Crypto is one kind of digital currency utilized in the same way as dollars, euros, and yen. The difference is that it secures online transactions through an online ledger and strong cryptography rather than the backing of a government or central bank.
Cryptocurrency exchanges facilitate the purchase and sale of cryptocurrency. Additionally, it can be "mined." Computers equipped with powerful GPU graphics cards mine cryptocurrency by completing complex mathematical calculations to generate money.
Cryptocurrency is not printed like dollars; each cryptocurrency has a finite supply, attracting investors. However, cryptocurrency is subject to volatility, making it a risky investment. For example, Bitcoin has a limited collection of 21 million coins. However, once additional coins are discovered, and certain supply thresholds are achieved, the value of the coins is halved.
While Bitcoin has skyrocketed to unprecedented heights, another cryptocurrency is making waves. Dogecoin is also aboard a rocket ship and has become a cultural phenomenon.
Continue reading to learn Dogecoin vs. Bitcoin. Discover everything you need to know about these two varieties of cryptocurrency and prepare to invest.
Bitcoin was the earliest and now the most extensively used cryptocurrency. Bitcoin was established in January 2009 following a white paper by Nakamoto detailing a blockchain-based currency. It is currently an internationally traded financial asset with daily activity in the tens of billions of dollars.
Bitcoin's decentralized network means that no one controls or owns it. Rather than that, the Bitcoin network is made up of volunteers – allegedly 80,000 – who run open-source software on their personal computers, dubbed nodes. All Bitcoin transactions are recorded on the blockchain, a decentralized public ledger.
Bitcoin has a limitation of supply of 21 million coins compared to other cryptocurrencies, which have a limit of billions. Bitcoin is currently valued at $48,000 as of this writing.
The incentive for discovering coins is ownership of them, which can accumulate quickly for individuals who find a large number. While someone can mine Bitcoins using their home computer, this is a large-scale industry where they would compete with larger Bitcoin farms.
Dogecoin demonstrates how an internet meme can permeate popular culture. "Doge" is a photograph of Kabosu, a Shiba Inu dog with an odd expression on his face. Typically, the image was accompanied by a fragment of writing in imperfect English, evoking some internal debate. This meme was so famous that in June 2021, it was sold as a nonfungible coin.
When Dogecoin's creators chose Kabosu as its logo in 2013, they were being ironic. That distinguishes Dogecoin from the competition, and the community that supports it is not overly serious. Elon Musk was elected CEO following his support for Dogecoin and use of the moniker "The Dogefather" on Twitter.
Palmer created Dogecoin by merging the famous 'Doge' Shiba Inu meme and a cryptocurrency. Palmer then made a satirical tweet about his idea, but Markus spotted it and came out to help establish Dogecoin.
Markus created Dogecoin three hours before Palmer could reply by forking Lucky Coin, a fork of Bitcoin. Essentially, Markus constructed Dogecoin by copying large portions of the source code for Bitcoin, Litecoin, and Lucky Coin and modifying it somewhat before launching the project.
Palmer and Markus anticipated that their meme project would fizzle out shortly after Dogecoin's launch. Rather than that, DOGE developed a sizable community through the Reddit social media network. The Dogecoin subreddit was teeming with followers exchanging DOGE, exchanging knowledge about DOGE, and bringing newcomers into the DOGE community.
Elon Musk, Tesla's founder, eventually became engaged. Musk regularly tweeted about DOGE in early 2021, suggesting he would launch the cryptocurrency to the moon. Musk's tweet sent the DOGE price soaring as investors raced to the cryptocurrency. Additionally, it sparked a wave of jokes regarding DOGE, which drew even more attention to the asset.
However, on Christmas Day of 2013, the Dogecoin network was hacked. Unauthorized access to DogeWallet, a third-party Dogecoin platform, resulted in the theft of 11 million DOGE. Only two days later, the Dogecoin community generously donated 15 million DOGE to DogeWallet.
Compared to Bitcoin, DOGE is still viewed as a meme by a sizable portion of the crypto world. The general public continues to be exposed to DOGE because popular exchanges such as Coinbase and Robinhood support the currency.
Increased accessibility may encourage traditional investors to participate in DOGE. Due to DOGE's rising popularity, developers are now working on a scalability and security update scheduled for deployment in early 2022.
