What is DogeCoin?
With the intention to tap the market that Bitcoin failed to reach, programmer Billy Markus came up with an idea to have a cryptocurrency that is fun and cute.
Walkthrough Video that Explains How to Buy DogeCoin Online
Where Does the Name Come From?
With Bitcoin’s association to the Silk Road, DogeCoin is a cryptocurrency inspired by the 'doge' internet meme. DogeCoin is a Shiba inspired virtual currency that has reached a capitalization of $60 million in 2014 and has continuously grown over the years. By June 2017, Dogecoin has reached $340 million market capitalization.
How does DogeCoin Compare to Other Crypto Currencies?
Similar to Bitcoin and Litecoin, DogeCoin makes use of public-key cryptography. This means that a user generates one public cryptographic key and one private one. This allows the user to distribute the public key without the threat of anyone gaining access to encrypted information.
However, it also has a number of differences to other virtual currencies. For instance, unlike Bitcoin addresses that are 27 to 33 characters long, Dogecoin addresses are a string of 34 numbers and letters which start with a letter D.
It had an initial coin production of 100 billion coins by mid-2015 and produced additional 5.256 billion coins every year after that. By June 30, 2015, the 100 billionth Dogecoin was mined.
It was initially planned to limit the number of Dogecoins to 100 billion. However, DogeCoin developers later decided to make infinite Dogecoins available.
What made Dogecoin popular is its use as a tipping currency online. It has been used mainly for rewarding contributors for interesting and noteworthy content online. DogeCoin was based on Luckycoin, a cryptocurrency that was in turn based on Litecoin. It features randomised rewards that you get for mining. This means a small amount can be used as a reward without any transaction fees.
DogeCoin was officially launched on December 8, 2013. By December 19, 2013, DogeCoin appreciated in value to almost 300% within 72 hours. From its original value of $0.00026 to $0.00095 despite the billions of Dogecoins that were produced on a daily basis.
The timing was also perfect for DogeCoin during this time since it happened when China decided to forbid Chinese banks from investing the Chinese Yuan into BitCoin. However, three days later, DogeCoin crashed by 80% mainly due to the large mining pools looking to exploit the small computing power required in order to mine DogeCoin during this time.
By January 2015, Dogecoin already reached a market capitalization of $13.5 million. However, a few months later, Jackson Palmer announced an “extended leave of absence from the cryptocurrency community”.
Should I Buy or Trade DogeCoin?
Should you buy or trade DogeCoin at this point? If you are a speculative trader, it is a good idea to invest on altcoins like DogeCoin. It has a minimal risk that allows you to accumulate a good number of DogeCoins for a small amount of money.
Though it has dropped in popularity over the years, you can still earn a good amount of money when its value spikes up.
You can easily take advantage of its lows to buy coins and appreciation to sell your DogeCoins. You will be able to take advantage of “pump and dump” strategies by individuals manipulating the market.
Do the Fundamentals Mean I Should Buy and Hold?
On the other hand, if you are a fundamental investor, it is a good idea to take a closer look at the numbers, structures and fundamental technology being used by DogeCoin before investing. For instance, it offers a pair of cryptographic keys for the security of its users. This means that there’s an additional layer of protection to its users.
Another thing worth mentioning about DogeCoin is that it offers a much higher mining reward. It has recorded 14,000 and 22,000 payment volumes weekly. Unfortunately, unlike other virtual currencies, DogeCoin is not a widely accepted in retail. Instead, it exists only as a virtual tip used for content creators.
Also, it is worth mentioning that there was a time when DogeCoin experienced an alarmingly decreasing hash rate.
With infinite coins, will the price go up?
Should you buy DogeCoin? If you are waiting for the day when DogeCoin is going to be worth $1, you may not see this happen. That’s because of the fact that the number of DogeCoins in the market is by the billions. Following the basic law of supply and demand, this means that DogeCoin’s value could even drop in the coming years.
What makes DogeCoin relevant is the possibility of using it as a small tip. Its value is very negligible that you won’t mind paying using the cryptocurrency.
How to Buy DogeCoin Online - Step-by-Step Guide
Get a DogeCoin Wallet
Buying DogeCoin is quite easy. For starters, you will need to have a wallet. For those that don’t have any experience with cryptocurrencies, consider your DogeCoin wallet as your bank account where your money is kept.
Following the same logic, you need a secured wallet to keep everything. Just go to DogeCoin’s official website and you will be able to download the DogeCoin Wallet that you need.
- Purchase BTC or LTC at a Secure Exchange House, such as Coinbase. The next step is to purchase a more reputable cryptocurrency. You may find it difficult to buy DogeCoin directly with your cash. Because of this, you can choose to pick either BTC or LTC for this purpose.
- Once you already bought BTC and LTC using your money, you can then pick the right exchange that will do the trick of buying DogeCoins.
- Next, go to Changelly, a cryptocurrency exchange, and set up an account. Once there you will have the opportunity to change your Bitcoin into Dogecoin.
- Exchange your BTC for DOGE. Choose BTC for what YOU HAVE. Choose DOGE for what YOU GET. Enter the amount of BTC that you bought on Coinbase that you want to exchange for DOGE. The application will automatically calculate your exchange rate and fee. Select Next.
- Enter your Doge address, this is the same address you would have got when you first signed up for what is essentially your Doge bank account. Select Next.
