What is Dogecoin and how does it work? A beginner's guide to DOGE

Dogecoin DOGE -2.78% is a cryptocurrency that has been making waves in the digital currency world. Initially created as a joke, it has since gained a massive following and has even been endorsed by high-profile figures such as Elon Musk.

But what exactly is Dogecoin, and how does it work? If you're new to the world of cryptocurrency and want to learn more about DOGE, this beginner's guide will provide you with all the information you need to get started. From its origins to its current popularity, we'll explore the ins and outs of Dogecoin and help you understand how it works.

What is Dogecoin?

Dogecoin, often known by its ticker symbol DOGE, is a digital currency that was introduced in 2013. Unlike many other cryptocurrencies, Dogecoin was not created to fulfill a specific use case; instead, it was inspired by a comedic internet meme featuring a Shiba Inu dog. This unique origin, rooted in humor and internet culture, has given Dogecoin a distinctive place within the broader cryptocurrency community.

The coin was developed by software engineers Billy Markus and Jackson Palmer, who adapted the open-source code of Bitcoin and its derivative Litecoin to create Dogecoin. Despite its lighthearted origins, Dogecoin has become a serious player in the crypto space, largely due to its active and enthusiastic community.

Although Dogecoin does not offer many unique features that differentiate it from other cryptocurrencies, it has a few characteristics that make it interesting. One of these is its unlimited supply. Unlike Bitcoin, which has a capped supply of 21 million coins, Dogecoin can be mined indefinitely, resulting in constant inflation.

This makes Dogecoin less suitable as a store of value, but potentially more useful for transactions, especially for tipping or small payments. Another notable feature of Dogecoin is its faster transaction speed compared to Bitcoin, with blocks being mined on the Dogecoin blockchain every minute, as opposed to Bitcoin's ten-minute block time.

Despite these advantages, it's important to note that the future of Dogecoin is uncertain. While its community is passionate and its transaction speed is advantageous, these factors alone may not be enough to secure its long-term success.

Dogecoin wallets and exchanges

When it comes to storage and trading of Dogecoin, there are several options available to users. Dogecoin can be stored on a cryptocurrency exchange, where it can be bought or sold like any other digital asset. However, storing Dogecoin on an exchange may give users less control over their funds. Alternatively, Dogecoin can be stored in a personal, self-hosted wallet. These wallets offer greater security and control but also come with more responsibility. It's crucial to ensure the chosen wallet is compatible with Dogecoin before proceeding with the transfer.

As for trading Dogecoin, a variety of cryptocurrency exchanges support the dog-themed coin. These platforms allow users to buy or sell Dogecoin using fiat currency, stablecoins, or other cryptocurrencies. Some platforms even facilitate in-person transactions.

Additionally, Dogecoin can be used for payments. For instance, in 2021, the Mark Cuban-backed Dallas Mavericks of the National Basketball Association opened the door to Dogecoin payments for merchandise and tickets.

Finally, it's worth noting that Dogecoin's technical developments have been consistent over the years, as reflected on its Github page. Its low transaction fees, compared to other cryptocurrencies, remain a significant selling point. However, it's also important to be aware that despite its large supply, a small number of Dogecoin owners hold a significant portion of its total coin supply.