Dogecoin: A Joke Or The Most Valuable Currency In The World? | DW

It only took a joke for the value of Dogecoin, one of the most popular cryptocurrencies in the world, to drop 30%. The cryptocurrency, which was born as a joke on social media eight years ago, lost more than a third of its value after Elon Musk, its most famous follower, called it a “scam” on the American television show Saturday Night Live. , the last weekend.

The Dogecoin price achieved a record before the program was issued. “Musk is probably happy he made a joke, but investors are probably feeling real pain right now,” said Justin d’Anethan, head of sales for Diginex in Hong Kong, a digital asset financial services company.

Interest in cryptocurrencies has exploded over the past year, pushing the value of all digital currencies to more than 1.9 trillion euros, backed by financial stimulus from governments, central banks, and some institutional investors.

While Bitcoin, the most valued cryptocurrency, has captured much of the limelight, it is the other alternative digital currencies, such as Ethereum and Dogecoin, that have gained ground in recent days.

Elon Musk en el program Sutarday Night Live

What’s behind the popularity of Dogecoin?

There is no easy explanation for the rise in the price of Dogecoin. The value of this coin increased more than 20,000% in the last year. Edward Moya, a senior market analyst at Oanda, a foreign exchange firm, believes that “the endorsement of celebrities like Elon Musk and Mark Cuban provided a rationale for many early investors and gave the last push.” Musk’s trading company SpaceX accepted payment for a lunar mission with this cryptocurrency. The Dogecoin-funded mission, scheduled for 2022, is called “DOGE-1 Mission to the Moon.”

Is Dogecoin the Next Bitcoin?

Dogecoin and Bitcoin are very different, although the former is based on the same software code that Bitcoin has.

Dogecoin can potentially have an unlimited supply, which means that those looking to keep investing in the coin for longer could see the value of their investment decrease. Bitcoin, on the other hand, is capped at 21 million units, making it scarce and more valuable, as are gold and diamonds, which are also in limited supply.

If Dogecoin was designed to be a cryptocurrency for “dummies”, Bitcoin was always thought of as a decentralized digital currency, an alternative to central bank controlled money.

Even though Dogecoin has come a long way from its satirical origins to being a popular cryptocurrency, it does not endanger Bitcoin’s dominance. Its $ 70 billion valuation is just a fraction of a trillion dollars of Bitcoin.

“Dogecoin is a crypto kindergarten. It was created for fun and also to illustrate how cryptocurrencies work,” Jeff Gallas of the German Bitcoin Foundation told DW. “Therefore, it is good to start, perhaps, by learning about how cryptocurrencies work and not taking it too seriously,” he clarified.

Is Dogecoin a good investment?

Dogecoin followers adore it, promote it as a cryptocurrency of the future. Its low transaction fees and great offer make it ideal for Internet users to use to pay for content online. Also, transactions with Dogecoin can be processed faster than with Bitcoin.

(rmr/ers)

How does bitcoin work?

Pretty cryptic

Bitcoin is a cryptocurrency. The means of payment works digitally, without physical coins or bills, and is based on cryptographic processes. Bitcoin is organized in a decentralized way and does not require banks. Therefore, the currency can be used around the world and across borders under the same conditions and cannot be compared to any previous monetary system.
How does bitcoin work?

The “father” as a mystery

In January 2009, open source software for bitcoin was released under the pseudonym Satoshi Nakamoto. A few months earlier, this person or group had publicly described the functioning of the digital currency for the first time in a text.
How does bitcoin work?

How do you get bitcoins?

There are different ways to get bitcoins: they are bought on an internet platform (and they are paid, for example, with euros). Or bitcoin is accepted as a means of payment for the goods or services it offers. Or you become a “miner” yourself and “mine” new bitcoins.
How does bitcoin work?

You have to have a digital wallet

Cryptocurrencies are stored in a virtual wallet. Contains keys. Only with these can you determine who owns a bitcoin. They are also necessary for transactions. A wallet can be stored on a smartphone, a computer, a USB stick, specially protected storage media and in a web cloud. Without a wallet, you don’t have access to your bitcoins.
How does bitcoin work?

How to pay with bitcoins

Suppose Mr X wants to buy a hat from Mrs Y and pays with bitcoin. Both must have a public key (comparable to an account number) and a private key (comparable to a TAN) for a bitcoin transaction.
How does bitcoin work?

Block chain

Mrs. Y transmits her public key to Mr. X. He confirms with his private key and thus requests a transaction. This is collected with several hundred other transactions in a block (hence the term blockchain, but it will be discussed later).
How does bitcoin work?

Bitcoin miners

The block is distributed to all computers in the decentralized bitcoin network. These computers are also called miners. They check the transactions that go from one wallet to another and confirm them. In theory, anyone can make their computer work on the network. Meanwhile, however, most of the work is done by professional server farms.
How does bitcoin work?

Graphics card mining

Before the transaction is executed, the miners have to solve the cryptographic computation tasks for each block. This requires computing power and powerful graphics cards. Mining works like a competition: several miners try to decipher a block from the blockchain. Whoever gets it first will receive new bitcoins as payment, that is, “freshly mined”.
How does bitcoin work?

A kind of pearl necklace

The block of Mr. X and Mrs. Y is part of a long chain, the so-called blockchain. All bitcoin activities are stored in this decentralized database. The blockchain thus serves as a payment book for the cryptocurrency. Although everything is recorded and can be viewed, users remain anonymous.
How does bitcoin work?

Mining happens here

China has, by far, most of the computing power of the bitcoin network and, therefore, of its electricity consumption. Other major countries are the United States, Russia, Kazakhstan, Iran and Malaysia, according to the University of Cambridge’s bitcoin Electricity Consumption Index. Mining is only worth it when electricity prices are low.
How does bitcoin work?

Huge power consumption

The process of calculating bitcoin transactions (mining) requires about 120 terawatt hours (TWh) per year, according to the University of Cambridge’s bitcoin Electricity Consumption Index. That’s more electricity than each of the countries colored blue uses in one year. Graphics: Per Sander Texts: Gudrun Haupt

Author: Henrik Böhme