicated mathematical equations so as to process transactions and list them on the Dogecoin blockchain. This is also referred to as a proof of work system. Miners usually earn extra Dogecoins as a reward for processing transactions as well as supporting the blockchain ledger. The miners can opt to hold or sell the coins in the open market.
You can use Dogecoin to pay or make online purchases. However, it is not an appropriate store of value. This is mainly because there is no lifetime limit on the number of Dogecoins that can be mined. This implies that the cryptocurrency is, by design, highly inflationary. Miners get rewarded by the blockchain for their efforts of creating millions of Dogecoins on a daily basis. As such, it becomes very difficult to speculate price gains for this cryptocurrency.
How to buy Dogecoin
Anyone can buy Dogecoin on a cryptocurrency exchange such as Kraken on Binance. One of the requirements for these exchanges is that you open an account with cryptocurrency or U.S. dollars. After that, you can purchase or exchange cryptocurrencies, including Bitcoin and Dogecoin. Nonetheless, other cryptocurrency exchange platforms such as Coinbase don’t support the buying and selling of Dogecoin.
There are also online brokers like TradeStation and Robinhood that allow people to purchase Dogecoin other than traditional assets such as mutual funds, bonds, and stocks. Although they don’t support other major cryptocurrencies, they do support Dogecoin.
Is Dogecoin a good investment?
Because there is no restriction on the number of Dogecoins that can be mined or produced, and millions of Dogecoins are being released every day to the market, it is very tricky to have it as a long-term investment. When you choose to invest in Dogecoin, make sure you leverage a trusted platform like SoFi Invest.
The people who bought Dogecoin at the beginning of 2021 have reaped a lot. The future prospects of this cryptocurrency are not certain.