What Is Dogecoin (DOGE)?

Dogecoin (DOGE) is a cryptocurrency that started as a joke and became a real network with a large, active community. It is an altcoin, meaning any cryptocurrency other than Bitcoin. To see how it fits into the wider group, read our guide to what altcoins are.

This guide covers where Dogecoin came from, how it works, how it differs from Bitcoin, its uses and risks, and how to store it safely.

This guide does not quote prices, because they change all the time. See the Dogecoin price and payment options for the current DOGE rate.

Where did Dogecoin come from?

Dogecoin began as a joke. Billy Markus and Jackson Palmer launched it on December 6, 2013, because they felt crypto was being taken far too seriously. Its name and logo come from the Doge meme: a photo of a Shiba Inu dog surrounded by colorful Comic Sans text.

The joke found a real audience. Reddit users began tipping each other in DOGE for helpful or funny posts, and the community started raising money for causes. In early 2014, it raised 26.5 million DOGE to help send the Jamaican bobsled team to the Sochi Winter Olympics. It also raised more than 40 million DOGE to help build clean-water wells in Kenya, according to the Dogecoin project’s own history.

That community culture is still part of Dogecoin’s identity, and it is why DOGE is often called a meme coin: a coin whose popularity comes mainly from internet culture.

How does Dogecoin work?

Dogecoin runs on its own blockchain, a shared public record of every DOGE transaction. It is not a token on another network such as Ethereum. Its main software, Dogecoin Core, is open source and was adapted from Bitcoin Core and other cryptocurrencies.

New blocks are added through proof of work. Miners’ computers compete to solve a puzzle, and the winner adds the next block and earns newly created DOGE. Dogecoin’s puzzle uses the Scrypt algorithm, like Litecoin, instead of Bitcoin’s SHA-256. Mining with an ordinary graphics card now earns close to nothing, the Dogecoin project notes, so miners use specialized Scrypt machines called ASICs.

The network aims for a new block about every 60 seconds, compared with about 10 minutes for Bitcoin. So a payment usually gets its first confirmation sooner, although the receiver decides how many confirmations to wait for. Each transaction also pays a small network fee to miners.

What is merged mining with Litecoin?

Merged mining lets miners secure Dogecoin and Litecoin at the same time with the same work. It went live on Dogecoin at block 371,337, mined in September 2014.

In 2014, Dogecoin’s hash rate (the computing power securing the network) was falling, which makes a network easier to attack. Litecoin’s creator, Charlie Lee, proposed letting Dogecoin accept the work miners were already doing on Litecoin or other Scrypt coins.

Since then, miners can earn rewards on both networks with the same machines, which gives them a reason to keep securing Dogecoin. For more on the partner network, read what Litecoin is and whether Litecoin is a fork of Bitcoin.

How many Dogecoins are there, and is there a limit?

There is no maximum supply. New DOGE is created with every block, and this issuance has no planned end date.

The reward schedule changed in the early years. At first, block rewards were random amounts; later they were fixed amounts that fell in steps. Since block 600,000, mined in February 2015, every block has paid a fixed block reward of 10,000 DOGE. At about 1,440 blocks a day, that is roughly 14.4 million new DOGE a day, or about 5.26 billion a year. The Dogecoin project describes this as a fixed yearly issuance of 5 billion coins.

Because about the same number of coins is added each year while the total grows, the yearly percentage increase shrinks over time. For example, 5 billion new coins add 5% to a supply of 100 billion, but only 2.5% to a supply of 200 billion (an illustration, not the current supply).

The Dogecoin project argues that ongoing issuance is needed to pay miners and keep the network secure. The trade-off is that DOGE is not scarce in the way Bitcoin’s fixed limit is designed to make it.

How is Dogecoin different from Bitcoin?

Dogecoin borrows many of Bitcoin’s ideas, but it adds blocks faster, uses a different mining algorithm and has no supply cap. The table sums up the main differences.

Neither design is simply better: one offers faster blocks and steady issuance, the other a fixed limit and slower blocks. Learn more about what Bitcoin is and the Bitcoin halving.

What do people use Dogecoin for?

People mainly use DOGE for tipping, small payments, community fundraising and trading.

• Tipping. Small tips to creators or friends online are what first made Dogecoin popular.
• Payments. Some merchants accept DOGE online or in person, sometimes through crypto payment processors, but acceptance is limited. Unlike a stablecoin, DOGE is not tied to a currency such as the US dollar, so its value can change between receiving and spending it.
• Community and fundraising. The community has a long record of raising money for causes.
• Trading and speculation. Many people buy DOGE hoping to sell it later at a higher price. This is the riskiest use, because the price can fall as fast as it climbs.

What are the risks of Dogecoin?

The main risks are sharp price swings, sensitivity to social media and scams that use Dogecoin’s name.

• Volatility. The price can move sharply within hours. DOGE has no issuer, earnings or currency peg behind it, so its value depends on what buyers are willing to pay.
• Celebrity and social media swings. Posts and appearances by famous people have moved the price before. In May 2021, DOGE fell as much as 29.5% during Elon Musk’s appearance on Saturday Night Live, NBC News reported. Past performance does not predict future results.
• Large holders. A small number of addresses hold a large share of all DOGE. The Dogecoin project notes that many of the largest belong to exchanges and brokers holding coins for their customers, but big transfers or sales can still move the price.
• Look-alike tokens. Tokens with “Doge” in their name on other blockchains are separate projects, not Dogecoin.
• Scams using its name. Fake giveaways promise to double any DOGE you send, often in a celebrity’s name. The US Federal Trade Commission (FTC) warns that only scammers promise sure profits or big returns.

Learn the warning signs in common scams in the crypto industry and how to protect yourself from fraud.

How do you store Dogecoin safely?

Keep DOGE in a wallet that supports the Dogecoin network, back up its recovery phrase offline and check every address before you send. A crypto wallet stores the keys that let you move your coins.

Coinmama Team

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