The definitive look at Dogecoin (DOGE) and Ethereum (ETH), two of the most popular cryptocurrencies.
It is not surprising that you might be enticed to try your hand at cryptocurrency trading at this point in time, when virtually no piece of financial news would be complete without mentioning cryptocurrencies. However, in order for your dabbling in cryptocurrencies to have a reasonable chance of succeeding, you must choose which cryptocurrencies to invest in based on the risk-return tradeoff that you are comfortable with.
If you believe that all cryptocurrencies have the same kinds of applications, you are in for a big surprise. Rather, each coin has its own unique uses, benefits, and drawbacks, and the one that is most appropriate for you is going to depend on the particulars of your situation. In order to have a better understanding of these applications, let’s first go over the workings of two popular cryptocurrencies, Dogecoin (DOGE) and Ether (ETH).
What exactly is a Dogecoin?
Late in 2013, software engineers Billy Marcus and Jackson Palmer came up with the idea for Dogecoin, which was a parody cryptocurrency based on Bitcoin (BTC) and the internet meme known as “doge.” The name of the cryptocurrency was derived by purposefully misspelling the word “doge,” which refers to a breed of dog called a Shiba Inu.
It is generally agreed that the sentiments of Dogecoin’s fan club as well as the tweets of Elon Musk are to blame for the rise in value of Dogecoin. Dogecoin, in contrast to other frontline coins, does not offer any actual use case advantage and is only accepted at a limited number of retail locations.
Dogecoin is currently mined using a proof-of-work (PoW) consensus algorithm, but the cryptocurrency’s developers are working on implementing a proof-of-stake (PoS) consensus mechanism in the near future. Miners receive Dogecoin (DOGE) as compensation for their contribution, which is the creation of blocks. It is an inflationary cryptocurrency because, unlike Bitcoin, there is no limit on the number of coins that can be mined on a daily basis. This contrasts with Bitcoin, which is a deflationary cryptocurrency.
Even though Dogecoin employs the Proof-of-Work mining mechanism, its operation is somewhat distinct from that of Bitcoin’s. Scrypt is a hashing algorithm that is used in Dogecoin mining. It is a simpler algorithm than SHA-256, which is used in Bitcoin mining. A hashing algorithm is a type of random code generator that generates a code of a predetermined length through the application of a particular method. In addition, Dogecoin and Litecoin (LTC) share a common algorithm, which enables “merged mining.” This enables miners to mine both coins simultaneously without negatively impacting the operational efficiency of their mining operations.
What exactly is Ethereum?
Ether is the native cryptocurrency of the Ethereum network, while Ethereum itself is technically a blockchain. After bitcoin, ether (ETH) is currently the most widely used cryptocurrency. Many new areas of decentralized finance (DeFi), such as decentralized applications (DApps), have been revolutionized thanks in part to the Ethereum blockchain. It is the driving force behind applications based on dynamic DeFi and nonfungible tokens (NFT).
Initially, Ethereum was implemented as a Proof-of-Work (PoW) blockchain; however, the platform is currently undergoing a transition to a Proof-of-Stake (PoS) mechanism, which is known as a consensus layer upgrade. The Proof-of-Stake (PoS) consensus method will be utilized by Ethereum’s consensus layer in order to verify transactions through staking.
The addition of a consensus layer is a multi-stage upgrade that will increase the scalability and security of the network. The modernization is expected to be finished by the year 2023. It will result in a significant increase in the transaction speed of the network while simultaneously lowering its transaction costs.
As a result of the recent uptick in activity associated with DeFi and NFTs, Ethereum’s ever-increasing gas prices have become a source of growing concern in recent months. In March of 2022, the average transaction fee was approximately $15, which was an amount that was simply unreasonably high for anyone looking to carry out a transaction, particularly one of a smaller denomination.
Ethereum, the world’s second largest blockchain and the second most decentralized in practice, makes it possible for the applications and smart contracts that are hosted on it to operate without any hiccups. Applications built on Ethereum are known to function without any possibility of fraud, interference from a third party, or centralized control.
Is it wise to put your money into Dogecoin?
Any investment in cryptocurrencies requires careful consideration of a number of important factors, including the potential applications of the project, the backing of the community, and the developers working on the project. Even though Dogecoin does not yet have a legitimate use case, the community behind it is very supportive.
The Dogecoin community is notable within the realm of digital coins due to the fact that it is one of a kind. The Dogecoin community has always worked together when it comes to organized actions such as giving support to individual athletes and sports teams. The community has been extremely helpful in generating support for the cause and encouraging investors to get involved.
When it comes to cryptocurrency investments in general, the choice ultimately boils down to personal preferences and the trading strategies that an individual employs. In the same way that you would with any other digital coin, you need to keep in mind the speculative nature of DOGE before making any kind of decision involving it. Having said that, it is essential to conduct research before making an investment.
Where can I purchase Dogecoin?
Buying Dogecoin is accomplished in a manner that is analogous to buying other cryptocurrencies. You will first need to locate an exchange that deals in DOGE and then a wallet that is capable of holding this currency before you can proceed. You can purchase Dogecoin with your local fiat currency or trade it in for any other cryptocurrency you might already have in your possession.
