we use screenshots to walk you through each step. Such ease!
Last updated on Feb 20, 2014
Dogecoin is a cryptocurrency, which the Guardian describes as "a combination of Bitcoin, the popular digital money, and Doge, the internet meme that superimposes broken English written in Comic Sans onto pictures of Shiba Inu dogs." While the Doge meme is silly, Dogecoin is built on the same technologies as Bitcoin and Litecoin and is just as legitimate. You can use it to purchase goods and services (check out "buy stuff") or to tip others (check out "tipping").
We've been following cryptocurrencies for a while but Doge is the one that made us jump in because of the community and accessibility.
To use Dogecoin, you need a wallet. A wallet is essentially an address you use to receive Doge. Whenever you acquire a new wallet, a private and public key is generated and given to you.
The public key can be freely shared and is what people use to send Doge to each other. This public key is stored with the amount in the currency's transaction history, known as the block chain. By looking at the block chain, you can determine how much Doge an account has by adding up how much was sent and received to that account.
However, the private key should be kept secret as whoever knows the private key claims ownership of all its associated funds (in fact, by default the local wallet hides the private key from you so you don't accidently reveal it). Whenever you back up a wallet, you actually aren't saving how many coins you have, but the private key. This way, you can't spend coins then restore from a backup to regain them. Instead, the private key is used to just claim ownership of all funds associated with its public key pair in the block chain.
The blockchain is a permanent record of all transactions that is updated every minute with a 'block' of new transactions. Whenever you send Doge, it is added into the latest block and verified before being premanently written in. Each block of new transactions builds on the prior block, thus we have a chain going back to the very beginning. This implementation prevents double spending since each transaction can be traced back.
The act of confirming the new block is performed by the distributed computing power of miners, so when you mine you are confirming the latest transactions are valid. As a reward for doing this work, a block confirmation will give the miners Doge. Because blocks are confirmed at set intervals but the computing power of the miners varies, the computing power is kept in check via the confirmation difficulty. If there are more people mining, the difficulty is increased (and vice versa).
The community is very fun and positive. Not very Wall Street. Anyone is welcome, even new shibes (Shiba Inus) like you. There are also many community efforts, such as the recent 30k USD worth of Doge donation to the Jamaican Olympic bobsled team. To meet fellow shibes, check out reddit.com/r/dogecoin. Everyone is very generous and tipping is a core part of the culture.
It is easy to acquire Doge via tips, faucets, mining, and converting other currencies via exchanges.
The most popular way, mining, just requires free software and normal computers, so it is still possible for average shibes like you and me! While 1 Bitcoin is worth hundreds of USD, it is extremely unprofitable to mine without specialized hardware specifically for mining Bitcoin. In contrast, there isn't any hardware designed specifically to mine Doge to compete against! Payouts for cryptocurrencies are also reduced over time as part of their design, so it is hard to mine a currency that has been out for years. Doge was released in December 2013 so it is still young. Such opportunity!
ASIC, which stands for application specific integrated circuit, is hardware designed for one specific task. This allows them to operate much more efficiently compared to general purpose designs, which must accomodate a broader range of capabilities.
So why don't Doge miners use ASIC hardware? Doge (and other scrypt based coins) is designed to delay the development of ASIC hardware as the scrypt algorithm requires a lot of memory. Memory hardware happens to be expensive, increasing the cost of current ASIC designs.
ASICs for scrypt mining actually already exists but have not shown a cost advantage compared to consumer graphic cards. Thus, for now mining is accessible to the average person.
Below are popular places where you can interact with the Dogecoin community.