Hello income streamers! Sorry that I’ve been gone lately, I’m in the last two weeks of my school year and I’ve had tons of finals and homework. But I’m back now, and would love to tell you all about the first coin I ever loved: Dogecoin!
Dogecoin is a type of cryptocurrency that was spun off of Litecoin, a Bitcoin spin-off itself that uses the Scrypt algorithm o mine and validate transactions. This algorithm was intended to use less computing resources than SHA-256, the one Bitcoin uses, but the competition among miners has made it just as demanding. So, while mining dogecoin may no longer be feasible, there’s plenty of ways to get some!
“And why would I want some, Steve? Isn’t this coin based off a meme?” I’m glad you asked! What makes dogecoin special is the culture surrounding it. A lot of the action in our community is on Reddit at /r/dogecoin and it is probably the friendliest place on the Internet. They are incredibly beginner friendly, and most of the exchange of dogecoin actually occurs through ‘tipping’, when people give away dogecoin for a funny comment or a good article post. So if you’re looking for dogecoin to play around with and to learn about cryptocurrency, hop on over and participate in a giveaway! There’s also plenty of faucets around, but they tend to give out ridiculously low amounts.
Trading dogecoin can also be quite profitable, if done right. Dogecoin tends to be a stable coin, given its established and devoted user base, but can sometimes be vulnerable to pump-and-dumps where groups buy up a lot of dogecoin at once to pump its price higher, only to dump it at the top and let the price crash. These events are rare, and don’t hurt long term investors since the coin price ends roughly where it starts. A good long term strategy for trading is to buy the same amount every month, similar to the MoonPledge, so that you don’t get caught trying to time the market and instead ride the upward trend of dogecoin.
Another thing that makes dogecoin unique is that there is much higher inflation, making each dogecoin worth very little compared to 1 Bitcoin. This may seem bad, but actually makes owning dogecoin a lot more fun, as you get to tell your friends you’re a millionaire in dogecoin :). And that’s the best part about dogecoin: its so easy to spread the word! When people see you enjoying your cryptocurrency and using it to tip other friendly folks on the internet, buying cool shirts, or sponsoring a NASCAR driver, they get interested in the important movement of cryptocurrencies as a whole. So get on over to Reddit, a faucet, or a friendly doger and get involved!
A big part of my financial strategy revolves around cryptocurrencies, the beauty being that I can profit both in the sort term and long term from them as an investment, while also supporting a technology that can impact the very structure of our economy. And in a world with “smart” everything, its pivotal that you all understand the smart money of the future.
What is a Cryptocurrency?
A cryptocurrency is any form of currency whose transactions are cryptographically validated by a decentralised network. More simply put, it is a type of money that derives its “authority” as real money from a mathematically proven history of transactions rather than the arbitrary say-so of a centralised authority. This kind of money gives power to everyday citizens to control our currency and not be left at the mercy of the whims of a Federal Reserve or Central Bank.
The first technology to use this concept on a large scale was the famous Bitcoin. Since its transactions were validated by math and not bankers, there was no way for the government or anyone else to track who owned which Bitcoin when. This anonymity revolutionised online economics and naturally lead to a black market, while also having legitimate uses. After the government’s crack down on the largest Bitcoin vendor, the Silk Road, Bitcoin went largely clean and is used for legal purposes in the vast majority of transactions.
The mechanics of Bitcoin involves two groups: the miners and the users. Miners are the people who connect their computer to the Bitcoin network to validate transactions. Since these transactions must be mathematically unable to forge, validating transactions requires an enormous amount of computing power. When the network was small and there were few miners competing among each other to validate a “block” of transactions before other miners did, many people just mined with laptops. But as more transactions flowed in and more miners entered the game, people switched from graphics cards to specially built mining cards and eventually were forced into pooling their resources among miner allies. Miners get rewarded 25 Bitcoin for validating a transaction, a vast sum that now ends up getting split among 1000 or so pool mates.
This serves the dual purpose of introducing new Bitcoin to the system as well as validating transactions. Miners tend to sell their rewards off for fiat currency or other cryptocurrency and the newly mined Bitcoin enter the system of users, being traded and used for purchase.
As an open source project, Bitcoin opened a world of opportunity for developers to create new coins based off of Bitcoin. This lead to a whole world of altcoins all claiming to make improvements off of Bitcoin’s model. These improvements include new validation algorithms, new ways to distribute coins and coins revolving around drawing support to special causes. I hope to take you through all these altcoins over time, but for now I hope you have a solid understanding of cryptocurrencies and Bitcoin. Until next time, keep on earning amigos!