What is Dogecoin? Wow Much Coin, How Money, So Crypto

On December 20, 2020, a single tweet from Elon Musk sent Dogecoin soaring in the cryptocurrency markets, rising in price by more than 20% in a single day. The tweet in question:

Dogecoin was created from meme culture, so it makes sense that Elon would seemingly tweet his support for the alt-coin. After all, Elon once tweeted that whoever controlled the memes would control the universe, which is frankly something that’s difficult to disagree with. Despite being immensely popular, Dogecoin is mysterious. Market participants often wonder if the cryptocurrency is just a meme or if it has transcended and become something more.

What is Dogecoin?

Dogecoin is an open source peer-to-peer cryptocurrency that is best known for its logo, which features a Shiba Inu dog front and center. Dogecoin is anonymous and decentralized. In addition to this, it supports fast transactions. In fact, Dogecoin’s transaction processing time is significantly faster than the transaction processing time experienced when using Bitcoin. 

The coin was first introduced in 2013 by a pair of developers, Billy Markus and Jackson Palmer. The duo hoped to create a cryptocurrency free from controversy following murky receptiveness to Bitcoin by the masses.

Initially, the coin was created as a joke with the Dogecoin site plastered with the meme image of the popular Shiba Inu with Comic Sans font. However, since then the coin has taken on a life of its own and today has a market cap of over $500 million with over 100 billion Dogecoins in circulation. Since Dogecoin is a limitless cryptocurrency, circulation is expected to rise over time as more Dogecoins are mined.

One of the benefits of a limitless supply is as the Dogecoin network ages, miners will still be incentivized to mine for Dogecoins and support transactions on the network. With a limited supply, the rewards (coins), available to miners decrease over time, giving them less of an incentive to support the network. It also combats the hoarding effect that coins like Bitcoin have experienced. If a coin has a limited supply and its demand exceeds supply, then the price of the coin will appreciate, incentivizing further hoarding. 

In simple terms, Dogecoin is a cryptocurrency that can be utilized online in many of the same ways that cash can be used. The big caveat is that while cash is accepted almost anywhere, Dogecoin has a much more limited number of places where it can be used. Despite the limitations that exist on where you might be able to use Dogecoin, it’s difficult to see Dogecoin going away anytime soon due to its fervent supporters. The cryptocurrency has a devoted community and fanbase, which in the past has even banded together to sponsor a Nascar driver.

How Does Dogecoin Work?

Much like Bitcoin, Dogecoin uses a proof of work consensus mechanism (POW). In layman’s terms Dogecoin miners use their computers to solve complex equations and in the process also power Dogecoin transactions. When an equation is solved the Dogecoin network receives a new block and the miner who assisted in the transaction receives a DOGE. The mechanism creates an incentive for miners to use their computing power to support the Dogecoin network.  

Is Dogecoin Safe?

The dogecoin network has never been hacked, but as a Dogecoin holder you’re still at risk of any of the potential dangers that come with owning any cryptocurrency. For example, exchanges have been hacked in the past. Most famously, in the 2014 Mt.Gox incident,was hacked for over $2 billion of cryptocurrencies at today’s value were stolen by hackers.

For the aforementioned reason, we don’t recommend leaving your cryptocurrency in the account you create on an exchange, regardless of which exchange you use. It’s generally better to move cryptocurrency to a wallet, which only you have access to.  

What can you use Dogecoin for?

You can use Dogecoin for any purchase with any merchant that accepts the altcoin as a form of payment. 

Pro Tip: Altcoins
An altcoin, short for alternative coin, refers to any cryptocurrency that is not Bitcoin. Examples of altcoins include Litecoin, Ethereum, Monero and Dogecoin.

Unfortunately, even when compared to other altcoins, such as Litecoin and Ethereum, Dogecoin is much less frequently accepted by vendors. So, while you can theoretically use Dogecoin to pay for anything, you’re unlikely to actually encounter a transaction where you can actually utilize the currency in your day to day life. 

The good news is that Dogecoin has a fantastic community. As of the writing of this article the Dogecoin subreddit has amassed over 171,000 members. There are frequent posts advertising places that accept Dogecoin as a form of payment. 

One of the most popular things to do with Dogecoins is to donate them for a cause or tip online community members for helpful content. In early 2014 the Dogecoin community banded around a Jamaican Bobsled team which qualified for the olympics, but lacked enough funds to make the trip. The community ended up raising over 26 million DOGE, which at the time was valued at over $30,000.

In summary, you probably shouldn’t expect to be able to spend your Dogecoins. If you’re considering purchasing Dogecoins, you should be comfortable spending the money to support the meme cryptocurrency’s vibrant community.   

Is Dogecoin a Meme?

Dogecoin is a meme and yet at the same time it’s not. The Shiba Inu image featured on all graphical representations of a Dogecoin has origins in meme culture. The altcoin captured media and user attention based on the pure absurdity of having a doge serve front and center on the face of a cryptocurrency. 

