Today we are going to talk about one of the most popular cryptocurrencies in the world, Dogecoin, what is it and how to invest in this coin? In the first months of 2021, Dogecoin increased its value by 1,500 percent and has become the tenth largest cryptocurrency in the world for a few days. Now things have calmed down a bit: Dogecoin has fallen to 13th place, and in the last few days has lost about 30 percent of its value.
What is Dogecoin?
Dogecoin cryptocurrency was created in December 2013 by programmers Jackson Palmer and Billy Markus. They planned to create a cryptocurrency that would be enjoyed by a large number of people. In addition, the creators wanted to distance themselves from Bitcoin. Dogecoin was a meme cryptocurrency but still it has repeatedly supported fundraising for charitable purposes.
Dogecoin was created with the initial idea of reaching a wider audience with its positive message, especially younger customers. The name and logo refer to the popular Doge meme starring a shiba dog, whose startled-faced photos went viral in 2013, usually accompanied by funny phrases written in Comic Sans. The Doge network operates on the Proof of Work consensus algorithm, without having a limited maximum supply.
Dogecoin today boasts a prestigious position in the cryptocurrency landscape, with really considerable numbers both in terms of capitalization and exchanges: it is a peer-to-peer cryptocurrency, i.e. founded on a network in which each connected subject acts as client and server. In a simpler way, we can say that the Dogecoin is a digital currency generated by computer through the procedure known as extraction or mining and that allows it to be traded without the need for a central authority.
How does it work?
Dogecoin is undoubtedly a very serious platform with a lot of advanced technology. It is a cryptocurrency based on the source code of Luckycoin, which was a modified version of Litecoin. Dogecoin uses Scrypt, an algorithm that has been called revolutionary since it was used. This algorithm, also helps produce faster speeds and is generally more accessible to novice miners. Dogecoin is a favorite of those who create content on platforms such as Reddit and YouTube.
This cryptocurrency has a shorter block time than Bitcoin. To be more precise, the blocks on the Dogecoin blockchain are closed every minute. This means that it is able to close more than nine times the amount of blocks that Bitcoin can do per minute. As with any other cryptocurrency, it also requires an electronic wallet. The function of the wallet is to store the different cryptocurrencies you own. It can be found in the form of different programs on the official website.
It works with virtually all operating systems: on iOS, on Android, and even on desktop computers. It is enough with a simple installation of the electronic purse. What you need to do is register with the chosen exchange, connect a credit card or other accepted means of payment to an account and an e-wallet in which to store Dogecoins, enter the amount you want to buy, and convert the euros into digital currency, which will be automatically transferred to your wallet.
Why did Dogecoin become so popular?
It is always difficult to say how and why a cryptocurrency gains or loses value and becomes popular or not. However, at the end of January 2021, there were factors that influenced the rise in the value of Dogecoins. First, the Reddit community, which went to war with the investment funds that decided to wipe out the GameStop network of game stores, asked: if it was possible to increase the value of GameStop, why not increase the value of Dogecoin?
At its peak, it reached 1500% of its value. But that’s not all, Elon Musk, started publishing strange posts on Twitter, which in a way were to promote Dogecoin. The Tesla boss, in his Twitter style, started writing about the cryptocurrency without much context. Musk’s posts sparked a veritable frenzy.
Those tweets made Dogecoin a trending topic on Twitter. So it is not incorrect to say that part of the credit in this case belongs to Elon Musk and his tweets.
How to invest in Dogecoin?
Many are wondering what the future of this cryptocurrency will be in the short or long term. Investors on Reddit forums, for example, are betting on a steady rally: most active users expect Dogecoin to reach $1 in the coming months.
As a Doge investor you will have to choose between two strategies:
- Trade Dogecoin: You can trade it online which will allow you not to actually buy the cryptocurrency, but only profit from it in case of a price increase or collapse.
- Buy Dogecoin: You can buy and hold the cryptocurrency for the long term, in the hope that it will grow.
Advantages of using Dogecoin
Dogecoin is built on a technological infrastructure that basically resembles that of Bitcoin, but with important differences that mark a big step forward at a technological level. One important advantage it offers, is that its transaction verification protocol, only needs one minute to verify a transaction and add it to the blockchain. It is certainly not the shortest possible time, but it is much better than what Bitcoin or Litecoin allow to do.
It is one of the most traded cryptocurrencies in history. We are not talking about speculative movements, which according to most analysts’ estimates account for more than 90% of transactions; in this case we are referring to all those people who actually use Dogecoin to send and receive money in exchange for goods or services. It must be said that, in the long run, the popularity of a cryptocurrency within the real economy will be what will truly make the difference.