How Dogecoin Works?
To know how Dogecoin works, we need to know first the technology used by Dogecoin.
- Dogecoin Technology: We all know that Dogecoin is a cryptocurrency which uses Bitcoin's Blockchain technology. Blockchains store transaction information in its database. Blockchains are decentralized; that is why its data is stored across many nodes, i.e. computers. Let us learn about how a transaction happens on a dogecoin blockchain with the help of an example.
- For Example, Jane lives in Canada and wants to send money to Alice in Australia using Dogecoin. Jane Sends 20 DOGE to Alice. The nodes on the blockchain will check if Jane has 20 DOGE, it is done when more than half of all the nodes agree that Jane has 20 DOGE, and the transaction is done. Alice will now receive 20 DOGE, and the nodes will get a reward for checking the transaction. The reward is known as mining.
- Dogecoin Mining: It is like a lottery system. When the nodes confirm the transaction, they have to guess a code which is generated for the new block of transaction in the blockchain. The reward is 10,000 DOGE for the node who will guess the right code. This lottery happens every minute when a new transaction is initiated. The Doge received by the node is stored in a dogecoin wallet.
- Dogecoin Wallet: Dogecoin wallet is a crypto wallet where the Dogecoin is stored. It is, of course, a digital wallet and not a physical wallet which is used to store paper currency.
How To Use Dogecoin?
To use Dogecoin, the owner needs to have a wallet to store the dogecoins. That wallet is known as dogecoin wallet. There are online as well as offline wallets. It is safe to keep less money in online wallets due to the risk of hacking.
It includes private and public keys. Private keys are to be kept private as its name suggests and public keys are seen by everyone on the network. There are four types of dogecoin wallets.
- Software Wallets: There are two software wallets available.
- Dogecoin Core: It makes your computer a dogecoin node as it contains the whole blockchain.
- Multidoge: It does not make your computer a full node as it stores only enough information to use Dogecoin.
- Online Wallets: It helps to use Dogecoin without storing any dogecoin blockchain. Ex, Dogecoin Wallet. It is risky.
- Paper Wallets: It is very secure as you have to print it and you can keep the printout with you.
- Hardware Wallets: It is a removable hardware device like a USB. It is secure but very expensive. Ex, Keepkey is $68, and Ledger Nano is $ 96.
How To Buy And Sell Dogecoin?
Dogecoin can be bought through various exchanges. You can now also buy Dogecoin through credit card, PayPal, Paytm, etc. To buy Dogecoin from fiat currency, smaller exchanges like Exrates, YoBit and Livecoin are used.
Brokerage services are also offered by LiteBit.eu, Bittylicious and Cryptomate. You have to follow some steps to buy Dogecoin through exchanges:
- Register: The first step is to register with the exchange from where you want to buy Dogecoin. Find a suitable exchange and sign up for an account with them. You have to provide necessary details and ID proof to register with an exchange.
- Deposit Funds: Once your account is registered with an exchange, all you have to do is deposit funds into your account. Most exchanges need you to buy other cryptocurrencies like bitcoin to buy Dogecoin. Fiat currency is not used by most exchanges. Login to your accounts and click on Deposit, enter the amount and choose the wallet.
- Buy DOGE: Go to the section of the market on the exchange and look for DOGE. Click on Buy Doge and enter the amount. Review the transaction carefully.
To sell DOGE, you have to follow a similar process, but instead of clicking on Buy, click on Sell. Again check for best deals and sell the Doge. Review the transaction details properly to stay averse of scams.
You will not be able to get the desired currency in exchange for DOGE. You can use various wallets to hold you, DOGE. But it is not safe to keep it in your wallet as it can get hacked. It’s safe to withdraw it as soon as possible.
These are websites or platform where you can buy and sell Dogecoin and other cryptocurrencies. You have to choose the best exchanges that have highest dogecoin trading volumes. You can also get free Dogecoin if you visit dogecoin faucet.
It is a website where you have to do tasks, watch ads, fill surveys and other stuff for free dogecoins. A person has to be extremely cautious while doing so because sometimes you get nothing in exchange for the task done or a very less amount.
How To Make Money By Using Dogecoin?
There are multiple ways through which we can make money using Dogecoin.
- Tip: Users get a tip in the form of Dogecoin when they do some tasks. These tips can be stored in the wallet and later can be used to buy various products.
- Buy Dogecoin: Users can buy Dogecoin by speculating the price rise in the future like the stock market, i.e. buying Dogecoin at a low price and selling them at a higher price in the future. Users can generate a decent amount of profit if they have proper skills and knowledge.
- Products and Services: Users can buy any product and services in exchange for Dogecoin as it is accepted by many online outlets and is a secure method of payment. Users can earn tips and buy products of their choice by using those dogecoins.