Dogecoin was created to be more accessible to the general public than other cryptocurrencies. Additionally, it has a theoretically infinite supply. Dogecoin ensures that miners are constantly rewarded sufficiently to keep mining. The disadvantage? Dogecoins were valued at approximately 24 cents each in September 2021.
The coins are significantly more accessible than Bitcoin or Ethereum. However, the actual draw is the wacky community.
Similarities Between Bitcoin and Dogecoin
Given that DOGE began as a parody of Bitcoin and made extensive use of Bitcoin's source code, the two cryptocurrencies share a great deal in common — so much so that a BTC vs. DOGE comparison is not implausible.
For starters, both Bitcoin and Dogecoin use a proof-of-work (PoW) consensus technique that requires the participation of miners. Blocks are used to hold transactions in a proof-of-work blockchain. Once a block is complete, it is validated by a group of devoted users known as miners.
Miners dedicate powerful hardware to determining a unique 64-digit hexadecimal code for each block. Once the hexadecimal code is discovered. The transactions included within the block are deemed valid, and the league is added to the network. Miners are compensated in the network's cryptocurrency for their efforts, resulting in the creation of additional units of an asset. Crypto miners can work independently or as part of a mining pool on both the Bitcoin and Dogecoin networks.
In its absence, Bitcoin and Dogecoin can be used to store and transfer value. Businesses and enterprises worldwide may accept one or both assets in exchange for goods and services. However, the parallels between Dogecoin and Bitcoin frequently end there. Even though Dogecoin was established as a meme, Markus and Palmer made numerous improvements that distinguish Dogecoin from Bitcoin more than they look at first glance.
Purpose of the Coin
Its developers designed Bitcoin to work similarly to digital gold. While Bitcoin can only process approximately seven transactions per second (TPS), the network's total value transacted significantly exceeds any other coin. In other words, users use BTC to make large-value payments.
Additionally, some users perceive Bitcoin as an investment, a notion that has paid off as Bitcoin has compounded at an annual rate of between 100 and 200 percent on average. Between March 2020 and July 2021, Bitcoin increased by nearly 800 percent, producing great rewards for those willing to HODL despite the volatility.
Meme-inspired On the other side, Dogecoin began as a lighthearted way for people to learn about cryptocurrency. With a meme coin trading at a fraction of a penny, individuals might transfer it to one another for educational purposes or as a niche hobby. Numerous online retailers now take DOGE, albeit its adoption is not as widespread as BTC.
Market Capitalization
When comparing the two coins' market capitalizations, there is no contest. At the writing time, Bitcoin had a market capitalization of over $867 billion, whereas Dogecoin had a market capitalization of little more than $31 billion. Bitcoin is now the top cryptocurrency in market capitalization, while Dogecoin is ranked ninth.
DOGE was rated between the 30th and 50th largest cryptocurrencies for most of its existence by market capitalization, if not considerably lower. During the 2017 and 2018 cryptocurrency frenzy, the meme coin achieved the first market cap of $1 billion, and its price broke through the $0.01 barrier.
Bitcoin has always been the most precious cryptocurrency in terms of market capitalization. With the oldest history, the most secure network, and the largest community of users and volunteer developers, other coins cannot compete in the same way for the top rank. When institutional investors with a large amount of working capital seek to obtain crypto exposure, they frequently allocate the majority of that capital to Bitcoin, dismissing the other possibilities as too risky.
Although Bitcoin will likely continue to be the largest coin in terms of market capitalization, the rate at which some altcoins like Dogecoin have risen to prominence has been excellent.
Supply
Dogecoin and Bitcoin have radically different supply and demand patterns.
One of the characteristics of Bitcoin that contributes to its value is its deflationary monetary policy. Bitcoin's supply drops rather than increases over time. Around every four years, the block reward for miners is halved, a practice dubbed "the halving." Bitcoin will never be mined more than 21 million units.
On the other hand, Dogecoin has an inflationary monetary strategy. There is no limitation on the amount of DOGE miners can create, albeit with a 5-billion-coin annual cap. Because the DOGE blockchain has not been halved in a long time, the mining reward stays stagnant at 10,000 DOGE every block.
This means that individuals can continue mining DOGE and selling it on the open market indefinitely. Rather than sending the price to the moon, DOGE's supply and demand dynamics suggest it is much more likely to crater toward the Earth's center over time.
Security and Technological Advancements
Until recently, Dogecoin's Blockchain remained idle for an extended period. There was not a single developer update to DOGE between 2015 and 2020. In 2021, developers proposed many enhancements that could be implemented before the end of the year.
