Does Dogecoin Burn Tokens? An Innovative Approach In Crypto World
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Dogecoin is a highly popular crypto token that was created as a joke. It was aimed at increasing people’s awareness about blockchain. It reached its peak of popularity in 2021, and since that time, the price of the token never crossed the $1 point. Despite this low value, it remains one of the most popular coins and means of payment, especially for creating various content on social media. In this article, we will study the phenomenon of the meme coin, discuss how it works, and explore the future prospects of the DOGE token.
Key Takeaways
- Dogecoin is an open-source P2P crypto token.
- DOGE has a large and active community, which is also responsible for the token’s value.
- The coin has inflationary tokenomics, meaning there are no limitations for the maximum supply of tokens.
- DOGE is mainly used for fundraising initiatives or as a reward on social media platforms paid to content creators.
What Is Dogecoin?
Dogecoin (DOGE) is a peer-to-peer crypto with an open source created to make fun of the crypto market and other types of cryptocurrencies following the establishment of Bitcoin. Being one of the most interesting crypto projects, DOGE was created in December 2013 based on similar technology to Bitcoin and Litecoin.
Dogecoin uses a simplified version of a mathematical process called Scrypt to secure transactions. It also uses a proof-of-work consensus mechanism to receive work from other Scrypt-based networks. Dogecoin mining consumes less power than the SHA-256 Bitcoin algorithm.
In recent years, Dogecoin exploded to be one of the leading cryptocurrencies, primarily due to a devoted community of its users known as the “DOGE Army,” who continue to promote it.
Dogecoin changed the crypto world, including faster and cheaper transactions. Dogecoin is one of the most valuable virtual currencies based on its market value, ranking seventh on the list provided by Coinbase.
Dogecoin is a type of digital money that started as a joke based on a famous meme picture of a happy Shiba Inu dog — a Japanese hunting breed.
The historical value of DOGE has increased a lot. However, these long-term profits have been a result of significant fluctuations in the world of cryptocurrencies.
The market price of Dogecoin is mainly affected by pop culture; that is, such things as celebrities’ statements or social media trends significantly impact the DOGE value. The excitement around the token can sometimes make prices increase drastically.
Dogecoin doesn’t have any practical use cases or real-world applications. However, it has the potential to become commonly used as a means of payment. The main problem behind Dogecoin is its inflationary nature, meaning that there are an unlimited number of tokens, which can lead to losing their value over time.
Dogecoin Key Features
Unlike other digital currencies like BTC, DOGE does not have a limit on the amount that can be created. Dogecoin miners get 10,000 DOGE for every group of transactions, and a new group is created every minute. Thus, every day, 14,400,400 new tokens are made and either sold to people or kept by miners in their wallets.
DOGE is a decentralised crypto. The decentralisation of a cryptocurrency is measured by how many nodes are connected to the network and how evenly the mining is distributed among different people. According to Blockchair, Dogecoin has around 670 nodes, while Bitcoin has more than 6,600. This means that the Dogecoin network can be easily taken over by one person or group with more than half of the control of the network.
There are many circulating tokens on most Dogecoin wallets, meaning that the wallet owners have too much control over the price changes and DOGE liquidity. At the same time, BTC coins, for instance, are spread out evenly among different wallets.
Dogecoin History
Dogecoin is a digital currency that was created in 2013 by two software engineers — Bill Marcus and Jackson Palmer, who, prior to the DOGE launch, worked at IBM and Adobe Systems. They created the token to make people more aware of what blockchain technology can do.
Though Markus claimed that he started Dogecoin as a joke and to bring some lightheartedness and kindness to the crypto world, the token became a digital form of payment, similar to Bitcoin or Litecoin, and some people even used it for investments. Primarily created as a meme coin, DOGE managed to gather a community, the members of which use social media to unite people around the coin’s guiding principles — charity, fundraising and mutual support.
Thus, in 2014, the Dogecoin Foundation raised more than $50,000 DOGE to help the Kenyan drinking water crisis. The same year, they fundraised another $50,000 DOGE to send the Jamaican Bobsled Team to the 2014 Winter Olympics since the sports team didn’t have enough money to participate.
In 2021, the crypto token’s value increased by more than 4,000% thanks to the support of a large online community, which included such celebrities as Elon Musk and Snoop Dogg.
Despite the sudden rises, the price of DOGE has remained relatively flat since its launch. Its highest cost was $0.7376, while the all-time low was $0.00008547. Dogecoin’s price still remains lower than $1.
How Does Dogecoin Work?
Dogecoin is a peer-to-peer digital currency. It means it can be transferred directly between people without a central authority as an intermediary. Network nodes verify DOGE through cryptographic algorithms and then record them in a publicly distributed ledger (blockchain).
Dogecoin uses a Proof-of-Work algorithm. This means miners receive Dogecoins as a reward for validating transactions on the network by solving complex mathematical equations. The Dogecoin network relies on miners to keep the blockchain safe and validate transactions. Unlike the proof-of-stake system, PoW consumes more energy and has a large carbon footprint, which was a reason for criticising DOGE.
