This Dogecoin FAQ seeks to help you better understand cryptocurrency. It is a relatively new financial concept and can be confusing if you are new to it, especially since there are so many different types available.
Dogecoin is one of the options. It stands out a little from the other types because of its backstory and how it works. If you have an interest in this cryptocurrency, then you should find out everything possible about it. That will allow you to ensure you understand it well before investing in it.
Here is a Dogecoin FAQ that covers all the basics and more about this cryptocurrency option to assist you.
What Is Dogecoin?
Dogecoin, pronounced “dohj coin,” is a cryptocurrency named after a dog meme. The mascot is a Shiba Inu named Doge.
It began as a joke but quickly became much more as it grew in popularity. It is known for a low price and large supply, which set it apart from other options.
It is also open source and uses a Scrypt algorithm. Mining occurs in one-minute blocks. This allows for a large availability compared to other cryptocurrencies.
Who Created Dogecoin?
Dogecoin was the attempt of Jackson Palmer and Billy Markus to make fun of cryptocurrency and the whole crypto market. Both founders were working as software engineers at the time, and they were having fun with it.
They would stage stunts to raise awareness about Dogecoin. Eventually, the currency became super huge on Reddit and gained many loyal followers who helped to catapult its popularity.
When Was Dogecoin Created?
Palmer and Markus introduced the currency in 2013. This was when the dog meme that inspired the venture was at its peak popularity.
How Does Dogecoin Work?
It is a common Dogecoin FAQ to learn how this crypto works. To understand, you need to learn about the general concepts behind cryptocurrency. It comes from blockchain technology, which is a digital ledger.
According to Forbes, miners who find the currency use a computer to run transactions that require solving a complicated equation. When the computer succeeds, it records the find in the Dogecoin blockchain. The miner also earns Dogecoin for his or her actions.
There is no limit on how many Dogecoins miners can find, which makes the value much different than other currencies. Inflation is part of the model since every day, the blockchain creates new coins.
The only limit is how much people work to mine. Since it is open-source, anyone can do it, and there is no limit on how many miners can work on the project. However, it does require extensive energy and computer power to become a miner, which means most people simply do not have the resources to do it.
How Does Dogecoin Gain Value?
It’s an important Dogecoin FAQ to learn how it gains value because this is the whole point behind investing in crypto. However, the process is much different than your standard currency and how it gains value.
Cryptocurrency value connects mainly to the community that supports it. If people are willing to mine it and give it value as a currency, it will gain value. If nobody finds value in it, then it can become worthless.
Dogecoin prides itself on having a strong community. It is a network of people who strongly believe in the currency and want to see success. Because of this, it is rather valuable. People are willing to work towards advancing it, so it has worth.
How Is Dogecoin Different?
There is a range of options in cryptocurrency. One of the most well-known is Bitcoin. Dogecoin differs in some important ways from this alternative.
According to CNBC, one difference is in the creation of each cryptocurrency. Bitcoin’s creation was detailed and complex, whereas Dogecoin was merely a joke and something fun for the founders that ended up paying off.
Due to these foundations, Bitcoin has always been a more serious investment. Dogecoin is more relaxed. Many people feel intimidated by Bitcoin but welcomed by Dogecoin. That can make a huge difference when people are choosing between the two.
Beyond that, Bitcoin has scarcity with a maximum number of coins. Dogecoin has an infinite supply. This is an important difference. It allows Bitcoin to surge in value because people know there is only a limited number available. Dogecoin doesn’t see the same growth because there is no limit.
That is not to say that Dogecoin won’t see such success. The nature of crypto tells us that the potential is there for it to soar, just as Bitcoin has done. However, Dogecoin is much newer, so it still has a lot of story to write.
How Do I Invest in Dogecoin?
To use Dogecoin, you want to sync with the blockchain. You have two options.
MultiDoge is the light version of the wallet. It skims the blockchain quickly. You cannot use it if you wish to mine, but it is effective for other uses.
The other option is Dogecoin Core, which downloads the complete blockchain. It is slow and requires a large amount of space on your device. However, it will allow you to mine. It can also enable you to do anything you want with your coins.
How Can I Buy Dogecoin?
If you wish to buy Dogecoin, you have some options. You can go to a cryptocurrency exchange that carries it. You will buy it in the same way you would purchase any other type of currency, exchanging whatever currency you use for the Dogecoin.
Online brokers also offer cryptocurrency in some cases. They will sell them to you just as they would other types of investments, such as stocks.
You will need a wallet once you make your purchase. The wallet safely holds your Dogecoins. Keep in mind that cryptocurrency is 100 percent digital. You must keep all records safe. If you have a technical issue, you could lose the currency with no way to get it back. You may wish to invest in a hardware wallet to download your crypto and keep it secure.
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According to the Dogecoin FAQ list on the company website, you should secure your wallet first. You need to download and install it on your device. After that, you can begin buying.
How to Trade Dogecoin
Trading is another way to get Dogecoin. You can trade cash or other cryptos for it.
