Dogecoin

Dogecoin

What is a Dogecoin?

Dogecoin is a cryptocurrency that became extremely popular within weeks of its creation. It set out to make serious Bitcoiners lighten up and ended up being the 4th largest virtual currency. 100 billion Dogecoins are designed to be mined initially. The Dogecoin portrays a Shiba  Inu dog, popularly known as ‘Doge’ with the phrase “To the moon!” referring to the upbeat reactions to its swelling value.

Dogecoin’s  market  cap is a little north of $64 million as of February 2014, with a quick development of an ecosystem around it. Apart from having a dedicated website, Dogecoin has a blog, a forum and, needless to mention, a subreddit.

History     Programmer Billy Markus of Portland, Oregon and Jackson Palmer, an Adobe Systems worker in Sydney, Australia are credited for creating the Dogecoin. Palmer had the domain dogecoin.com registered. He added a splash screen and placed the coin logo and scattered text of ‘doge-speak’ on the site. Markus eventually found it online and found the idea funny and interesting. He instantly edited the parameters and created the Dogecoin wallet based on the existing Litecoin currency and reached out to Palmer.

Markus and Palmer applied finishing touches to Dogecoin on December, 8th 2013.

Progress 

Within a fortnight after its launch, Dogecoin rallied more than 200 percent in just 72 hours, jumping from USD$0.00025 to $0.0095. It offered an alternative to Bitcoin that was reeling from China’s declaration to ban Chinese banks from investing Chinese Yuan into the Bitcoin economy. In a couple of days, it had its biggest crash dropping by 80% as large mining pools seized the opportunity in manipulating the tiny computing power needed at the time to mine the Dogecoin.

On Christmas Day 2013, millions of Dogecoins were stolen by hacking the online wallet platform Dogewallet. The hacker accessed the platform’s file system and manipulated the system’s send/receive page to drift the coins to an unauthorized static address. This incident instantly made Dogecoin the most talked about altcoin on social media platform Twitter.

By the end of January 2014, the aggregate trading volume of Dogecoin had overtaken that of Bitcoin and all other crypto-currencies.

Dogecoin transactions for goods and services have already begun. It has been reported that a Starbucks barista had started accepting Dogecoin as payment for coffee. Also, a Redditor with the alias geekyhostess posted on the forum that she would accept Dogecoin as payment for online shopping at her store. Dogepages lists a significant number of businesses accepting Dogecoins and the list is gradually getting longer.

The Dogechain 

The Dogechain is an open ledger, a chain of records of all the transactions and offers a unique identity to each transaction just as  Blockchain  does for Bitcoin. Moreover, the Dogechain offers information on various attributes of each transaction that occurs on the Dogecoin protocol.

The DogeChain Application Programming Interface (API) is a specification that states how relevant software components should interact with each other. It permits developers to retrieve relevant information about coins available on the official Dogecoin website.

Examination of the chain reveals who owns the coin currently and the history of ownership of the coin. Users get information on validity, amount transacted and public key hashes through the API. Other important information that the Dogechain offers is the last solved block’s difficulty, the latest block number, transactions for the last block, statistics about difficulty levels, network power, and the total volume of currency ever mined.

Block 

A block is a record in which transaction data is permanently recorded in the network. It is a register of some or all of a wallet’s dogecoins that have not been included in any other block. Each block has a pointer to the last block which makes the block go right behind the one it is supposed to. This list is the Dogechain for Dogecoin. The longer the list the more secure the chain is, and so is the record of transactions.

Exchanges and use 

There are online exchanges that offer Dogecoin to Litecoin (LTC) and Bitcoin (BTC) trades..

In January 2014, AltQuick became the first exchange to launch Dogecoin/USD trading. Canada-based exchange Vault of Satoshi also declared Dogecoin/ USD and Dogecoin /CAD trading. Soon, China-based exchange BTC38 and Hong Kong based Asia Nexgen (ANX) began to offer support on Dogecoin exchange.

By the end of January, there were three exchanges that had accounted for the bulk of traded volume of Dogecoin: Bter (60%). Cryptsy (23%) and Vircurex (10%). The best-traded currency pairs on that day were DOGE/BTC (50%), DOGE/CNY (44%) and DOGE/LTC (6%).

