What is the Dogecoin Blockchain

Let’s demystify what is Dogecoin and what is a blockchain. Dogecoin is no doubt a lot of fun! However, if I was Doge, I would get offended when someone calls me a “joke”. Is 90 billion dollars a joke for you? Better you show me your garbage can before calling DOGE a joke.

Dogecoin’s technology is not complex. Dogecoin, just like Bitcoin, is made out of a handful of cool technologies that once put together, create the possibility of having a cryptocurrency. These technologies are digital signatures and cryptography, hashing, and a consensus mechanism.

Dogecoin is a blockchain that works as a distributed ledger that allows recording some data or transactions, creating the possibility of having a trustless relationship between parties that maybe don’t know each other. How can this be achieved?

Being a distributed system, Dogecoin’s network keeps the ledger in a peer-to-peer network with thousands of computers that are connected and each one of those computers can keep an updated copy of the ledger. These computers in the network can also be called nodes and anyone can be a node.

The ledger is shared across all these nodes in such a way that each node and miner can verify the individual transactions and audit the blockchain.

The magical book analogy:

The Dogecoin blockchain (and actually most of the blockchains), can be seen as an old paper book where each page (or block) is linked to the previous page with a code.

• Try to imagine an old paper book where each page refers to the previous page with a code. We call this code hash
• The book is the blockchain, and each page is a block. Each line on the page is a Doge transaction
• Because each page refers to the previous page with this hash code, it is easy to detect if a page was removed or changed
• Pages refer to the previous page in such a way that makes it easy to detect and prevent malicious activity
• Since pages are stacked on top of each other, it’s tough to tamper with old pages

The ledger is shared across many peer nodes (currently almost 1 thousand in the dogecoin blockchain) in such a way that each machine can verify the individual transaction and announce if the transactions are valid or not.

Dogecoin uses sha256 to link the pages of the book, i.e. the blocks. For mining, it uses a different algorithm that was inherited from Litecoin: the scrypt algorithm.

So why do we need Dogecoin?

Why do we need dogecoin? Well, because dogecoin is awesome! It’s a fast, cheap, decentralized and reliable way to exchange value between people! But let’s go a few steps back.

Until recently, people always need a centralized trusted party to make business. This has been the role of financial institutions such as banks. They keep track of customer’s balance and keep the ledgers of all the customers updated. Banks also allow us to send value between people and businesses. Every time we purchase a good with our debit/credit card, every time we make a bank transfer, take up a loan or send money to a seller in a different country, we need to have a bank acting as a middleman. Bank’s role is extremely important and it has been the pillar of society for hundreds of years.

What if I tell you that now you can do all that in a peer-to-peer manner, without banks, without financial institutions, with lower transaction fees and even faster? That would be an amazing proposition and it could solve many of the pain points of the traditional financial system:

• The middleman — usually banks or remittance companies — take fees for transferring money. Sometimes the fees are more than 10% of the amount transferred. While Dogecoin transactions fees are extremely low (usually only a few cents or even less)

• Most of the times, banks and financial institutions have a minimum size for the transaction, which cuts the possibility for small transactions and micropayments. Dogecoin is an amazing cryptocurrency for micropayments. It was typically used to tip content creators online and I can send for example 0.50 cents worth of Dogecoin to someone
• Cross-boarder payment systems are not transparent in some countries. Dogecoin, because it’s a public decentralized blockchain, it’s much more transparent
• Financial transactions are slow, and cross border wire transfers frequently take days to complete. A Dogecoin is very fast. A transaction takes usually no more than 1 minute to be confirmed.
• In the traditional financial system, The sender and receiver have very little or no control over the transaction. Because Dogecoin is peer to peer, sender and receiver have full control over the transactions!
• The supply of fiat currencies such as USD is controlled by central banks. The monetary policies have been increasing the money supply (i.e. printing money) which creates inflation and devalues the currency. When compared to fiat currencies, Dogecoin offers protection against inflation. Yes, you hear me well. Although dogecoin is inflationary, i.e. new dogecoins are printed every day, the inflation rate is currently close to 4 % and it will decrease over time.

So as you see, Dogecoin can actually solve many pain points. Dogecoin is a system that can make people less dependent on big institutions serving as a middleman and can solve some issues that other cryptocurrencies like Bitcoin have: being expensive and slow.

At the moment you may also be asking: “Hey, but can Dogecoin scale up and actually be a payment system when Bitcoin failed to do so due to high-transaction fees?”

Dogecoin can handle 10 times more transactions per second than the Bitcoin network. Thus, dogecoin is from the gecko much more suitable to be used as a payment system than Bitcoin.

Currently, Bitcoin transactions fees are incompatible with small payments (i.e. no one wants to pay $20 fee to pay a $5 coffee) and Bitcoin is like a core layer or a trust layer that allow settling bigger transactions with a very high degree of trust.

Dogecoin, on the other hand, can indeed handle small payments in a pretty fast way.

