Like Litecoin, Dogecoin uses Scrypt technology, which has lower hashrates (a measure of computational power per second) and uses less energy than Bitcoin’s SHA-256 mining algorithm. It was left ‘unfixed’ on purpose as it keeps the cost of DOGE low. Palmer has stated that this was a mistake, and that the supply cap should have been set at 100 billion. One block is mined every minute and Dogecoin has no supply cap. Since then, each mined block yields a reward of 10,000 DOGE. This process is known as merged mining.ĭogecoin’s initial block rewards were designed to be random and vary between zero and one million DOGE and this continued until it reached a supply of 100 billion, which occurred in February 2018. It uses a proof of work consensus algorithm called Auxiliary Proof of Work, which allows those who mine other proof of work cryptocurrencies (primarily Litecoin) simultaneously to mine DOGE at no additional cost. The Dogecoin blockchain can process around 30 transactions per second, which is much higher than Bitcoin. For example, in 2017, Bitcoin Cash was created after a hard fork in the Bitcoin blockchain. A fork happens when a blockchain diverges into two potential paths and can lead to a complete change in protocol and eventually a completely new cryptocurrency. How does it work?ĭogecoin is a version of Luckycoin (now defunct), which itself is a ‘fork’ of Litecoin (which is also a fork of Bitcoin). Palmer also introduced it as an alternative to the greed he saw in the cryptocurrency community and as such, Dogecoin is designed to be unattractive to investors by keeping a permanently low value due to its mining algorithm. But it was primarily created as an attempt to break the stigma surrounding cryptocurrencies, which carried negative connotations at the time. It can be used to buy food, household supplies and even website domains. This marked the first of many large-scale initiatives by the Dogecoin community.ĭogecoin is primarily used for tipping users on Reddit and Twitter, but it is also accepted as a method of payment by a few dozen merchants. On 25 December 2013, multiple Dogecoin wallets were hacked but the Dogecoin community came together and refunded affected users. Shortly afterwards, IBM developer Billy Markus reached out to Palmer via Twitter asking him if he would be willing to create an actual Dogecoin cryptocurrency and it was officially launched on 6 December 2013. When switching between the tabs, Palmer had the idea to put the two elements together and quickly tweeted about a hot new cryptocurrency called Dogecoin and bought the website domain. Palmer had two tabs open side-by-side on his computer – one was CoinMarketCap (an aggregator of data on cryptocurrencies) and the other was a news article about the best meme of 2013, Doge. It was founded by Jackson Palmer – a software engineer working for Adobe – although he has since walked away from the project. Dogecoin is a cryptocurrency that began as a joke, taking its name and logo from a meme of a Shiba Inu dog that became popular online in 2013.
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