The price of Dogecoin is affected by how much people buy and sell it, its usage in everyday life, token adoption, world events, trends, and many other factors. Its price in the market is formed by the number of people wishing to buy and sell the coin. Nevertheless, the token’s unique approach to crypto and the community around the currency remains the primary source of DOGE value.
In contrast to Bitcoin, DOGE is an inflationary currency, meaning that there is no limit on the number of Dogecoins that can be created or mined. Some analysts think such tokenomics could attract more investors to the token, making it more appealing. However, many experts say that although Dogecoin is similar to LTC and BTC, it is not a very effective store of value; however, it may be used for small payments and purchases and is a good solution for social media users and content creators.
DOGE cryptocurrency is mainly used as a reward on social media platforms, to tip people who create content, and for sending and receiving small payments with very low fees.
Dogecoin is a unique token for several reasons:
- Dogecoin transaction confirmation is faster than that of BTC or ETH due to the fact that the token has a shorter block time, that is, the time needed for a new block to be added to the blockchain.
- Though DOGE has a lower market cap than ETH and BTC, it thereby shows lower volatility.
- Dogecoin is often called the most fun and friendly electronic currency. Its community is very active, and if you want a type of digital money that you can give to people as a reward for creating content or to help charity organisations, Dogecoin is a good choice.
How To Buy And Store Dogecoin
Dogecoin is mainly used to make payments and quickly complete transactions online.
Users can buy and sell Dogecoin on the most popular cryptocurrency exchanges, like Binance, eToro, Coinbase, or Gemini. You need to open an online account with a selected exchange that supports DOGE and fund it via supported fiat or cryptocurrency. Once it’s done, you can place orders on the exchange and receive DOGE tokens.
Another option to receive Dogecoins is to purchase a cryptocurrency wallet that supports the storage of your DOGE tokens outside an exchange via a set of private keys. This method adds to the security of your assets and provides an extra layer of protection against hacker attacks.
There are two types of wallets to store your tokens: hot wallets and cold wallets.
Hot wallets are mainly free software, but you need an internet connection to access your DOGE investment on such a wallet.
Cold wallets are hardware wallets that can be used offline. This type of wallet ensures secure storage of your assets; however, you have to pay a fee to the provider to use the wallet.
The optimal hot wallet for Dogecoin storage is the Dogecoin wallet, which is available as a desktop version and a mobile app.
However, it is crucial to remember that crypto wallets do not secure the entire blockchain. Technically, the Dogecoin blockchain or any other blockchain can be hacked if one entity controls more than 51% of all nodes on the blockchain.
Does Dogecoin Burn Tokens?
Crypto coin burning means removing a number of them from broadcasting. Cryptocurrency burning is performed by transferring the tokens to a special burn address, which is typically a wallet from which no one can retrieve them.
One of the most common motives for burning tokens is to reduce a token’s total supply to the market and thus increase the value of the crypto asset.
However, this is not the case for Dogecoin. DOGE has inflationary tokenomics, meaning that the production of new tokens is not limited. That is why DOGE burn is not needed.
What is The Future of Dogecoin?
Since its very launch, Dogecoin has been the subject of various discussions and Controversies. Today, many investors and analysts still cannot answer the question, “Is Dogecoin dead?” or “Does the token have a bright future and is worth investing in?”
Thus, the analysts for TradingBeasts predict a relatively small decline in the DOGE price, both in the short and long term. The experts claim that the DOGE price can potentially fall to $0.15 by the end of 2025.
DigitalCoinPrice, on the contrary, predicts that the Dogecoin price may continue to rise in the short and long term and reach $0.36 by 2026.
Currently, crypto experts suggest that DOGE is more suitable as a transacting currency since its highly inflationary nature dampens its value and makes the coin less attractive for long-term investment.
Another drawback of Dogecoin that makes it less appealing to investors is its relatively weak security system. Combined with the need for a robust mining community, this factor makes DOGE an undesirable investment for many experts in the field.
Today, DOGE mostly serves as a reward for content creators on social media platforms. The constant development of social media resources can be a ground for Dogecoin’s future popularity, and the market’s general attitude towards the token is optimistic.
Moreover, DOGE’s upsurge in 2021 makes some analysts believe that this success can be repeated, so the coin can still be considered a good investment from a long-term perspective to benefit investors.
Conclusion
Dogecoin is a type of digital money many people like because it is cheap. Plus, the community around the coin is very active and enjoyable. Although Dogecoin started as a joke, and its market cap is significantly lower than that of major crypto assets like Bitcoin or Cardano, DOGE has the potential to become a valuable token due to its increasing popularity. However, investing in Dogecoin can be very risky since the forecasts for its future price are unclear. So, before investing in DOGE, make sure you conduct a thorough investigation on the topic and gain a profound knowledge of the crypto world.
FAQ
What gives Dogecoin value?
DOGE value is determined by many factors, including token adoption, world events, social media trends, celebrities’ statements, and the activity of the Dogecoin community.
Where Can I Buy DOGE?
DOGE tokens can be purchased on many popular platforms, such as Coinbase, Kraken, or Binance.
What Was The Maximum DOGE Price?
The all-time high of the DOGE token was $0.74, recorded on May 8th, 2021.
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