Dogecoin is never great again!
Dogecoin is just like the commonly known Bitcoin or Ethereum—although it’s a very different animal than either of the two. It was originally created at least in part as a lighthearted joke for crypto enthusiasts. And despite its unusual origin story, Dogecoin has exploded in popularity in 2021. Now, to help you get started with Dogecoin, we will answer a few questions!
How Does Dogecoin Work?
Dogecoin is a cryptocurrency that runs on blockchain technology, similarly to Bitcoin and Ethereum. All holders carry an identical copy of the Dogecoin blockchain ledger. This is frequently updated with all new transactions in the cryptocurrency. Like other cryptocurrencies, Dogecoin’s blockchain network uses cryptography to keep all transactions secure.
People called miners use computers to solve complex mathematical equations. Consequently, helping in processing transactions and recording them on the Dogecoin blockchain—a so-called “proof of work” system. In exchange for processing transactions and supporting the blockchain ledger, miners earn additional Dogecoin. This they can then hold or sell on the open market.
Dogecoin may be used for payments and purchases, but it’s not a very effective store of value. This is chiefly because there is no lifetime cap on the number of Dogecoins that may be created by mining. Meaning, the cryptocurrency is highly inflationary, by design.
What's the difference between Bitcoin and the lighthearted joke-Dogecoin
Now, Dogecoin has a few significant differences compared to Bitcoin. First, it’s quicker and easier for miners to complete the mathematical equations that complete and record transactions. So Dogecoin is somewhat more efficient for processing payments.
Another significant difference is the absence of any lifetime cap on the number of Dogecoins that can be created. There is a lifetime cap of 21 million Bitcoin that limits the maximum number of coins that can be created. This means that miners are forced to work harder and longer over time to earn new Bitcoin. And to a degree, it helps guarantee Bitcoin’s ability to hold and grow its value over time.
How Do I Buy Dogecoin?
You can buy Dogecoin on a cryptocurrency exchange like Binance or Kraken. The exchanges require you to set up and fund an account with U.S. dollars or cryptocurrency. You then are able to buy and exchange cryptocurrencies, including Dogecoin.
Some online brokers also allow you to buy Dogecoin—in addition to conventional assets like stocks, mutual funds and bonds. They don’t offer as many of the cryptocurrencies as exchanges, but Dogecoin is generally available.
As with other cryptocurrencies, once you’ve purchased Dogecoin it’s best to move your coins to a crypto wallet. Wallets take many forms, from online services offered by exchanges like Coinbase. So while you can’t buy Dogecoin on Coinbase, you can store it in your Coinbase wallet. This is also impossible on apps on your mobile device or even a physical hard drive. You secure the wallet with a private password. Since your coins are held outside of an exchange, there’s an extra layer of protection against hacks.
Before Dogecoin rocketed higher in price, you could earn free coins for doing basic tasks online, but not now!
Is Dogecoin a Good Investment?
The answer to this question depends on who you ask and what you need! There is no lifetime limit on the number of Dogecoins that can exist. Millions of new Dogecoins are released onto the markets every single day. So there is very little incentive to hold the cryptocurrency for the long term. Again, the gains in Dogecoin that have been seen in 2021 has changed the whole story! So whether the crypto’s tipping and donating culture will continue remains to be seen.
Should You Buy Dogecoin?
Those who bought Dogecoin to start 2021 have been well rewarded. Still, buying any sort of cryptocurrency involves risk, and that includes Dogecoin. It’s always worth buying a few coins and familiarizing yourself with the system. But honestly, it’s of late losing its value to Shiba Inu.
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