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Saturday, May 10, 2014

What is Doge coin?

Doge coin
Doge Coin is a competitor cryptocurrency to Bitcoin
By Katrina Matthews

Cryptocurrencies

Cryptocurrencies, such as the well known Bitcoin and relative newcomer Doge Coin, are not fiat money, which has its value controlled by the government and government regulations.

Cryptocurrencies do not have a value created by a government or group. The amount of currency in circulation is set by the creator of the currency, with an upper bound that is specifically set. Decentralized currency has several benefits, such as not having its value affected by government regulation, providing an anonymous payment method, and avoiding inflation by adjusting the algorithms and calculations used to introduce money into the system. Cryptocurrency coins are created through a process called mining. The mining processes transactions in a block. When a block is completely solved, a coin is created.

Dogecoin


Dogecoin is a cryptocurrency derived from Litecoin. Litecoin started in 2011 as a branch of Bitcoin. The developers of this cryptocurrency wanted to set themselves apart from Bitcoin in several ways, such as processing a block every 2 and a half minutes, uses scrypt to check on the processing work done by Litecoin miners, and has 4x more coins than Bitcoin.

Dogecoin has its name derived from an Internet meme called Doge, which features a Shiba Inu dog. This is a newer cryptocurrency established in December 2013. Unlike Litecoin, which had a slower rollout on coin production, Dogecoin was designed to have rapid coin introduction at the beginning of its lifecycle.

The current production plan has 100 billion coins in circulation by December 2014, with an eventual goal of adding 5.2 billion coins per year. While the amount of coins is much greater than other forms of cryptocurrency, it has less of a commercial application and more of an application in Internet culture tipping. Social media sites such as Reddit have user submitted content to form communities. Dogecoin users tip these community members for valuable contributions, such as content and conversation.

Dogecoin mining can be accomplished through a standard desktop or laptop PC, as opposed to Bitcoin which needs a dedicated mining machine to solve any blocks. Mining a Dogecoin takes 1 minute, which is over twice as fast as Litecoin. The amount of coins are fixed per block, which is a change from its original idea to have a random reward when blocks are solved. The latest update added in a difficulty adjustment to stop multi-mining teams from exploiting the system.

New cryptocurrencies such as Dogecoin evolve from the unlikeliest of places, such as Internet culture communities. As Bitcoin and other alternative currencies gain legitimacy in the currency world, it becomes a viable way to generate and spend money. More companies begin accepting cryptocurrencies as a form of payment, increasing its legitimacy across the board. Non-regulated currencies are not affected by inflation the way fiat currencies are, although they do get affected by market forces such as hacking and coin exchanges. It takes a few steps to convert Dogecoin into USD, but more services are coming into the fold as this industry starts to gain ground.


About the author: +Katrina Matthews is a product specialist for RackSolutions, the market leader for designing and manufacturing custom racking products for the IT industry! Katrina gives helpful tech/IT advice here on our blog.

Image license: Alforata, CC BY-SA 3.0