How does Dogecoin work?
Dogecoin is a cryptocurrency that can be bought, sold, transferred, and used for purchases (although very few merchants accept it or any other cryptocurrencies). It uses blockchain technology to maintain a decentralized digital ledger that records all Dogecoin transactions.
Like Bitcoin and many other cryptocurrencies, Dogecoin uses the proof-of-work method and a process called mining to validate transactions. Dogecoin miners use devices, such as computers with high computing power, to solve mathematical equations that verify and record transactions on Dogecoin’s blockchain. In return for verifying Dogecoin transactions, miners receive payment in Dogecoin.
To its credit, Dogecoin is much more efficient than Bitcoin. Dogecoin mining is faster than Bitcoin mining and requires far less energy, so it doesn’t have anywhere near Bitcoin’s environmental impact.
Dogecoin transactions are also much faster and cheaper than Bitcoin transactions, but it’s not alone in this regard. There are now many popular types of cryptocurrency that surpass Dogecoin’s transaction fees and processing times.
How can I buy Dogecoin?
Buying Dogecoin is not difficult. Just follow four basic steps:
- Create an account on a cryptocurrency exchange that lists Dogecoin.
- Complete the identity verification process. Exchanges typically require a scan of an identity document such as a driver’s license or passport.
- Transfer money from your bank account to the cryptocurrency exchange. The exchange may accept other payment methods, but bank account transfers generally have the lowest fees.
- Once the money is available in your account with the exchange, select the “buy” option to purchase Dogecoin.
Dogecoin trading is available on several of the top cryptocurrency exchanges. Here are a few of the most popular options:
- Coinbase (NASDAQ:COIN): One of the most widely used exchanges in the U.S., Coinbase began listing Dogecoin on June 3, 2021.
- Gemini: This exchange, which also provides cryptocurrency educational content, added Dogecoin on May 4, 2021.
- Binance: This widespread yet troubled international platform has enabled Dogecoin to trade on its U.S. version since Oct. 24, 2019.
- eToro: Known for its CopyTrader feature, which allows users to copy decisions of high-performing traders in real time, eToro started offering Dogecoin on May 3, 2021.
After you’ve purchased Dogecoin, you can keep it on your exchange account or transfer it to a crypto wallet that offers Dogecoin storage. Transferring it to a Dogecoin wallet is recommended so that you, and not the exchange, have complete control of your coins.