What started as a joke then is now one of the most-mentioned cryptocurrencies on Twitter. Yes, Dogecoin was a lighthearted take on cryptocurrency in general and Bitcoin in particular. Although an underestimated cryptocurrency, Dogecoin is considered a faster and cheaper alternative to Bitcoin.
So, what exactly is Dogecoin? How does it differ from the other cryptocurrencies? Is it a better currency, and how is it similar to the other virtual currencies? Let’s find out the benefits and drawbacks of the currency that shot to fame overnight.
What is Dogecoin?
Dogecoin is a peer-to-peer cryptocurrency launched on December 6, 2013. Dogecoin is used for online transactions and can also be exchanged with cryptocurrencies like Bitcoin and Litecoin. The coin’s logo and namesake are based on the Shiba Inu dog meme.
The creators of Dogecoin, Billy Markus, a software engineer for IBM, and Jackson Palmer, an Adobe engineer, wanted to create a fun and instant P2P crypto token with a broader reach than Bitcoin. They achieved this motive as Dogecoin is considerably faster where it takes a minute for completing one Dogecoin transaction as opposed to Bitcoin’s 10 minutes transaction time. Want to know more about ways to invest in Dogecoin and its future? Look at this detailed post.
Facts about Dogecoin
- Dogecoin is based on Litecoin technology. That is, it started as a prototype of LuckyCoin, which is based on Litecoin technology.
- Dogecoin has an active community that has been known to arrange various charitable events. The Dogecoin community even sponsored NASCAR.
- Apart from cryptocurrency trading and online transactions, Dogecoin is used for tipping on social media sites for posts and other contributed content. Tipping is compared to the ‘Like’ button. However, it has a greater impact.
- Dogecoin uses a proof-of-work algorithm similar to Bitcoin. However, unlike Bitcoin, Dogecoin uses the Scrypt hash as opposed to Bitcoin’s SHA256.
- Unlike Bitcoin, Dogecoin has no mining limit. Also, Dogecoin mining is considerably faster when compared to Bitcoin owing to the Scrypt hash.
- Dogecoin’s average transaction fee is less than $1 compared to Bitcoin, which may go up to $60.
- There were no technical updates or developments after 2015, and Jackson Palmer, one of Dogecoin’s inventors, left the project stating an extended leave of absence.
- Dogecoin witnessed a surge in its price following the Tweet of Elon Musk, calling Doge the people’s crypto and also his favorite currency.
- Dogecoin reached an all-time high with a market capitalization of roughly 10 billion USD following Musk’s tweets. In fact, in one of his tweets, Musk stated, “Bought some Dogecoin for Lil X so that he can be a toddler holder.”
What are the advantages of Dogecoin?
- As per doge price prediction, compared to Bitcoin, the transaction fees for Dogecoin are quite low. Also, the transaction is much faster where it roughly takes around a minute.
- Due to Dogecoin’s low value, it is widely used as a tipping system and an ideal mode of payment for online casinos and cryptocurrency gambling.
- Due to Dogecoin’s Scrypt proof-of-work consensus, unlike the SHA256 of Bitcoin, Dogecoin can be mined via FPGA and ASIC devices with less energy consumption opposed to Bitcoin’s high power mining rigs.
- The uniqueness of Dogecoin is attributed to its strong and vibrant community, making it different from the other cryptocurrencies.
What are the disadvantages of Dogecoin?
While Dogecoin is believed to be a better alternative, it is still in its infancy where mainstream applications are concerned. Nevertheless, with business tycoons like Elon Musk and celebrities like Gene Simmons and Snoop Dog expressing interest in the crypto, it may find more real-world applications.
Although Dogecoin has a very vast and active community, there have been no major developments and technological updates since 2015. And this may be considered as yet another drawback. Despite the lack of updates, Dogecoin grew in its value, reaching an all-time high during February 2021.
Cryptocurrency analysts and experts believe Dogecoin to be an underestimated currency. One can also say that Dogecoin rose to fame following the tweets of Elon Musk supporting the crypto. That aside, Dogecoin truly has great potential as a feasible and faster alternative to Bitcoin. Dogecoin was intended to be a widely accepted cryptocurrency with a touch of fun. Nevertheless, Dogecoin has emerged as a viable alternative to both Bitcoin and Litecoin.