What is Dogecoin?
Dogecoin is a cryptocurrency, i.e., decentralized digital currency that can be transmitted between users almost instantaneously and securely throughout the globe via the internet. It has low fees, no need for any personal information except your wallet address and miners are rewarded after every block of transactions is mined.
The official website reads, “Dogecoin is an open source peer-to-peer digital currency, favored by ShibaInus worldwide.” Therefore, it’s both ironic and appropriate that the logo of Dogecoin features the face of one such dog – Kabosu, an authentic purebred Shiba born in Japan on December 16th 2010.As you might already know cryptocurrencies are usually created and then released to the public through mining.
Here’s how it works
When a new cryptocurrency is launched, nodes (computers connected to the network) compete to solve complex mathematical problems in order to produce a valid “block” of transactions. This process is called hashing and involves running miner’s software which requires a lot of memory and processing power – mostly from Graphics Processing Units for now.
As a reward for completing this process first, you receive units of that cryptocurrency as well as units of transaction fees contained within each block produced by the network. In Bitcoin’s case, as more people join the network there is an incentive to join these early miner pools as competition increases and blocks are naturally harder to compute faster than later entrants into the pool. This results in larger and larger pools of slower miners earning less and less.
Dogecoin production
In Dogecoin’s case the production curve has already been predetermined with a maximum number of 5,000,000,000 units to be produced within a one-year timeframe. Every block mined rewards 50 units to each successful miner whereas transaction fees are distributed proportionally amongst all active miner’s every time a block is mined.
As more people join the network there is no incentive to join early pools as success rates remain constant over all participants while the reward per unit decreases on an ever-increasing scale. In fact, if you do choose to buy dogecoin or participate in mining when the difficulty reaches its peak level your computer might even still be unable to produce a valid hash on its own which means it would be forced to join a merged mining pool.