Unlike Bitcoin, there is no final limit to Dogecoin production. The schedule estimates approximately 98 billion coins to be released by January 2015, when the 600,000th Block is mined. From 600,001st block onward, approximately 5.2 billion more dogecoins will be produced every year.

Although there was a discussion on whether the production of Dogecoins should be capped with a final limit, on February 2, 2014, Dogecoin founder Jackson Palmer declared that the supply of coins would be uncapped.

So far, 50 billion Dogecoins have already been mined. However, it is noteworthy that Dogecoin has a fast initial coin production schedule. Approximately 100 billion coins are scheduled to be in circulation by the end of 2014.

Difficulty 

It is the difficulty of finding a new block. The difficulty is a simple way of explaining how complex it is for a computer to perform the proof-of-work algorithm when mining Dogecoin. The level of difficulty is very tightly held by the protocol. As the number of miners increase, and as the hardware gets more skillful at mining, the difficulty level is increased by the protocol. The difficulty is maintained to keep the total number of blocks gained over time at a stable pace.

Transactions 

The number of unique Dogecoin transactions exceeds that of all other virtual-currencies tracked by CoinMarketCap.

The Dogecoin, however, is meant to be used for transactions rather than being used as a speculative investment as is done with Bitcoin by many. A post on the Dogecoin Foundation website, noted by the creators reads “If you hoard all the coins you have in the hope that the value will increase and you will get rich quick you’ll be both disappointed and hurting dogecoin.”

Dogecoin transactions occur through public-key cryptography. A user generates two cryptographic keys during wallet setup. Of the two keys, one is public and the other is private. The private key is able to decode information that has been encrypted with the public key. Hence, the keys’ owner can use the public key without having to fear about the use of it to gain access to the encrypted information. The Dogecoin addresses are public key hashes; which is a string of 34 numbers. For Dogecoin transactions, the addresses start with the letter D. The public key is the Dogecoin address required by other user to send Dogecoins.

The private key is for secret use of the owner; it allows full access to the Dogecoin wallet. It is advisable to keep the private key secret and secure. All Dogecoin clients are included in a peer-to-peer network. Therefore, everybody is communicating with everyone else on the platform. When a transaction occurs, it is communicated with all the clients. A transaction is ‘confirmed’ when it is part of the longest block, and 5 blocks occur after that block. It is the responsibility of the Miners to record and confirm transactions into blocks.

Mining 

Mining is the process of creating new Dogecoins. Miners actually notice the current incoming transactions, and then compute a difficult hashing algorithm versus the latest transaction data produced since the last block was created.

When a miner solves the hashing algorithm successfully, they actually “seal off” the block, and in this way, a new block is produced to store the transactions. It is simple for other clients to validate the work performed by the miner. The hashing algorithm is very much similar to a contest. When the miner tries to solve, each instance is like rolling dice. Therefore, it requires a miner to have huge capability in terms of computing horsepower. Increased computing power means that they will be able to increase their chances, by rolling dice more frequently.

If a block is ‘discovered’, the discoverer will be able to gift themselves a fixed number of coins. It is currently 500,000. This reward changes over time. Dogecoin’s implementation is unique by several parameters.

Dogecoin developers have now announced that Dogecoin would not be capped at 100 billion dogecoins after all but would have a flat 10k reward after a set number of blocks have been reached.

Philanthropy

Dogecoin has also initiated good karma. In January this year, the Dogecoin community established a fundraiser to raise $50,000 for the Jamaican Bobsled Team. The team was able to qualify for the Sochi Winter Olympics but was financially strapped to go there. A whopping amount of $30,000 was donated by the end of the second day of the fundraising initiative.

The Dogecoin community has raised funds for a second Olympic athlete Shiva Keshavan too.

Tipping     The Dogecoin is the cool new way to high five among members of the Shibe (Dogecoin) community for exceptional or entertaining content posted on the internet. You could tip fellow Dogecoiners via Twitter, Reddit or Facebook.

Its early days to predict the success of every cryptocurrency, but Dogecoin is a more practical and less expensive currency compared to others currently available on the web. The currency will have to stand the test of time and go through some wear and tear if it has to become the most  influential  ‘internet cash’ of the web world.