We are going to explain what exactly is Dogecoin, the cryptocurrency in trend in recent weeks after receiving the explicit support of celebrities such as Elon Musk. This type of product is a concept that users with less knowledge may not know, so we are going to try to make everything as understandable as possible.
For that, we are going to start by explaining to you broadly what a cryptocurrency is since Dogecoin is a type of cryptocurrency. Then, we will go on to tell you what Dogecoin is with its characteristics, and we will finish by clarifying why it has become so popular.
What is a Cryptocurrency?
Cryptocurrencies are a digital medium of exchange that secures financial transfers using cryptographic methods. These methods are also used to create new units of each cryptocurrency and verify the transfer of assets. They are a decentralized alternative to the digital currency, a method opposed to conventional currencies that are centralized and organized by entities and banks.
The concept of this type of currency is a bit ambiguous, and to understand it you will need to understand other basic concepts. To begin with, cryptocurrencies are based on different decentralized networks of computers, which are spread all over the world with copies of all the transactions that have been made.
The second concept is that of cryptocurrency mining. The coins are created on computers, nodes whose owners are known as miners. They have the computer always on to compute the coins, but with the incentive that every time they generate a new coin, it is distributed among those who are part of the nodes. That is why some people create “cryptocurrency farms”, computers with many graphics cards working at full capacity to generate coins and get paid for it.
Each cryptocurrency has its algorithm, which manages aspects such as the number of new units issued each year. Bitcoin is a well-known example of a cryptocurrency, and every four years the number of units produced is reduced by two, and only a total of 21 million Bitcoins will be issued.
Decentralized computer networks with different nodes are known as Blockchain. Their blocks or nodes are linked and secured using cryptography. Each block links to a previous block, as well as a date and transaction data, and by design, they are resistant to data modification.
Therefore, it is as if this network or blockchain is open and public free where all transactions made by two users are recorded. When you make a transaction, the transaction data is recorded in a block, and it is automatically replicated in the rest. This means that the data cannot be modified or manipulated without modifying the rest of the blocks, something extremely complicated.
The first cryptocurrency was Bitcoin, but after its success, many other cryptocurrencies have been created. Some have achieved fame, such as Ethereum, but others have gone unnoticed. And we also have cases like Dogecoin, a coin that was created as a very minor but has suddenly started to be popular for some reason or timely promotion.
What is Dogecoin
The Dogecoin is a type of cryptocurrency that was originated as fun based on a meme. The meme is the Doge meme, which became popular in 2013, and consists of a picture of a Shiba Inu breed dog, to which grammatically incorrect phrases are added. Over time, the meme has evolved, but it’s still a Shiba Inu dog with funny phrases. Above is a screenshot of the dog in the meme, and if you’ve been in the meme world for a while you’ve probably seen it.
The Dogecoin cryptocurrency was created in December 2013 by Billy Markus, a programmer, and former IBM engineer. At the time, Bitcoin was gaining a very bad reputation for being involved in Dark Web black market transactions, and Markus wanted to create an alternative that had nothing to do with such shady business. The name of the cryptocurrency came from the meme, and the image of the dog is used in the images with which it is illustrated.
Dogecoin is based on Litecoin, and its operation is similar to that of other cryptocurrencies. You need a program on your computer to solve the complex algorithms with which this cryptocurrency is mined. Like Litecoin, Dogecoin also uses a cryptographic program called Scrypt and allows it to be mined faster than others such as Bitcoin, although without being able to use the same hardware as for the latter.
This speed is also in the transactions, which means that payments through this cryptocurrency can be faster than those you make with Bitcoins. Also, according to its algorithm, the theoretical maximum of Dogecoins that can be mined is 100 billion units, compared to the maximum of 21 million Bitcoin that will be available.
Why has Dogecoin Become Popular?
Dogecoin has become popular in recent weeks due to the public support it has received from celebrities. Elon Musk spoke about it assuring that it is the people’s cryptocurrency, and its value has not stopped rising like crazy since then. It has also received the support of musicians such as Snoop Dogg or Gene Simmons of KISS.
As we can see in the CoinMarketCap graph above, the sudden rise in its value was due to this public support. The rise has been such that even Dogecoin’s Twitter account has asked users to be calm and to be responsible when making purchases instead of getting carried away by those who push them to do so.