Cryptocurrencies came into being with Bitcoin being the first in 2009. Since then, several other cryptocurrencies have come up, also known as altcoins. Within altcoins, there is a category known as memecoins. These are cryptocurrencies that were inspired by memes, and were first created for fun.
Dogecoin happens to be the first of these memecoins, and so holds huge significance in the crypto industry. It was first created as a “joke” cryptocurrency, with the picture of a Shiba Inu dog on its logo.
Dogecoin has also inspired the creation of several other memecoins, including Shiba Inu, and is currently the biggest memecoin by market capitalization. In this guide, we discuss what Dogecoin is, how it works and what you can use it for, to help you know more about it.
What is Dogecoin?
Dogecoin is an open-source peer-to-peer cryptocurrency forked from Litecoin. It was first created as a joke cryptocurrency with no real use case, based on the Doge meme that became popular in 2013.
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The idea was first conceived by Billy Markus, a programmer from Oregon. He designed it to be a “lighthearted” cryptocurrency without the technicalities of cryptocurrency technology, to encourage mainstream adoption.
Dogecoin made a remarkable entry into the crypto space with wide acceptance that made it a multi million dollar asset in no time, and hasn’t looked back since.
How Dogecoin Works
Dogecoin was forked from Litecoin, which is also a fork of Bitcoin. Therefore, it has several resemblances to Bitcoin. The most notable resemblance is that it retained Bitcoin’s original proof-of-work consensus mechanism, which is a mechanism that involves mining of transaction blocks to verify transactions.
Miners help to maintain the network through this process, and are then rewarded with new DOGE coins as incentive to continue verifying the transactions. This maintains a decentralized network similar to that of Bitcoin.
However, Dogecoin developers have made several changes to the project to make it faster or more efficient than Bitcoin, one of which is that it has a one-minute block time. This means that it takes one minute to mine a Dogecoin block, unlike Bitcoin which takes roughly ten minutes, or even Litecoin which takes 2.5 minutes.
Another difference is that unlike Bitcoin and Litecoin, Dogecoin does not have a maximum supply limit. Bitcoin has a supply limit of 21 million coins, while Litecoin has a limit of 84 million. For Dogecoin, there will always be more Dogecoins mined, and there are currently over 130 billion in circulation already.
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This was intentionally done to encourage spending of the coin, and to prevent early adopters from gaining from it disproportionately as is the case with Bitcoin. This means that Dogecoin wasn’t created as a coin that will increase in price much. However the developers have adopted a burn mechanism to continuously deplete the supply and increase the value per coin.
What is Dogecoin Used for?
As mentioned earlier, Dogecoin was initially created with no use case. It was simply a joke cryptocurrency that could not be used for anything other than the fact that the Shiba Inu dog is a popular breed.
However, that is all changing now. Dogecoin started becoming popular when current Twitter owner Elon Musk began showing interest in it. Because of his influence, the cryptocurrency has made insane price gains, but experts said it needed real life use cases for the price gains to be sustained, which led to a few use cases.
Dogecoin is now used as a means of payment for countless businesses both online and offline today. The most notable of such businesses are AMC Theatres, Elon Musk’s Tesla, Newegg etc.
The project’s developers have also been developing new use cases for the blockchain. The first Dogecoin based non-fungible token (NFT) was minted in 2021, suggesting that the network was capable of being used for this purpose. This has not been fully explored, but it is something that could make Dogecoin a very useful cryptocurrency in the future.
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