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Starting as a joke in the crypto community, Dogecoin (DOGE) has seen many ups and downs in the past. Though at first, people did not take this cryptocurrency much seriously, the crypto has become a star in the crypto space lately as celebrities like Snoop Dog and business tycoons like Elon Musk began to endorse Dogecoin.
It is one of those cryptos that have piqued the interest of crypto enthusiasts and investors alike.
So, what exactly is the case with Dogecoin? Let’s find out.
Dogecoin is an open-source, peer-to-peer cryptocurrency with the image of a Shiba Inu dog as its logo. It rose to popularity due to the famous Shiba Inu dog meme and serves as a light-hearted alternative to traditional cryptocurrencies like Bitcoin.
However, like other cryptocurrencies, Dogecoin provides an entirely unknown, decentralised, and secure environment for its users, devoid of third-party interference.
Dogecoin is different from other cryptocurrencies like Bitcoin. It is an “inflationary coin”, unlike the latter, which is deflationary. In the case of Bitcoins, there is a limit on the number of coins that will ever be created. Hence, the reward for mining Bitcoins gets reduced every four years, and so does its inflation rate.
In the case of Dogecoin, the supply is unlimited. Hence, its value is low when compared to other altcoins.
Dogecoin was started on 6t December 2013 by IBM engineer Billy Marcus and Adobe engineer Jackson Palmer. Upon its release, due to the Shiba Inu meme, it became an instant hit, and today, Dogecoin has a market cap of over $10 billion in crypto.
Initially, Dogecoin was popular among people who wanted to play around with cryptocurrencies. However, later on, forums like Reddit started rewarding Dogecoins to their content creators. This caused a surge in the trade value of other cryptocurrencies like Bitcoin.
Throughout Dogecoins’s life, Elon Musk has greatly supported this cryptocurrency. He has frequently tweeted about a faux “Doge” magazine cover that led to a rise in the value of the cryptocurrency. In April 2020, Musk posted the famous “Doge barking at the moon”, which increased the value of Dogecoins by over 600%.
Like all other cryptocurrencies, Dogecoins also work on blockchain technology. The system nodes are distributed all over the global network, and each transaction has its unique timestamp.
The data in each block is encrypted and is shared across all the nodes present in the network. Therefore, to unethically gain access to the system, an individual must hack all the blocks at once. This is a very difficult task in today’s scenario, and thus your investments in this crypto stay safe.
Like mining Bitcoins and other cryptocurrencies, you can mine Dogecoins using an adequately powerful computer and a Dogecoin wallet. It will help if you have a system housing a powerful CPU.
Since the popularity of Dogecoins has surged over the years, the mining competition has increased manifold. If you have regular hardware, it will be difficult to cope with the giant companies mining 24/7. You can consider joining a mining pool or opting for cloud mining services.
Furthermore, there are costs to keep in mind. Apart from electricity costs and internet bills, the mining pool and cloud mining services will have fees. The Dogecoin blockchain will also charge a network fee for its service.
You have to remember that the mining cost per coin should not exceed the value of 1 Dogecoin. If it happens, you need to change your strategy as you are mining at a loss.
If you still decide to mine Dogecoins solo, mining just one block could take weeks, if not months. However, all the block rewards go into your pocket in the end.
Furthermore, mining Dogecoins are much less stressful than Bitcoins as the former uses Scrypt, which takes much less power than Bitcoin’s SHA-256 algorithm.
Like all cryptocurrencies, there are brokers and exchanges where you can easily buy Dogecoins. Some reputable sources are – BuyUcoin, eToro, Crypto.com, Binance, Coinbase, etc.
Let’s take the example of BuyUcoin for an easy explanation. You can follow the steps mentioned below to buy Dogecoins.
And you are good to go.
Besides its wide acceptability, Dogecoin sports a low transaction fee and faster confirmation time. It has a devoted community of creators and followers, and people also use it as a payment method for content creators on social platforms. Its comparatively lower value enables it to be used as a gaming currency.
In India, buying, selling and holding cryptocurrency is not illegal. However, you cannot use it as a legal tender. As long as you hold your crypto assets, no tax deduction is applicable.
When you sell your crypto assets, the government charges you a tax on the profit generated. As of 1 April 2022, the Indian Government is taxing a flat 30% on crypto assets. In addition, from 1 July 2022, a TDS charge of 1% on all cryptocurrency transactions will come into effect.
The government is also planning a 28% GST charge for the 30% tax deduction. However, it has not come into effect as of now.