A Beginner´s Guide to Buying, Selling, Using, and Mining Dogecoin:
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The scalability issue has been topical in the global crypto space for some years. It is somewhat important because of its recurring effect on the most popular cryptocurrency, Bitcoin. How to solve the scaling issue has been dubbed political as well as ideological.
Several efforts have been made to resolve it to no avail as at yet. Litecoin, the currency dubbed Bitcoin's silver, has been suggested to come to the rescue. Yet, how Bitcoin will meet the demands for growing transactions loads is still an issue. While the debate continues, a third currency being considered to solve the issue is Dogecoin.
A simple definition of DOGE borders on its being completely anonymous and decentralized. The cryptocurrency created by Billy Markus came to being in 2013. It was created to be a fun cryptocurrency that could reach wider than Bitcoin.
Bitcoin, Litecoin and Dogecoin are built on the same technology. However, Dogecoin came a little later and was able to fine tune its specifications. Top among them is its confirmation times. Bitcoin has a block every 10 minutes and Litecoin in a two-and -a-half minute period. Dogecoin's network has a block every minute and larger transaction capabilities.
It makes the Dogecoin network seems more suitable for businesses in fast-paced environments. It is believed that payment processors can make Bitcoin's scaling issue go away if they adopt Dogecoin.
Like Bitcoin and Litecoin, DOGE works with a public-key cryptography: public and private. The private key decodes the information encrypted with the public key.
Presently at about $0.0012 each, there are more than 111 billion DOGE in circulation. The number keeps increasing everyday. There is no limit to how many coins will be produced at the moment. About 5 bln more coins get added per year. Its supply would likely remain uncapped going by findings.
Some major factors have been identified that reflect on DOGE's stand in the crypto market. The currency needs more exposure to influential people or mediums. It needs more physical applications. Also, while its value increases, recent market trends show that DOGE is partially linked to Bitcoin.
Its technology is not new. However, it is one of the first coins to be branded with a popular internet meme, the Doge meme. This is expected to be a plus that would enhance its popularity with time.
DOGE can be bought on several exchanges using Bitcoin or Litecoin. They include Poloniex, HitBTC, Bittrex and YoBit. Others are Exmo, Livecoin, Cryptopia and Bleutrade. Cash or credit cards cannot be used to buy DOGE directly on exchanges. Exchanges like Bisq and C-cex.com offer DOGE/USD pair while BTC38 and Bter offer DOGE/CNY. It is also possible to buy DOGE on other platforms which are not exchanges. They include Reddit.com/r/dogemarket/ and Changelly.
One of the other ways of getting free DOGE is through faucets. All that is needed is the user's Dogecoin address and to solve a captcha. Trading DOGE on any of the exchanges could also bring some gains. DOGE is particularly beneficial for someone new to crypto trading or cryptocurrencies as a whole. Its low level rate enables a new user to learn to trade easily. The risk level is very low and it can be rewarding especially in the event of a minor swing up. Working and making efforts to create content for DOGE tips on appropriate platforms are also possible.
DOGE can be traded for Bitcoin or Litecoin on any of the cryptocurrency exchanges mentioned above. The Bitcoin or Litecoin can be converted to cash like USD or EUR or to other cryptocurrencies. That is, users can turn DOGE to cash after it has been traded for Bitcoin (or Litecoin). Afterwards, it can be liquidated into cash and withdrawn through the banks. Cashing out through automated teller machines are also possible through the banks. Alternatively, there are Bitcoin-backed debit cards like BTCC’s Mobi Card.
To use Dogecoin, one needs a wallet. The wallet is a piece of software that keeps Dogecoins on a user's computer to send and receive them. A paper wallet for Dogecoins could be made and printed from walletgenerator.net. On Dodgecoin.com, the latest software version of the wallet could be downloaded.
Like other cryptocurrencies, Dogecoin can be used to pay for goods and services. It can also be traded for any other currency - be it digital or fiat. Not much transactions are conducted as at yet using the coin though.
Like Litecoin, Dogecoin excels when used for small transaction amounts. Sending Dogecoin costs between 1-2 units and transaction get confirmed within minutes. It would gain more value if Bitcoin and other major cryptocurrencies' scaling issues persist. A key limiting factor to its exchange rate in fiat value is the number of Dogecoin in circulation.
Though it started as a joke, the currency has maintained its presence in the market for this long. Its price has also risen in the last couple years --- albeit still small. This consistency shows that some people are investing in DOGE. However, aside the fact it has good infrastructure for fast transactions at low fees, DOGE as not seen much progress.
As a finite resource, DOGE's mining process entails solving math problems with a computer. The process is distributed by blocks which have currency rewards for those who solve the math solution per block. The reward is a controlled number of coins. Part of this control is called 'halving' whereby the reward is reduced by 50%. This halving occurs at predetermined intervals like after the first 100,000 blocks.
After the blocks have been mined, there are 'maintenance' blocks to help keep the cycle moving. Dogecoin’s developers created a fixed 10,000 DOGE reward per block after block 600,000. The amount is supposed to help with inflation.
DOGE's mining difficulty is perhaps one of its network's most important features. Its algorithm is updated based on total network hashing power to ensure that its blocks are generated every minute.
No price rise can cause an increase in the rate at which DOGE are mined. A sudden increase in DOGE’s price would likely cause more miners to point hash power at the network. Its difficulty ensures that the new hash power is balanced with a rise in the difficulty of the proof of work algorithm. The difficulty is adjusted after each block.
Dogecoin is basically a script-based coin. It’s a bit like Litecoin. It has over 111 billion coins in circulation presently with a market cap of approximately $132.5 mln.
There are two ways to mine Dogecoins. It could be CPU mining using microprocessors. CPU mining of Dogecoin is not too effective. It could also be through graphics card mining or GPU mining. Here, gaming computers can be used to mine Dogecoin. Others build mining rigs using multiple AMD or Nvidia graphic cards.
The most popular software for mining Dogecoin are CGminer, CUDAminer, CPUminer and GUIminer. Users can also get other hardware to mine Dogecoin: 70KHs Dogecoin miner (about $100) or a 30MHs Dogecoin miner (about $285).
To start mining, a created wallet would have to be synchronized with the Dogecoin network. Once synchronized, the user's client will be able to receive and send Dogecoins. The user also need to join a mining pool. Dogepool.com is a good website to find a group of miners that mine together to find coins faster. An account would be created with the pool and configured to run its worker(s).
For profitability, mining DOGE as a Scrypt is considered not profitable at the moment. Only those with powerful mining equipment and free electricity to compete with Litecoin pools stand a chance.
DOGE does not seem to suffer from the scaling issues facing many other coins due to its block times. It handles 10x the volume of other coins without any issues. Its blocks are not full and there is plenty of room to grow. The network can make blocks larger or implement the Segwit and Lightning systems.
Its faster block time reduces the risk of double spending attacks. Also, its network's transaction fees are unrelated to the amount transferred. Unlike Bitcoin, whose fees rise steadily to warrant hard forks, Dogecoin users pay the same fee regardless of the amount sent.
Charts show that not many people see DOGE as a good investment. However, it has a huge community that maintains its relevance in the market. Its liquidity level is increasing and high volumes of DOGE could be sold without reflecting badly on the market price chart.