Dogecoin is a digital currency that started somewhat as a joke. This is the reason why the currency has a Shiba Inu dog on its logo. Despite the fact that the digital currency has a funny logo and has done a lot of creative fun publicity, it is an actual blockchain-based financial network that has its own pros and cons. This is one of the reasons for DigiCoin becoming on the top cryptocurrencies in the world. By January of 2014, the currency reached a capitalization of USD$60 million. In December of 2017, the capitalization of Dogecoin has surpassed USD$1 billion.
Just like Bitcoin and other cryptocurrencies, Dogecoin is a decentralized blockchain network. The developers of the network have made the code open source, which means that anyone can download the code for inspection, use it or become part of the Dogecoin network.
There are a number of differences between Dogecoin and Bitcoin. From the technical perspective, Dogecoin has more similarities with Litecoin than it does with Bitcoin. Here’s what this means: first, Dogecoin uses Scrypt protocol for proof-of-work while Bitcoin uses SHA256. Secondly, Dogecoin creates blocks of Dogecoin blockchain with the speed of 1 block/minute while Bitcoin is 10 times slower at 1 block per every 10 minutes. Another difference is the rate of change of the parameter of difficulty of the network. With Dogecoin, difficulty changes every four hours. With Bitcoin, difficulty changes every 2016 blocks.
The final difference is that Bitcoin has a coin cap of 21 million, meaning that the network could only have 21 million coins.
Coin supply on the Bitcoin network vs Dogecoin network
The Bitcoin network has been adding bitcoins to circulation gradually by giving them as a reward to miners for processing transactions on the network by adding them to the Bitcoin blockchain. Blocks from 0 to 210,000 got a reward of 50 bitcoins each. Then, the reward split in half and became 25 bitcoins per block. In July of 2016, the reward went down again and turned into 12.5 bitcoins per block. The next split of the reward will occur around June of 2020 when the reward will become 6.25 bitcoins. The reward will keep splitting in half until it reaches zero. After that, 100% of the rewards that miners get for doing the work on the Bitcoin blockchain will be coming from the optional transaction fees that users can add to the funds they are sending on the Bitcoin network to incentivize the miners to include the transactions into the blocks of bitcoin blockchain.
Bitcoin as a currency and as a network is about freedom and responsibility. Miners do not have to include any transactions into the blocks that they mine and users do not have to pay a fee for a transaction if they don’t want to. However, as the data from the Bitcoin network shows, when the network Bitcoin network started becoming really popular in 2017, users either had to pay a fee or wait for a long time for their transaction to go through. This means that Satoshi Nakamoto was right when he said that the network could sustain itself with miners getting paid from transaction fees. The downside of fees on the Bitcoin network is that they’ve already made the network not usable for small peer-to-peer transactions, but the issue of fees and scalability of the Bitcoin network is not a subject of this article.
As of January of 2018, there are over 16,5 million bitcoins in circulation out of 21 million, which means that over 80% of the total supply of bitcoins is already in circulation. On average, the network is generating 1,800 bitcoins a day. You can see the how many bitcoins the Bitcoin network has in circulation as you are reading this article by visiting http://www.bitcoinblockhalf.com/
Coin supply on the Dogecoin network works in a very different way. There is no cap on how many coins the network can have. After becoming available to the public in December of 2013, the network has added 100 billion coins by the end of June of 2015, in less than two years from the launch of the network. Since then, the number of coins that the network adds to the circulation is limited to 5.256 billion dogecoins annually. This means that Dogecoin is an inflationary currency while bitcoin is deflationary.