What is Dogecoin (DOGE)?

Dogecoin (DOGE) became a very popular cryptocurrency in recent months when its price skyrocketed to $0.08. But now that it has surpassed $0.40 it is more than just a pump and dump. Nevertheless, not everyone knows what Dogecoin is and how it works. 

This is why we have created this guide that will answer all your questions about it. We will go through the main characteristics of this virtual currency, how it works and why it is attracting such a large number of investors. 

Disclaimer: the information shared by AltSignals and its writers should not be considered financial advice. This is for educational purposes only. We are not responsible for any investment decision you make after reading this post. Never invest more than what you are able to lose. Always contact your professional. financial advisor.

What is Dogecoin (DOGE)?

Dogecoin (DOGE) is one of the largest cryptocurrencies in the world and also one of the most discussed virtual currencies. The digital currency was created as a fork of Litecoin (LTC) in 2013 by Jackson Palmer and Billy Markus. 

The coin was able to create an online community focused on the Shiba Inu dog, the logo of the virtual currency. Nowadays, Dogecoin is used as a meme currency that works as a secondary digital asset to be mined by Litecoin (LTC) miners through merged mining. 

The virtual currency is now accepted in most of the largest exchanges around the world. Users can get access to it in just a few simple steps and even purchase it with fiat currencies. 

What is Dogecoin Used For?

Dogecoin is currently used as a digital currency to speculate with its price. The coin fluctuates a lot and many users and investors want to get rich fast by purchasing DOGE. Nevertheless, this is certainly a difficult thing to do and it also involves a lot of risks. 

Dogecoin is also a virtual currency that can be used to send and receive funds in a fast way. Indeed, it is very cheap to be send and received, which makes it a good alternative to Bitcoin or other currencies. However, its unstable price makes it difficult for users to hold it for long periods of time. 

The virtual currency is also used for merged mining. This is an activity that helps Litecoin miners earn larger rewards when mining LTC. 

How does Dogecoin work?

Dogecoin works with a proof-of-work (PoW) consensus algorithm similar to the one of Litecoin and that has also some similarities with Bitcoin. However, block times are just 1 minute compared to 2.5 minutes on the Litecoin network and 10 minutes on the Bitcoin blockchain. 

Litecoin miners that do merge mining are also able to protect the Dogecoin network and earn rewards in both LTC and DOGE. Thus, Dogecoin makes it more profitable for LTC miners to secure the LTC and DOGE networks at the same time. 

Will Dogecoin Reach $100?

It might be very difficult for Dogecoin to reach a price of $100 per coin. The reason behind that is related to the fact that Dogecoin has a massively large supply of coins compared to other virtual currencies. 

Let’s use an example. Litecoin has a total supply of 84 million coins, but Dogecoin has an unknown total supply. At the moment, there are 129.32 billion DOGE coins released to the market. This is why the price of Dogecoin would not reach $100 in the near future. 

Indeed, if Dogecoin reaches a $100 price per coin, it would have a market capitalization of almost $13 trillion, which is more than 13 times the market valuation of Bitcoin at current prices. Bitcoin would have such a market value if its price surpassed $650,000 per coin.

What is the Difference Between Bitcoin and Dogecoin?

There are many differences between Bitcoin and Dogecoin. The main one is related to the total supply and the deflationary structure of Bitcoin compared to the inflationary supply of Dogecoin. While Bitcoin has a limited total supply, new DOGE coins will be created forever. 

Bitcoin is more expensive to send and receive than Dogecoin. Dogecoin is also faster than Bitcoin, but less secure than the largest cryptocurrency in the world. 

Despite having the same consensus algorithm (Proof-of-Work), Dogecoin is based on scrypt rather than SHA-256 as on the Bitcoin network. This makes it easier for Dogecoin miners to get access to the network. Instead, Bitcoin miners require users to mine BTC with powerful ASIC miners.