• Dogecoin is regulated (mathematically through algorithms) to maintain a fixed and predictable supply of dogecoin (10 000 new Dogecoins per minute)
• No centralized authorities control Dogecoin. It’s also a leaderless awesome community
• It eliminates the need for intermediaries which reduces transaction costs
• Transparent and tamper-resistant. It blocks any possibility of manipulation or fraud
• Increases transaction speeds and transaction finality from days to a couple of minutes, facilitating very fast ledger updates, no matter the geographical location

Dogecoin (and other cryptocurrencies), has also some essential characteristics and advantages that bring Dogecoin more value and the capacity to work as a world currency or as Elon Musk said, the people’s crypto.

• Decentralized: Dogecoin is totally decentralized. There’s no third-party controlling the blockchain and its transactions, there’s no central management and no leadership. Transactions are accepted to the network as long as they comply with the rules that are encoded in the blockchain. For example, Alice can send 10 DOGE to Bob, as long as she owns that amount of DOGE and she doesn’t send it to anyone else. Other than that, no one can censor that transaction.
• Pseudo-anonymous: Dogecoin is pseudo-anonymous meaning that the real identity of the user is not associated to his Dogecoin identity. With Dogecoin identity, I mean the Dogecoin address or respective public key.
• Secure: Dogecoin is a pretty secure blockchain. Blockchain security is ensured by the consensus mechanism and the very hard to break public-key cryptography (ECDSA in the Dogecoin case)
• Fast and global: the Dogecoin network can be accessed from anywhere in the world with an internet connection and anyone can transact from anywhere. Transactions can be completed in a 1 minute or even seconds
• Dogecoin is permissionless and public: anyone can be a node in the network. Anyone can use even a personal laptop to download and audit the entire Dogecoin blockchain which brings additional trust benefits. This is called the “full node”. Also, anyone can be a miner (i.e. validate transactions) and anyone can see/read the blockchain ledger, meaning that it’s open for the public to check any transaction (this can be done for example with a DOGE explorer)

Why do we need Dogecoin?

Because dogecoin is awesome!

Well, because of all the reasons I said before and also…

• The high fees paid to the middleman. Currently, in some countries, it’s quite cheap to send cross-border transfers between banks. In Europe for example, SEPA transfers are fairly fast and cheap. However, billions of people in the world still pay very high fees to transfer money. Especially the people that most need, are the ones that pay the highest fees. Remittance companies such as MoneyGram, Western Union and UAE Exchange frequently charge more than 10% fee to migrants that want to send some savings back home. I know that these institutions have been playing an important role and they indeed need to charge fees because they have operating costs and the costs of money but… Do we really these intermediaries considering that you can transfer value in a fast and reliable manner with low fees using dogecoin?
• Censorship: the centralized party — bank or financial institution — handling your money has to comply with the local regulations. Very frequently, people get their assets frozen by governments because of their political views or because they didn’t comply with the legal theft (aka as taxation) or because they didn’t comply with some arbitrary rules. Dogecoin just doesn’t care who you are.

Dogecoin vs. Bitcoin

Dogecoin has a few significant differences compared to Bitcoin.

As we have discussed before, dogecoin is a fork or Luckycoin which was a fork of Litecoin which is a fork of Bitcoin. In the end, Dogecoin end up getting some of the characteristics of these blockchains.

First, it’s quicker and easier for miners to complete the mathematical equations that complete and record transactions on the transactions, which makes Dogecoin somewhat more efficient for processing payments.

Where it takes 10 minutes for the miners to validate transaction into new blocks on the Bitcoin blockchain, it takes only one minute on the Dogecoin blockchain.

Another significant difference is the absence of any lifetime cap on the number of Dogecoins that can be created. There is a lifetime cap of 21 million Bitcoin that limits the maximum possible number of coins that can be created. Every 4 years, the Bitcoin block reward is halved. For example, currently, the block reward is 6.25 BTC and in 2024 the Bitcoin block reward will be 3.125 BTC. However, the Dogecoin block reward is always 10 000 per block, i.e. 10 000 new Doge are minted every minute. This makes the dogecoin supply quite high and creates some inflationary pressure: currently about 4%. This inflationary pressure is not too big and over the years, it will decrease from 4% to 3% to 2% and so on. Although the supply is controlled, it still makes some supply pressure that will decrease the scarcity of the coin and slightly debase it.

Dogecoin is pretty much similar to Bitcoin but the main differences are the following:

We will detail the dogecoin mining later in the course. But Dogecoin is merge-mined with Litecoin, so it shares the protection of the Litecoin hashrate and is, therefore, harder to be attached when compared to other small blockchains. Since Litecoin/Dogecoin use a different hashing algorithm (Scrypt) than Bitcoin (SHA256), mining hardware does not transfer, it is only compatible with one or the other.

Some people citing security concerns argue that Dogecoin Core is behind Bitcoin Core in terms of the many security updates that were applied to Bitcoin and not to Dogecoin. There are security fixes and performance improvements that have not yet been implemented to Dogecoin. The Dogecoin network has only about 800 public nodes and one of the best ways you can help the dogecoin network is to run a full node on your laptop. You can check how on the node section.

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Disclosure: views expressed are purely personal and do not reflect any organisation’s views or thoughts the writer of this article may be affiliated or associated with. This is NOT financial advice and I’m not recommending anything. This article is only for educational purposes.

Source: https://levelup.gitconnected.com/what-is-the-dogecoin-blockchain-65de0d9d5ac3?source=rss——-8—————–cryptocurrency