Dogecoin originated as a near-exact clone of Bitcoin with a few minor modifications, and it remains such, although the two cryptocurrencies have a significant difference in terms of security.
The Bitcoin network is more secure than the Dogecoin network. DOGE's hash rate is less than 416 TeraHashes per second (TH/s), but BTC's hash rate exceeds 120 ExaHashes per second (EX/s). A TeraHash is equivalent to one trillion hashes, whereas an ExaHash is equivalent to one quintillion.
Why is this critical? Launching a 51 percent attack against Dogecoin would be very straightforward compared to launching one against Bitcoin. A 51 percent assault occurs when someone gains control of a network by acquiring the lion's share of hashing power.
This distinction is due to the DOGE Blockchain's use of a different mining algorithm than Bitcoin. This is one of the reasons why mining DOGE is significantly faster and easier. In contrast to Bitcoin, which employs the SHA-256 algorithm, DOGE uses the Scrypt algorithm.
Block Time and Transaction Speed
Dogecoin surpasses Bitcoin in this regard, as the DOGE network processes transactions more quickly and cheaply than the BTC blockchain.
The DOGE blockchain processes a new block of transactions every minute, and every ten minutes, the BTC Blockchain processes a block. While this may increase DOGE's attractiveness as a medium of trade, it decreases its attractiveness as a store of value.
Because DOGE miners earn ten times the block rewards as Bitcoin miners, increasing the number of new Dogecoins tends to drive down the price.
Transaction Fees
The cost of executing a Bitcoin transaction is substantially higher than the charge for processing a Dogecoin transaction. The processing charge for Bitcoin transactions ranged from $1.25 to $5.00 in the six months to February 2022, while the fee for a Dogecoin transaction ranged from $0.10 to $1.75.910
Additionally, Dogecoin and Bitcoin have distinct transaction fee structures. Bitcoin users can pay a more significant fee to expedite the processing of a transaction, with the price remaining constant regardless of the transaction's value. 11 Dogecoin transaction costs are calculated based on the size of the trade in kilobytes of data, with a fee of 0.01 DOGE per kilobyte.
Special Feature
As the first cryptocurrency, Bitcoin is an important innovation, but Dogecoin is the most entertaining.
Dogecoin is a fun and kind internet currency "preferred worldwide by Shiba Inus." Dogecoin is synonymous with the Shiba Inu dog meme. 12 Additionally, Dogecoin's popularity has spawned imitators such as the Shiba Inu cryptocurrency.
Bitcoin was established as a "pure peer-to-peer electronic cash" that enables financial transactions to take place without an intermediary or centralized authority. Bitcoin is similar to digital gold in that it has a finite coin supply and relies on a process called "mine" to create new bitcoins. Bitcoin mining, like gold mining, is an energy-intensive process.
Where Dogecoin Improves upon Bitcoin
While Bitcoin and Dogecoin share a common core, the two cryptocurrencies are not identical. Indeed, there are numerous distinctions between Bitcoin and Dogecoin.
For example, Bitcoin's proof-of-work consensus algorithm is based on the SHA-256 hash standard. The United States National Security Agency (NSA) produced the SHA-256 average in 2001, and it is widely regarded as state-of-the-art encryption technology.
On the other hand, Dogecoin uses the Scrypt hashing algorithm used by Litecoin. Scrypt makes cryptocurrency mining more accessible than it is on an SHA-256 network. Only the first miner discovering a block hash wins a reward on a proof-of-work blockchain network.
Because the reward is only available to one miner, consumers with less powerful hardware receive far less than organizations and individuals with thousands of dollars worth of hardware. There are graphics cards designed specifically for PoW mining known as Application-Specific Integrated Circuits (ASIC). ASIC miners are more likely to obtain a reward than regular miners, therefore limiting the entry of newer miners.
However, the Scrypt standard is resistant to ASICs. Scrypt-based blockchain networks were designed to assure the continued operation of traditional mining hardware, hence making the mining process more accessible because of the lack of ASIC support. Additionally, miners on the Dogecoin network are jokingly referred to as 'diggers.'
Bitcoin's Positives
Despite Dogecoin's advantages over Bitcoin, the Shiba Inu-themed cryptocurrency is not without flaws. Bitcoin retains several significant technological advantages over Dogecoin.