- Confirm your details. It is important to make sure the address is correct as there is very little recourse for any mistakes that are made. The responsibility rests solely on the user and there is no central authority to complain or request to. Select Confirm and Make Payment.
- From here, you will need to return back to Coinbase. You will now be making the link between the exchange and your Bitcoin wallet on Coinbase so next you will make a payment for the amount of BTC you entered in Step 4 to the address provided. In this case, you would send 0.01 BTC.
How to Buy DogeCoin with Credit Card
It is easy to buy DogeCoin using your credit card, and it is one of the few instances in Cryptocurrency where credit card purchases are almost functionable. All you need to do is to go to Changelly.com and be able to pay for DogeCoins using Visa/Mastercard credit or debit card. You will be paying the site in USD.
How to Buy DogeCoin with Paypal
How about buying cryptocurrencies using PayPal? Buying DogeCoin using PayPal can be tricky. There is really no straightforward approach when it comes to buying cryptocurrencies using PayPal mainly due to the possibility of buyers reversing the transaction. Unfortunately, PayPal favours buyers over sellers.
This means that sellers of DogeCoin can’t protect themselves if the buyer contacts PayPal that he or she hasn’t received the items.
So how are you supposed to buy DogeCoin using PayPal? The good news is that there is a solution for this problem provided by Virwox.
1 - Go to Virwox and deposit the money to your account using PayPal.
2 - Buy SLL using the USD exchange.
3 - Once you have the newly purchased SLL on your account, you will then be able to buy Bitcoins on the SLL/BitCoin exchange.
4 - Withdraw the BitCoins.
5 - Go to Changelly.com and use your Bitcoins to purchase the desired number of DogeCoins
How to Trade DogeCoin?
If you intend to buy and sell DogeCoin, the first thing that you should know are the list of exchange houses. Each exchange house will have their pros and cons. Among the most notable exchange houses that offer DogeCoin trading include Bleutrade, bter.com, exchangemycoins.com, and YoBit.net.
Choosing a DogeCoin Exchange
Choosing the right DogeCoin exchange site is the tricky part whenever you are going to buy or sell these coins.
- One, it is important to compare the exchange fees. This is the additional cost of buying or selling your DogeCoins.
- On top of the exchange fees, it is also important to check the order book volume of a particular website. A higher volume order book indicates that the site is widely used and has liquidity.
- It is also a good idea to know when you are getting the coins once you’ve finished the transaction.
- For some individuals, anonymity is an important consideration whenever choosing an exchange site. Staying completely anonymous might not be possible especially in a country governed by an Anti-Money Laundering Law.
- And lastly, it is important to check the security of the website. The easiest way to find out if an exchange house offers secure transactions is if their website starts with https rather than just http.
Future of DogeCoin Trading
In 2014, DogeCoin has become the second most active community next to Bitcoin in CoinGecko. From what started as a joke, DogeCoin’s developer simply decided to pursue making the cryptocurrency after getting a positive feedback.
Using a slightly different Lightcoin source code, DogeCoin has come a long way since it was launched in 2013. It has been able to launch donation drives and advertising including sponsorship of Jamaican bobsled team into the Winter Olympics in 2014.
DogeCoin Hash Issues
These days, a lot of people are worried about different issues faced by Dogecoin. For instance, DogeCoin’s hash rate decreased into alarming levels. Why exactly is this a point of concern?
For starters, hash rate pertains to the measuring unit of the processing power of the cryptocurrency’s network. This means that in order to meet the security demands, it is important for the network to make intensive mathematical operations.
According to experts, with Dogecoin’s hash rate, it could potentially launch a 51% network attack that can even destroy the coin for good. In order to prevent such problem, Dogecoin was allowed to merge minable with Litecoin.
But of course, there is also something of value from having Dogecoin. One of which is making microtransactions. For instance, you can now make a $0.01 transaction, something that isn’t possible when it comes to credit cards. And since cryptocurrencies have no transaction fees, this becomes something interesting about DogeCoin.
The idea about microtransactions is that a transaction can be made for a really low price. And because of the negligible price, the customer doesn’t mind paying for such. This is interesting business model might be a good reason for you to hold on to your DogeCoins.
Tip the Internet
Imagine a street performer. Now, it is impossible to tip pennies for someone who does the same on the World Wide Web. With microtransactions allowed by DogeCoins, there is a chance that more people are willing to give their money. And eventually, an accumulated amount could be something of value for a particular person or organization.
What exactly is in store for DogeCoin? There are a lot of investors that are now losing interest t mainly due to the influx of DogeCoins in the market. Could you imagine having billions of DogeCoins available?
In contrast to BitCoin’s limited 21 million coins, DogeCoins there will never be a shortage of DogeCoins. However, if you will look at the concept of microtransaction, maybe, having DogeCoin does make a lot of sense. However, if you plan on earning from trading DogeCoin, it is a good idea to capitalize on spikes in its value.
Enjoyed this Dogecoin guide? Then see our other cryptocurrency guides:
- How to buy and trade Bitcoin
- How to buy and trade Dash
- How to buy and trade Dogecoin
- How to buy and trade Ethereum
- How to buy and trade Golem
- How to buy and trade Litecoin
- How to buy and trade Monero
- How to buy and trade NEM
- How to buy and trade NEO
- How to buy and trade Peercoin
- How to buy and trade Potcoin
- How to buy and trade Ripple
- How to buy and trade Stratis
- How to buy and trade Tezos
- How to buy and trade Waves
- How to buy and trade Zcash