What is Dogecoin (DOGE) and how does it work?
What is Dogecoin, anyway? From starting as a joke to getting Elon Musk’s support, this coin has quite the story.
4 min read
The following statements do not constitute investment advice or any other advice on financial services, financial instruments, financial products, or digital assets. They are intended to provide general information. The following statements do not constitute an offer to conclude a contract for the purchase or sale of financial instruments and financial products or an invitation to submit such an offer and to buy or sell any particular digital asset. Cryptocurrencies are subject to high fluctuations in value. A decline in value or a complete loss are possible at any time. The loss of access to data and passwords can also lead to a complete loss.
As of January 2022, Dogecoin is one of the top 12 cryptocurrencies by market capitalization—not bad for a coin that started as a joke based on a popular meme! But what is Dogecoin? Classified as an altcoin, i.e. a coin that’s not Bitcoin it’s similar to other cryptocurrencies because it works on a blockchain and its pricing can be volatile.
However, unlike other cryptocurrencies, such as Bitcoin, there’s no limit to the number of Dogecoins that can theoretically exist. And according to one of its inventors, it has a “lighthearted and inclusive” community behind it. So, where did Dogecoin come from and what, exactly, is it?
Who invented Dogecoin—and why?
Let’s start with Dogecoin’s origin story. Dogecoin has been around for a while. It was invented back in 2013 by two software engineers, Billy Marcus and Jackson Palmer, who initially came up with it as a joke. They paired two of the hottest trends that year—Bitcoin and the “doge” meme featuring a Shiba Inu dog—to come up with a new cryptocurrency. Marcus and Jackson wanted a coin that was accessible to the general public, so they built it with open-source software that allows anyone to view their source code.
From these humble beginnings, the coin gradually grew into one of the most well-known cryptocurrencies. Tweets from one of its most prominent supporters, Elon Musk, led Dogecoin’s price to skyrocket in early 2021. And in December 2021, Musk even announced that his company, Tesla, would accept Dogecoin as payment for some merchandise. This marked the coin’s transformation from ‘joke’ to major crypto player.
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How does Dogecoin work?
Dogecoin is a blockchain-based cryptocurrency with quite the pedigree. Dogecoin is a fork of Luckycoin—i.e. it’s a new cryptocurrency that split off from Luckycoin—which itself forked (or split) from Litecoin, which is a fork of Bitcoin. So, essentially, Dogecoin can trace its roots all the way back to Bitcoin, but it’s not the same coin.
Dogecoin operates using a process called “auxiliary proof of work”, meaning crypto miners can work on certain other proof-of-work cryptocurrencies, primarily Litecoin, and also mine Dogecoin at no extra cost. In Dogecoin’s system, as well as other proof-of-work coin systems, miners compete to see who can solve complex mathematical problems to validate transactions the quickest in order to earn coins. For each Dogecoin block mined, miners earn 10,000 Dogecoins.
What can I buy with Dogecoin?
So, what is Dogecoin used for? As of January 2022, there are almost 2,000 places that accept Dogecoin as payment. Whether you’re after premium cars from bitcars.eu or a holiday via travolier.com, you can use Dogecoin to purchase all kinds of goods and services. You can even convert your Dogecoins into a prepaid Mastercard via Bitpay, which you can use anywhere that accepts plastic.
Should I buy Dogecoin?
Whenever you’re thinking of investing in a cryptocurrency such as Dogecoin, there are a few things that you should consider. Do you have a good understanding of how cryptocurrencies work, so you can make an informed decision? Crypto is often a risky investment, so would you be ok losing all the money you’ve invested? How much are you looking to invest in crypto and over what timeframe? Once you’ve thought through these questions, you’ll be in a better position to decide if investing in Dogecoin is right for you.
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So, we’ve answered “what is Dogecoin”—but whether you’re ready to buy Dogecoin or just dipping your toe into the world of cryptocurrency, there’s still plenty to learn. From how to set up a crypto wallet to getting started with crypto mining, there’s all kinds of ways to get involved, and N26 is here to help!
When was Dogecoin created?
Dogecoin was created in December 2013 as an open-source cryptocurrency.
What is a meme coin?
Meme coins are cryptocurrencies inspired by memes—such as Dogecoin and its derivatives Shiba Inu, Dogelon Mars, Samoyedcoin, and Doge Dash. Memes are typically humorous images that go viral on the internet.
What’s the deal with Dogecoin and Elon Musk?
Elon Musk has been a longtime supporter of Dogecoin—even tweeting that Dogecoin is a better option than Bitcoin for transactions. It’s widely believed that his tweets have caused major movements in Dogecoin's price. He is also believed to have a large holding of Dogecoin, with some speculating that he might be the Dogecoin ‘whale’ who owns around 36.7 billion Dogecoin (the equivalent of 28% of DOGE as of May 2021).
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