Dogecoin - DOGE
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What is Dogecoin (DOGE) and how does it work?
Dogecoin, or DOGE, named after the famous internet meme featuring a Shiba Inu dog, is a cryptocurrency created as a payment system as a joke by two software engineers, who at the time were making fun of the wild speculations in the crypto market. DOGE was the first of many meme coins and was created as a fun and light-hearted cryptocurrency.
Dogecoin was born in 2013 from a fork of the Litecoin network, meaning it shares the same proof of work protocol (POW), similarly to Bitcoin, but with the main difference being it has a Scrypt hash and mining algorithm instead of the traditional SHA256. As its PoW coin, DOGE can be mined with an average block time of 1 minute and an uncapped total supply. The coin can be mined solo or through a mining pool, which can be done on any operating system like Windows, Mac, or Linux. As of 2014, the process for mining Dogecoin and Litecoin has been merged, meaning miners can mine the two coins simultaneously.
Unlike other meme coins, Dogecoin has several use cases, such as tipping and purchases online. For example, users on Reddit and Twitter use the coin to reward the creation and sharing of quality content. Small quantities of the coin also get given to community members as a free introductory currency. Additionally, Dogecoin has also been used online as a currency for purchases, with several small companies accepting the coin until Tesla’s CEO Elon Musk also expressed interest in the cryptocurrency and introduced it as a means of payment for his company. This increased DOGE’s popularity exponentially, prompting many other retailers to start accepting it.
Elon Musk frequently expressed his interest and the fact that he liked the coin on Twitter, resulting in a price movement after his tweets. Between 2020 and 2021, several tweets from Tesla’s CEO resulted in rallies for the coin rising between 20% and 100%, leading some to believe that there might have been market manipulation as the CEO himself admitted to holding the coin over time. Although initially the coin was accepted as a means of payment for his company, due to its volatility it was eventually removed. Like the rest of the crypto market, it experienced a bit of a downfall.
Last update 21/5/2022
Dogecoin was launched on crypto exchanges as early as 2013 and has gone through several market cycles, usually following Bitcoin’s price. After trading below $0.004 for its entire existence, in late 2020, due to its increased popularity online and the tweets from Elon Musk, Dogecoin's price rose to $0.01 in December and as high as $0.86 in February of 2021, an increase of over 2300% in just a few months. This led many to believe that Dogecoin's price would reach the price of $1, a price level it hasn’t reached yet.
Following this exponential rise, the coin has had a slow and steady decline, missing out on the rally many coins went through in late 2021 and 2022 and has continued to fall slowly. Initially, the meme coin fell to around $0.4 and then to $0.2, a correction that led many to believe it might be ready for another rally. However, after retesting the $0.37 and $0.3 resistance, the coin started declining again and fell around its 20EMA and 50EMA moving averages on the weekly chart. After falling below these levels, DOGE kept falling and has now fallen as low as below $0.06, where it's trying to form a bottom to bounce back from.
Dogecoin price prediction would suggest that the coin is near historical lows and likely forming a bottom pattern. It’s still really early to say, but if it managed to get back above the $0.78 resistance, it could revert its trend and potentially bounce back. It’s key that this level is regained and that a lateral or upwards move occurs before knowing whether a recovery will occur.