Absurd or not, the value of any currency is based on the demand for it and since the demand for Dogecoin is not zero, Dogecoin is not really a meme. In fact, at one point Dogecoins were priced at over a penny. Historically speaking Dogecoins hover in value between $0.002 and $0.003 USD. It’s not the most valuable cryptocurrency around, but it’s far from being worthless.

The community around Dogecoin wants to see the cryptocurrency succeed. The community’s hope is that the altcoin can serve as an introduction to the cryptocurrency world for many. While the success of Dogecoin was far from intentional, the meme culture surrounding Dogecoin makes it the perfect vehicle for consumer education. A Shiba Inu saying catch phrases like “wow much coin” and “so crypto” is a lot less intimidating than the buzzwords usually associated with cryptocurrencies.

How Do You Purchase Dogecoin?

Before you purchase Dogecoin you’ll first need a wallet to store, send, and receive Dogecoins. If you want a wallet which can store other cryptocurrencies in addition to Dogecoin, you’ll want to explore which one is right for you before purchasing Dogecoin. If you only plan to store Dogecoin, then you can download a Dogecoin wallet solely for this purpose here. 

You’ll have the option between the light wallet and the full wallet. Most users who only intend to transact the cryptocurrency will be just fine with the light version, however if you plan on mining Dogecoin, you will need to download the full wallet.

As soon as you boot up the program you just downloaded the wallet will begin synchronizing with the Dogecoin network. This step will take anywhere from 10 to 60 minutes depending on your internet speed and the wallet type you selected. Your progress will be displayed near the bottom of the screen and it’s okay to leave this running in the background while you take care of other things.

Once the synchronization is complete you’ll be able to send and receive Dogecoins.

Pro Tip: Dogecoin Paper Wallet
The Dogecoin wallet gives users the option to print a paper wallet from the program’s file options. We recommend printing a paper wallet to backup your Dogecoin information. Just be sure to store the paper wallet in a safe and secure location. 

Where can I buy Dogecoin?

You can purchase Dogecoin through dozens of exchanges, including some of the more popular ones like LiveCoin and Binance. Just be aware that you’ll likely want to purchase Dogecoin on an exchange that has adequate trading volume for the cryptocurrency otherwise you risk getting a poor execution price due to low liquidity. Most well-known exchanges should transact altcoins in high volume, but be wary of any you haven’t heard of. Below, we highlight a few exchanges with a high volume of Dogecoin trading suitable for Dogecoin purchases:

  • ZG.com
  • XthetaGlobal
  • HBTC
  • Bidesk
  • Dsaq
  • ZB.com
Pro Tip: Trading Volume on Crypto Exchanges
You can lookup trading volume on each exchange through a quick google search. You can then compare different exchanges in terms of how much Dogecoin is being purchased and sold with USD. Generally speaking, the lower the trading volume, the higher the chance you’re not getting the optimum price.  

There are two primary ways to purchase Dogecoins and the method you choose will likely alter which exchange you utilize to execute your purchase, considering both options are not available on every exchange. 

Purchase Dogecoin by exchanging a different cryptocurrency

The first step is to figure out which coin you’d like to use to purchase Dogecoin. Unsurprisingly, the cryptocurrencies that are most commonly traded for Dogecoin include Bitcoin (BTC) and Ethereum (ETH). While it’s technically possible to execute a trade for Dogecoin using more obscure cryptocurrencies, we recommend sticking with popular options for better pricing.

Example

Cryptocurrency Trading

Let’s say you needed Japanese Yen, but for some reason you couldn’t purchase it with US dollars (USD). Your first instinct likely wouldn’t be to purchase a Zimbabwe dollar with your USD in hopes of then trading the Zimbabwe dollar for Japanese Yen. This scenario isn’t all too different to the reasons why we recommend sticking with well known cryptocurrencies like BTC and ETH when trading between currencies.

There’s a lot of risk involved when trading currencies and you should always seek to minimize as much of it as possible.

Coins like BTC and ETH are readily available on most exchanges. You can purchase BTC or ETH with USD or with existing cryptocurrencies you may already have. 

Once you’ve secured the cryptocurrency you’d like to trade for Dogecoin, the next step is to find an exchange which allows the specific trade you’re looking to perform (i.e. BTC-DOGE or ETH-DOGE). Once you’ve settled on an exchange to use, you’re all set to purchase Dogecoin.

Purchase Dogecoin directly with USD

There are very few exchanges that allow you to purchase Dogecoin directly. Some of the few which allow you to do so include LiveCoin and Binance. You’ll want to be sure to conduct some due diligence on whichever exchange you ultimately decide to utilize for your transaction. Exchanges vary in terms of how quickly you’ll receive funds in your account after making a deposit and how quickly a transaction can be executed. 

Some exchanges even allow you to purchase Dogecoin with a credit card, however, we strongly urge against purchasing Dogecoin on credit. 

For that matter we do not condone purchasing cryptocurrency of any kind on credit. Credit card APRs are notorious for being absurdly high, meaning you’re taking on high interest debt for a very speculative investment. It’s a bad financial move that you shouldn’t make under any circumstance.