For starters, Bitcoin is substantially more valuable than Dogecoin. Bitcoin has reached an all-time high of over $64,000, and Dogecoin's all-time high price is approximately $0.70. While the price differential between Bitcoin and Dogecoin can be viewed positively or negatively for various reasons, there is no doubting that tens of thousands of individuals invest in Bitcoin for its long-term stability as a store of value.
Bitcoin is also undergoing significant changes that may render Dogecoin obsolete. The most important of Bitcoin's future innovations is the Lightning Network, which will enable users to conduct smaller transactions with the cryptocurrency, such as purchasing a cup of coffee via off-chain tunnels.
Lightning Network tunnels are opened between two users, allowing them to transact immediately and with little expense. When both parties have completed their transactions, they can seal the tunnel, which is then forwarded to the regular Bitcoin network. While Dogecoin now has faster transaction speeds, Lightning Network has the potential to render Dogecoin essentially obsolete in the long term.
In terms of popular perception, Bitcoin is nothing near the meme status attained by Dogecoin. Due to Dogecoin's meme-like origins, institutional investors are less likely to invest significant sums in cryptocurrency. Rather than that, high-value investors are sure to gravitate toward Bitcoin, a cryptocurrency that has earned its existence from the start.
The miner receives 10,000 DOGE for each Dogecoin block mined. In mathematical terms, 10,000 Dogecoin are released into the network every minute, gradually depreciating the asset. Consistent devaluation of Dogecoin is just what Markus and Palmer desired. Because the two Dogecoin developers produced an infinite number of Dogecoin, it should be worthless due to a lack of scarcity. Bitcoin, on the other hand, is resistant to inflation. Bitcoin's hard cap of 21 million tokens, along with an ever-decreasing rate of supply, should result in a steady increase in value, akin to gold. The combination of scarcity and demand typically results in a high long-term value.
Bitcoin enthusiasts disagree on whether the cryptocurrency is intended to be used as a substitute for cash or a store of value. If Bitcoin becomes a store of value, it will open the door for another cryptocurrency to take over the alternative cash name. According to popularity, the cryptocurrency that will eventually supplant alternative cash will be Litecoin or another project with greater credibility and mindshare than Dogecoin. All of this is to indicate that, even if Bitcoin were eliminated as a Dogecoin competitor, other cryptocurrencies would still do significantly better than Dogecoin.
Bitcoin Vs. Dogecoin: Which One Should You Choose?
Given that both Bitcoin and Dogecoin have advantages and disadvantages, there is no clear winner. However, there is undoubtedly an answer to whether Bitcoin or Dogecoin is the better option for you.
It's critical to recognize that, despite their price discrepancies, both Bitcoin and Dogecoin have provided investors with excellent returns at various points in time. Dogecoin's price varied from less than $0.001 to about $0.68 in 2021, rewarding early investors with a tidy profit. It's worth noting that the Dogecoin price increase occurred due to Elon Musk's word of mouth. Dogecoin's price did not increase in response to any technological advancements, as is customary in the blockchain. It's tough to determine whether lightning can strike twice in the case of Dogecoin.
The Dogecoin network is constantly adding new coins, thereby devaluing the asset. To many investors, depreciation signals the possibility of Dogecoin's future decline. On the other hand, Bitcoin is meant to appreciate over time because of its scarcity. While demand determines whether or not Bitcoin's value will continue to climb, there is no doubting the asset's potential.
Remember how Palmer and Markus created Dogecoin as a meme? A long-term philosophy is programmed into the Dogecoin network, which is particularly concerning given diggers' continuous pumping of additional DOGE. Despite Markus and Palmer's intentions, the Dogecoin project has been taken over by the community. Dogecoin's future scalability and security updates will allow the community to authenticate the currency's existence.
Based on any project's price history, Dogecoin appears to be a more short-term investment for many, whereas Bitcoin is a long-term investment for many. Undoubtedly, some consider Bitcoin as a replacement for cash and Dogecoin as a store of wealth and have gained from both mantras. Dogecoin has historically been a short-term investment, while Bitcoin has been a long-term one. However, both networks' fortunes are constantly subject to change, dependent on future news and developments.
Final Thoughts
While Bitcoin and Dogecoin both use similar blockchain software, their numerous unique features distinguish them. Dogecoin is determined by its lightning-fast transaction times and low transaction costs, but Bitcoin is the market leader and demands the most significant value. Depending on your financial objectives and preferences, you may choose to invest in Bitcoin, Dogecoin, or both.
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