What is Dogecoin (DOGE) and how does it work?
As of January 2022, Dogecoin is one of the top 12 cryptocurrencies by market capitalization—not bad for a coin that started as a joke based on a popular meme! But what is Dogecoin? Classified as an altcoin, i.e. a coin that’s not Bitcoin it’s similar to other cryptocurrencies because it works on a blockchain and its pricing can be volatile.
However, unlike other cryptocurrencies, such as Bitcoin, there’s no limit to the number of Dogecoins that can theoretically exist. And according to one of its inventors, it has a “lighthearted and inclusive” community behind it. So, where did Dogecoin come from and what, exactly, is it?
Who invented Dogecoin—and why?
Let’s start with Dogecoin’s origin story. Dogecoin has been around for a while. It was invented back in 2013 by two software engineers, Billy Marcus and Jackson Palmer, who initially came up with it as a joke. They paired two of the hottest trends that year—Bitcoin and the “doge” meme featuring a Shiba Inu dog—to come up with a new cryptocurrency. Marcus and Jackson wanted a coin that was accessible to the general public, so they built it with open-source software that allows anyone to view their source code.
From these humble beginnings, the coin gradually grew into one of the most well-known cryptocurrencies. Tweets from one of its most prominent supporters, Elon Musk, led Dogecoin’s price to skyrocket in early 2021. And in December 2021, Musk even announced that his company, Tesla, would accept Dogecoin as payment for some merchandise. This marked the coin’s transformation from ‘joke’ to major crypto player.
How does Dogecoin work?
Dogecoin is a blockchain-based cryptocurrency with quite the pedigree. Dogecoin is a fork of Luckycoin—i.e. it’s a new cryptocurrency that split off from Luckycoin—which itself forked (or split) from Litecoin, which is a fork of Bitcoin. So, essentially, Dogecoin can trace its roots all the way back to Bitcoin, but it’s not the same coin.
Dogecoin operates using a process called “auxiliary proof of work”, meaning crypto miners can work on certain other proof-of-work cryptocurrencies, primarily Litecoin, and also mine Dogecoin at no extra cost. In Dogecoin’s system, as well as other proof-of-work coin systems, miners compete to see who can solve complex mathematical problems to validate transactions the quickest in order to earn coins. For each Dogecoin block mined, miners earn 10,000 Dogecoins.
What can I buy with Dogecoin?
So, what is Dogecoin used for? As of January 2022, there are almost 2,000 places that accept Dogecoin as payment. Whether you’re after premium cars from bitcars.eu or a holiday via travolier.com, you can use Dogecoin to purchase all kinds of goods and services. You can even convert your Dogecoins into a prepaid Mastercard via Bitpay, which you can use anywhere that accepts plastic.