A common approach is to do it through a crypto exchange. These companies serve as a platform to allow you to trade. Many of them support Dogecoin.
There are other ways to do it, though, that may be easier for some people. For example, PayPal supports crypto trading. There are other cash apps and investment companies that will support trading.
Using an exchange requires a little more knowledge of the process. It can be overwhelming if you are a beginner. You will have to understand order types and the general rules. There is a lot of terminology you must know to safely trade on an exchange. For this reason, you may want to find an alternative for your first trades so that you can become familiar with how it works.
No matter how you do it, remember that crypto trading is a taxable process. You need to understand the tax implications before you start.
How to Sell Dogecoin
If you are a savvy investor, you will understand how volatile the crypto market can be. This might lead you to a point where you want to sell. When you sell, you essentially trade your Dogecoin for cash in whatever currency you want.
Selling is a good option if you got into crypto to make money and you’ve had a nice increase in value. It also may be something you want to do if you feel the market is too unstable for your comfort or if you think the prices may drop soon.
You can sell in many of the same ways you can buy and trade. Exchanges allow you to sell. You can also sell to other people.
Crypto ATMs are another option. You can withdraw however much you want from the Dogecoin you own, just as you would use a bank ATM to withdraw money from your account. The downside is they are hard to find. You may not be physically near one you can use.
Why Is Dogecoin Going Up?
This is a common Dogecoin FAQ when the market is doing well. Particularly, people were asking it a lot at the beginning of 2021 when Dogecoin saw amazing gains. It reached an all-time high value of $0.72 at the beginning of May. There were a few reasons why its value was suddenly rising.
One factor, according to CNBC, is that Americans got a stimulus check from the government. This extra money prompted many to invest, and Dogecoin was a hot investment option at the time.
Free trading apps also were seeing a popularity surge. Since you can buy, trade, and sell using these apps, they were introducing people to the idea of crypto and encouraging investments.
Finally, Elon Musk helped boost Dogecoin’s visibility by throwing his support behind it.
However, the company’s founders believe there was something purer at the heart of the value surge. They believe the Dogecoin community is what helped it grow in popularity and rise in value.
The Dogecoin community is unique. It lacks the elitist feel most other crypto communities have. It is welcoming, and nobody takes themselves too seriously. It encourages fun and exploration. There is a real feeling of helping each other.
Charity giving is something the community encourages, and everyone looks out for each other by warning of scams. The overall atmosphere is positive and lighthearted. It is a place where people feel they belong, making people want to be a part of it. This strong community is a real positive point that pushes people to want to buy Dogecoin.
How High Can Dogecoin Go?
People often wonder about the ability of crypto to rise in value. It is one of the top Dogecoin FAQ items.
There is no limit to the number of Dogecoin that can exist, which sets it apart from other cryptos, such as Bitcoin that has a limit of 21 million. If people continue to mine and buy it, then it will continue to grow. Its value is based on the value people assign to it, which can go as high as imaginable.
According to Newsweek, Dogecoin founder, Billy Markus, has a lot of hope that it will continue to grow. It saw great gains in the early months of 2021.
However, Dogecoin hit a snag when in May 2021, Elon Musk backed off his support. Cnet explains the cryptocurrency saw a huge dip in its value after Musk announced Tesla will no longer accept crypto payments. Musk has also made public statements, including those during an appearance on Saturday Night Live, that have warned people about crypto.
Musk used to be a huge supporter, and the withdraw of his backing is a huge blow to Dogecoin. He has a lot of clout, so when he talks about financial topics, people listen. It was no surprise the value dropped so quickly and by so much after the announcement.
This drop is proof that while crypto can rise quickly in value and reach amazing heights, it also can fall terribly. The market is volatile because it depends on the whims of investors. If people no longer see value in it, then it becomes worthless.
There is potential for Dogecoin to surge incredibly high in value, but it will take great PR and strong community support. People have to see the value in it for it to rebound well.
What Is Going on With Dogecoin?
After the 2021 fall in value, it was unclear what would happen with Dogecoin. However, one thing about crypto is that it always seems to rebound. Ups and downs are completely normal in this system. So, the Elon Musk fiasco didn’t spell the end.
However, Dogecoin is battling a new enemy. There have been several new cryptos to enter the market. They are in direct competition, trying to build themselves off of Dogecoin’s popularity. This competition leaves less room in the market for Dogecoin.
Basically, what all this means is that Dogecoin isn’t finished. It will likely rise in value again. As long as it keeps the attention of a solid community, it could continue on and see more successes in the future.
Dogecoin FAQ Wrap Up
This Dogecoin FAQ tries to cover all the common questions people have. It intends to offer a complete idea of how to use it, where to find it, and what it is. With this information, it should be easier to know if Dogecoin is the best investment for you. It should also help you to understand more about it so that if you do invest, you do so from an informed position.
That said, any investment strategy could use a professional eye. If you’re considering investing in Dogecoin or any other cryptocurrency, it’s best to get advice from a financial expert.
Last update on 2021-06-20 at 12:28 / Affiliate links / Images from Amazon Product Advertising API