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What Is Dogecoin And How Does It Work?

Learn about the most hyped crypto in recent times- what is dogecoin and also understand how Dogecoin works.

Dogecoin was founded in late 2013 by software programmers Jackson Palmer and Billy Marcus. Palmer created the cryptocurrency's logo by willingly mistyping the term "doge" to describe a Shiba Inu dog, which was trending at the time.

It was only in early January 2021 that Dogecoin jumped up by more than 60% in less than 24 hours. Soon Dogecoin became the talk of crypto town and the market witnessed people asking “what is dogecoin” resulting in a 1,421% surge in trade volume.

In this article, we’ll answer the question of what is Dogecoin and also understand how Dogecoin works.

Connecting Your Dogecoin Wallet To ZenLedger For Your Crypto Tax Forms

  • To import your Dogecoin Blockchain transactions into ZenLedger for your crypto tax forms, all we need is your public address.
  • Select the proper blockchain or wallet from the dropdown list.
  • Paste your address into the address field in ZenLedger.
  • Select if the wallet is based in the USA or not.
  • Then hit ADD COIN button

How Dogecoin Works?

It is not enough to know what is Dogecoin. If you’re looking for opportunities in the Dogecoin market it is crucial to understand how Dogecoin works.

DOGE (Dogecoin) is a peer-to-peer cryptocurrency and is classified as an altcoin. You may purchase and sell Dogecoin on crypto exchanges. You can either store your Dogecoin on the exchange itself or in a crypto hot or cold wallet.

Now, let’s take a look at how does Dogecoin works.

Just like other cryptocurrencies like Bitcoin, Ethereum, and the likes, Dogecoin too, is based on blockchain technology. Blockchain is a public, highly secured database or ledger that records all transactions involving decentralized digital currencies.

Everyone has access to the Dogecoin blockchain record, which is updated regularly with all new transactions. Dogecoin's blockchain network, like that of other cryptocurrencies, employs encryption to ensure the security of all transactions.

Dogecoin can be used as a means of transaction of goods and services. However, it is not a particularly great store of value. This is mostly due to the fact that there is no lifespan restriction on the maximum of Dogecoins that could be generated through mining, implying that the cryptocurrency is extremely sensitive to inflation by nature. The blockchain compensates miners for their efforts by producing millions of new Dogecoins every day, making speculative price rises in Dogecoin difficult to sustain over a term.

How To Buy Dogecoin?

Now that we have an idea of what is Dogecoin and how does Dogecoin works, it’s time to 

Getting yourself some doges is pretty simple and easy. Just follow these steps and you can have doges in your crypto wallet:

  1. Choose A Wallet
  • Visit the official Dogecoin website.
  • Go to the [Wallet] section and choose between Multidoge and Dogecoin Core wallets.

Note: Multidoge is the ‘light’ wallet that skims through a blockchain to sync it, resulting in quick sync times. Dogecoin Core, on the contrary, is a ‘full’ wallet that downloads the blockchain to sync it.

  1. Setup The Wallet

Once you’ve downloaded your wallet, you can set it up according to the instructions on the screen, depending on the type of wallet you choose.

  1. Buy Dogecoin

There are several methods to acquire Dogecoin. 

  • Purchasing directly 
  • Mining Dogecoin
  • Earn Dogecoin as tips by taking part in the Dogecoin community
  • Participate in Dogecoin Folding @ Home
  • Trading Dogecoin, and many more.

The Bottom Line:  Why Should You Buy Dogecoin?

There is no lifespan limit on the quantity of Dogecoins that may exist, and lots of new Dogecoins are issued into the markets every day. This is a reason to exercise caution when planning to hold the cryptocurrency for the long term. On the other hand, Bitcoin's value keeps rising due to the system's lifetime limit on the number of coins that may be minted. Simply put, Bitcoin’s rise in value is due to its scarcity.

Purchasing any cryptocurrency, including Dogecoin, involves risk. It's always worthwhile to purchase a few coins and become acquainted with the system, but it's definitely advisable to avoid investing more than a tiny amount of your hard-earned money in a cryptocurrency that began as a prank.

Dogecoin FAQs

1. What is Dogecoin?

DOGE (Dogecoin) is a peer-to-peer cryptocurrency and is classified as an altcoin. You may purchase and sell Dogecoin on crypto exchanges. You can either store your Dogecoin on the exchange itself or in a crypto hot or cold wallet.

2. Is Dogecoin a good investment?

The reason Dogecoin might not be considered as a long-term investment is that there is no lifespan limit on the quantity of Dogecoins that may exist, and lots of new Dogecoins are issued into the markets every day.

3. How does Dogecoin work?

Just like other cryptocurrencies like Bitcoin, Ethereum, and the likes, Dogecoin too, is based on blockchain technology. Blockchain is a public, highly secured database or ledger that records all transactions involving decentralized digital currencies.
Every Dogecoin holder has an exact replica of the Dogecoin blockchain record, which is updated regularly with all new bitcoin transactions. Dogecoin's blockchain network, like that of other cryptocurrencies, employs encryption to ensure the security of all transactions.

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