Dogecoin is a cryptocurrency founded by two software engineers in 2013. Though it was originally created as a joke, the digital currency has gained popularity in 2021, experiencing remarkable price increases.
Before investing in Dogecoin or any other cryptocurrency, it’s important that you fully understand it. In this guide, you’ll learn the history and important features of Dogecoin, how it’s mined, and what you need to know about investing.
What Is Dogecoin?
Dogecoin is an open source peer-to-peer cryptocurrency founded in 2013 by software engineers Billy Markus and Jackson Palmer. Similar to other cryptocurrencies, Dogecoin runs on blockchain technology.
The digital currency was inspired by a popular internet meme. The meme features an image of a Shiba Inu dog referred to as “Doge.” The same image appears on Dogecoins.
Dogecoin actually began as a joke, and it existed for many years with little public attention. In the five years between May 2015 and May 2020, Dogecoin’s price on average was close to a fifth of a cent. Its rise in popularity coincided with an increase in retail investing during the pandemic as well as frequent Twitter attention from the well-known entrepreneur Elon Musk. In fact, the price of Dogecoin rose to a high of 74 cents on May 8, 2021, an increase of more than 15,700% from the levels it was at the start of the year
Special Features of Dogecoin
Dogecoin has a few important features that set it apart from other digital currencies. First, there’s no finite number of Dogecoins that can be mined. This is quite different from Bitcoin, the most popular cryptocurrency to date, which has a lifetime cap of 21 million coins. The infinite number of Dogecoins could make it highly inflationary.
The other feature that sets Dogecoin apart from other popular cryptocurrencies like Bitcoin is the way it's mined. Because it’s mined using Scrypt technology, Dogecoins can be mined significantly faster than some other digital currencies.
|Inception||December 6, 2021|
|Already Mined/ Total Supply (as of June 14, 2021)||130,021,683,983 / Infinite Supply|
|Special Feature||Infinite Supply, Faster Mining Process|
Cryptocurrency mining occurs by individuals completing mathematical and algebraic formulas. It can be done either individually or in a group (known as pool mining). Because of the equipment required, mining Dogecoins can be quite expensive.
Dogecoin is unique from other popular cryptocurrencies in the way that it’s mined. This coins are mined using Scrypt technology, which is often faster than other forms of cryptocurrency mining.
Dogecoins only have a block time of about one minute, compared to about ten minutes for Bitcoins. It has a mining block reward of 10,000 Dogecoins.
Total Supply of Dogecoin
When Dogecoin was originally created, it was announced there would be a maximum supply of 100 billion coins. Since then, the founders have decided to eliminate the cap, allowing for an infinite number of coins. As of June 14, 2021, there are a little over $130 billion Dogecoins in circulation.
How to Buy/Invest In Dogecoin
You can buy Dogecoins on any brokerage site that currently trades it. Some of the most popular options include cryptocurrency markets, like Binance and Kraken, and traditional brokerages like Robinhood.
You can purchase Dogecoins using a credit or debit card or a bank transfer. Depending on where you purchase your Dogecoins, you may pay some trading fees.
Robinhood offers commission-free trading on cryptocurrencies, while Binance and Kraken have a fee schedule in place. Transactions typically take between 40 and 60 minutes to process, but the time will vary depending on the trading platform where you buy your coins.
When you buy Dogecoins— or any other cryptocurrency, for that matter—you’ll also want to acquire a crypto wallet to keep it secure. A crypto wallet holds the private key to access your currencies on the blockchain.
There are plenty of digital crypto wallets on the market, but you can also use an external hard drive. These external hard drives are often considered more secure than digital wallets because they store your keys offline, preventing hacking or unauthorized access.
Dogecoin offers its own crypto wallets for investors.
Other popular digital and physical wallets that are compatible with Dogecoin include:
- Coinbase Wallet
- Trust Wallet
- Binance Chain Wallet
2021 has been a record-breaking year for Dogecoin. The digital currency started the year with a trading price of half a cent. By early May, its price had skyrocketed to 72 cents. The price began to fall throughout the month of May, but still remained at about 30 cents per coin.
Dogecoin’s price spike in 2021 can be credited to a variety of factors. First, retail investing has increased significantly throughout 2020 and 2021, according to a Charles Schwab survey. This increase isn’t directly related to Dogecoin, but could certainly have contributed to its rise in trading activity.
Finally, many credit the rise in popularity of Dogecoin with the frequent online attention of Elon Musk. The entrepreneur frequently tweets about this digital currency. He drew particular attention to Dogecoin on May 11, 2021, when he tweeted a poll asking whether Tesla should start accepting Dogecoin.
Later in the month, Musk shared that he’s working with the Dogecoin developers to make improvements and create efficiencies with the coin and invited individuals to share their feedback with him and the developers.
The Balance does not provide tax, investment, or financial services and advice. The information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk including the possible loss of principal.