If you are already involved in trading cryptocurrencies, you probably have a wallet that is compatible with Dogecoin. If, on the other hand, this is your first time investing in cryptocurrencies or if your current wallet does not support DOGE, you will need to locate an appropriate cryptocurrency wallet before you can purchase Dogecoin.
You have the option of using a piece of hardware or a software application as a cryptocurrency wallet. It is possible that you will choose to store your Dogecoin in paper wallets in order to ensure its safety. You have the option of selecting any of these, though the vast majority of people go with software programs. Your choice will depend on how convenient they are for you.
Is purchasing Ether a wise financial move?
ETH is one of the most well-known digital coins; however, if you are new to the industry, you may be wondering if Ethereum is suitable for investment. This is a natural question to ask because Ethereum is among the most well-known digital coins. It’s possible that a cryptocurrency that has a market cap of $143.50 billion is a viable option that should be investigated.
Because of the recent upgrade to its consensus layer, you might want to consider investing in Ethereum. A successful transition will not only solidify its position as the primary pillar upon which DeFi operations are built, but it will also almost certainly cause an increase in the price of Ethereum.
The practical application of blockchain technology is showing no signs of slowing down, and one of the most important first-generation blockchains is Ethereum. Ethereum is the second most well-known blockchain after Bitcoin, which was the first blockchain ever created. It serves as the groundwork for a vast number of decentralized applications and metaverses. Ethereum will become an essential component as these applications are gradually adopted by the general public and become integrated into mainstream culture.
Ethereum has everything it needs to be a part of the economy of the new age, including the ability to facilitate applications such as online payments, the distribution of loans, insurance, and trading with no restrictions. Tokenization of a wide variety of mundane activities, including voting, voting rights, artwork, mortgages, patents, and person-to-person (P2P) transactions, has been made possible by Ethereum.
Ethereum is the first blockchain that implemented smart contracts, which are computer programs that run themselves without human intervention. The idea of ownership in the digital realm has been elevated to a new level as a result of this. In addition to this, it maintains its decentralized nature despite the vast number of validators.
Where can I purchase Ethereum?
The first thing you need to do in order to purchase Ethereum is to register for an account with a cryptocurrency exchange that offers Ether trading. It is not going to be an issue because ETH is one of the most well-known digital coins; however, you may want to take into consideration aspects such as the fees they charge and the amount of time they have been operating their business.
In addition to this, you will need a wallet to which you can send and receive Ether. Because you can reasonably expect every wallet around to support Ether, this should also be a hassle-free process for you to complete.
Comparing Dogecoin and Ethereum: The Good, the Bad, and the Ugly
First, let’s discuss the perks and drawbacks of investing in Dogecoin, and then we’ll move on to Ethereum:
Dogecoins
Pros
- Transaction fees for Dogecoin are significantly lower than those for other cryptocurrencies such as Ether, Litecoin, Stellar (XLM), and many others.
- The Dogecoin community is very supportive of the cryptocurrency. If the community has been able to bring it this far, then perhaps it can also take it further!
- Dogecoin is an excellent choice for individuals who are interested in engaging in humorous cryptographic experiments.
Cons
- Because Dogecoin does not have any real-world applications, it will be challenging for it to thrive in the long run.
- Dogecoin is driven by sentiment rather than substance.
- The cryptocurrency is not widely accepted outside of its core community.
- Only 33 transactions are processed on the Dogecoin blockchain every second, which is an extremely low number in comparison to other blockchains such as Solana (SOL), which can handle 50,000 transactions per second.
Ethereum
Pros
- Mining Ethereum is much simpler than mining Proof-of-Work (PoW) cryptocurrencies like Dogecoin.
- The sheer number of validators on the Ethereum network has helped the cryptocurrency garner a large support base.
- Ethereum is decentralized in a practical sense due to the fact that there are thousands of validators located all over the world.
- Ethereum’s global user base ensures that the platform is available at all times.
- Ethereum serves as the base blockchain for thousands of different decentralized applications. On the blockchain, there were more than 2,800 decentralized applications as of the month of May in the year 2020.
Cons
- The total number of tokens that can be generated with Ethereum has no upper limit. As a result of the rapidly increasing number of tokens in circulation, inflation is almost certain to develop over time.
The gas fee frequently becomes an annoyance, which discourages users of decentralized applications (DApps) as well as traders.
- The number of transactions that Ethereum can process per second is currently around 30, which is far too low. Ethereum 2.0, on the other hand, is expected to increase that number to 100,000 transactions per second.
Comparing Dogecoin and Ethereum: The Way Forward
One thing that you can be certain of, regardless of whether you are purchasing Dogecoin or Ethereum, is that you will be required to comply with an increased number of regulations on exchanges. Know Your Customer (KYC) and Anti-Money Laundering (AML) are two practices that are mandated to be implemented by exchanges in almost every country. In order to verify their identities and addresses, account holders will need to share documents with one another.
The state of the cryptocurrency market is something that nobody can forecast with any degree of certainty. At the time of investment, taking into account the fundamentals of both cryptocurrencies and inputs in order to make the most informed decision possible is the most effective way to move ahead. You can reasonably anticipate doing well in the market if you are willing to maintain your position for an extended period of time and diversify the holdings in your portfolio.
