by Bitcoin’s whitepaper describes it as a decentralized digital currency that has attracted a large following, with many expecting it to eventually replace existing financial systems in use today. Bitcoin was and continues to be a big financial deal, to the point where international lawmakers are fighting to control it.
Despite the financial upheaval caused by Bitcoin, some have taken notice of its blockchain-based technology and wanted to use it for less dramatic purposes. Building on the concept was simple in theory because the Bitcoin blockchain is completely open-source.
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A meme cryptocurrency called Dogecoin (DOGE), developed in 2013 by two software developers named Jackson Palmer and Billy Markus, was inspired by the simplicity of Bitcoin.
An overview of the journey of Bitcoin and Dogecoin
Palmer created Dogecoin by fusing the famous “Doge” Shiba Inu meme with a cryptocurrency. Palmer then posted a somewhat joking tweet about his idea, and Markus contacted him to start working on Dogecoin.
Markus created Dogecoin in three hours. Basically, he modified the source code of Lucky Coin, Litecoin and Bitcoin to create Dogecoin before putting the project online.
DOGE has developed a large community through the social networking site Reddit. The Dogecoin subreddit was full of supporters introducing new people to the DOGE community, swapping it and sharing knowledge about it.
Elon Musk, the creator of Tesla, eventually got involved and his love for Dogecoin is now well known. At the start of 2021, Elon Musk constantly tweeted about DOGE and promised to send the stock to the moon. Following his post, a wave of investors rushed to buy DOGE, sending its price soaring. Additionally, it led to a flurry of DOGE-related memes, which increased interest in the merchandise.
However, the Dogecoin network was hacked over Christmas 2013. 11 million DOGE were hacked by a hacker who gained access to DogeWallet, a third-party Dogecoin platform. Two days later, the Dogecoin community generously donated 15 million DOGE to DogeWallet.
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Many in the cryptocurrency community still consider DOGE more of a meme than Bitcoin. Nevertheless, because DOGE is backed by well-known exchanges like Coinbase and Robinhood, the general public is constantly exposed to it.
Where Dogecoin excels above Bitcoin?
Although both cryptocurrencies have a similar structure, Bitcoin and Dogecoin should not be compared to each other. In reality, there are many differences between Bitcoin and Dogecoin.
For example, Bitcoin’s proof-of-work consensus algorithm is based on the SHA-256 hashing algorithm. The United States National Security Agency (NSA) created the SHA-256 standard, which is widely considered to be a state-of-the-art encryption technique.
In contrast, Dogecoin uses the Scrypt hashing algorithm that Litecoin made popular. Scrypt makes it easier to mine cryptocurrencies than on SHA-256 networks. Only the first miner to discover a block hash receives a reward on a proof-of-work blockchain network.
Users with less powerful equipment earn significantly less than companies and individuals with thousands of dollars in hardware, as only one miner can receive the incentive. Even so, specialized graphics cards known as application-specific integrated circuits (ASICs) are available for PoW (ASIC) mining. ASIC miners are more likely to receive a reward than regular miners, further restricting novice miners.
However, the Scrypt standard is ASIC resistant. Due to the lack of ASIC support, blockchain networks with Scrypt have been set up to ensure that traditional mining hardware works smoothly. A humorous term for miners on the Dogecoin network is “diggers”.
Supply capitalization between Bitcoin and Dogecoin
Although the founders of Dogecoin originally planned it to have a market cap of €100 billion, they later phased it out to prevent users from storing it and viewing it as an investment. Since the supply capitalization of Dogecoin is removed, it becomes an unlimited asset, so there is no longer a shortage.
Investors would understand that Dogecoin is not meant to be a store of value due to its endless capitalization. On the other hand, Bitcoin has a solid supply capitalization of 21 million BTC, which many people assume is what determines the value of the asset due to its scarcity.
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Bitcoin should theoretically increase in value over time if it becomes harder to obtain. The fact that Dogecoin has no supply limit and issues 5 billion units per year ensures that the asset will never become excessively valuable, which is exactly what Palmer and Markus envisioned when they created Dogecoin. . After all, it was created as a joke.
Not to mention that Dogecoin processes transactions much faster than Bitcoin in terms of transactions per second (TPS). Unlike Bitcoin, which takes ten minutes to confirm a block, Dogecoin only takes one minute. Compared to Bitcoin’s average TPS of 7, Dogecoin processes transactions at a rate of around 33 transactions per second.
The price of Dogecoin is also much less erratic than the price of Bitcoin. The value of Bitcoin is known to fluctuate by thousands of dollars daily. Similar to Bitcoin, Dogecoin is also quite erratic; the price of the asset usually fluctuates below $1. Dogecoin is a more viable option for day-to-day transactions than Bitcoin due to its relative stability.
Bitcoin vs. Dogecoin: The Benefits of Bitcoin
Although Dogecoin offers advantages over Bitcoin, the Shiba Inu-themed digital currency isn’t flawless. Bitcoin still has significant advantages over Dogecoin in terms of technology.
For starters, Bitcoin is much more valuable than Dogecoin. The all-time high price of Bitcoin is nearly $64,000. Dogecoin has never been purchased for more than $0.70. There is no doubt that tens of thousands of people are investing in Bitcoin because of its reliability as a long-term store of value, despite the fact that the price difference between Bitcoin and Dogecoin can be seen as both positive. and negative for many reasons.
Significant changes to Bitcoin are also underway which could render Dogecoin obsolete. The most important of Bitcoin’s future enhancements is the Lightning Network, which uses off-chain tunnels to allow users to use Bitcoin for smaller transactions.
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Between two users, Lightning Network tunnels are opened, allowing immediate and low-cost transactions. The tunnel can be closed when both parties have completed their transaction, at which time it is transferred to the main Bitcoin network. Even though Dogecoin may currently have faster transaction times, Lightning Network may eventually render Dogecoin virtually useless.
Dogecoin is much more of a meme than Bitcoin in terms of popularity with the general population. Institutional investors are much less likely to make large investments in Dogecoin due to its meme history. High-value investors will almost certainly prefer Bitcoin instead as it is a cryptocurrency that has been profitable since its inception.
Which digital currency should you invest in – Bitcoin or Dogecoin?
There is no clear winner as Bitcoin and Dogecoin both have pros and cons. To the question of whether Bitcoin or Dogecoin is best for you, there is undoubtedly an answer.
It is crucial to realize that despite their price disparities, Bitcoin and Dogecoin have, at various times, generated impressive returns for their investors. The price of Dogecoin has fluctuated from below $0.001 to above $0.68 in 2021 alone, providing early investors with a considerable return. That said, note that Elon Musk’s advocacy is behind the increase in the price of Dogecoin. As is customary in the blockchain, there have been no technological advances that have driven up the price of Dogecoin. It is difficult to predict when lightning will strike.
Of course, the constant influx of new coins into the Dogecoin network reduces the value of the asset over time. The devaluation may signal a future disadvantage for Dogecoin to many investors. The scarcity of Bitcoin, on the other hand, is intended to increase its value over time. Demand will determine if Bitcoin’s value rises further, but there is no doubt about the asset’s potential.
Overall, based on the price performance of both projects, Dogecoin appears to be a more popular short-term investment than Bitcoin. Undoubtedly, there are those who view Dogecoin as a store of value and Bitcoin as an alternative form of payment, and who have even benefited from these beliefs in both cases.
