The Difference Between Bitcoin and Dogecoin Explained

Have you ever heard the story of the bitcoin pizza? Back in 2010, an early adopter of bitcoin purchased $41 worth of Pizza Papa Johns pizza using 10,000 bitcoins. This is widely believed to be the first time a real-world product was purchased using a digital currency.

Fast forward to 2021, and those 10,000 bitcoins would be worth something like $380 million.

While most people would probably be kicking themselves, the computer programmer who bought the first bitcoin pizza says he has “no regrets.” A lot has happened in the world of cryptocurrency since bitcoin was first introduced in 2009. With thousands of other cryptos out there, one that really made a splash in 2021 was dogecoin.

What’s the difference between bitcoin and dogecoin, though? Let’s take a look at what you need to know.

What Is Bitcoin?

Bitcoin is the most famous cryptocurrency as well as the original decentralized digital currency. People can buy Bitcoin to use as a currency but they can also purchase it as an investment. Peer-to-peer technology makes it possible for people to make instant payments between themselves or to businesses in the form of bitcoin.

Originally created in 2009, bitcoin has become by far the most infamous cryptocurrency. On April 13, 2021, bitcoin reached its all-time high. At this point, the cost for one individual bitcoin was a staggering $64,853.10.

Bitcoin is not a paper currency. Instead, it is a digital currency. Paper money such as the American dollar or the euro is controlled by centralized authorities such as central banks, while bitcoin is both created and held digitally.

Beyond the fact that bitcoin isn’t controlled by any type of centralized monetary authority and is instead decentralized, there are a number of other important differences between bitcoin and traditional currencies. One of the benefits of bitcoin is that you can make purchases in a relatively anonymous way, meaning that you can transfer and receive bitcoins without having your personal information attached to them.

That being said, government agencies are getting better at tracking digital currency and its movements. This means that you should be careful to assume that your bitcoin transactions are truly anonymous anymore.

You’ll find that opinions about cryptocurrency run the gamut depending on who you are speaking with. Some people think it’s the future, while others think it’s a stupid trend that’s going to burst at some point in a catastrophic way. In fact, Warren Buffet himself has voiced his personal distrust of the currency.

No matter which side of the aisle you’re on, you have to admit that there is something very enticing about people being able to take back control of their own financial transactions.

What Is Dogecoin?

This is another one of the thousands of types of cryptocurrencies out there. Initially created in 2013, we have two software engineers with a sense of humor to thank for Dogecoin. Even though this open source cryptocurrency was originally created as a satire of bitcoin, Dogecoin itself experienced remarkable price increases in 2021.

Dogecoin is also a peer-to-peer cryptocurrency that runs on blockchain technology. For nearly a decade, Dogecoin received little to no attention from the public. It was inspired at first by the popular internet meme of the Shiba Inu dog that has become world-famous at this point.

Incredibly, Dogecoin grew rapidly in popularity during the pandemic. Part of its popularity was due to it being discussed on Twitter by Elon Musk. This meant that all of a sudden, everybody knew about it and was talking about it.

As of May 8, 2021, Dogecoin increased more than 15,700% from the levels it started at during the beginning of the year.

What Is the Similarity Between Different Cryptocurrencies?

Before we talking about the difference between bitcoin and dogecoin, let’s talk about what it similar between all of the different types of cryptocurrencies. There were more than 6,500 cryptos as of the fall of 2021. The world of crypto has grown to be one that is complex and vast, meaning that crypto investments require quite a bit of research ahead of time.

Cryptocurrencies are built using blockchain technology. As a part of this technology, a distributed ledger is used so that digital currency can be created, tracked, and managed. This is basically like a digital receipt that is ongoing, keeping track of all of the various transactions that are made using a particular digital currency.

This ledger includes keeping track of all of the owners of the digital currency as well as the amount of the currency that they own.

This receipt is constantly being verified by a network of computers that is decentralized. The purpose of this is to make sure that the digital currency is accounted for and functioning correctly. It’s also a method used to help prevent and reduce fraud.

Cryptocurrencies can be “mined” using powerful computers. By performing complicated math calculations, these “miners” (as the computers are known) are responsible for creating cryptocurrencies. Cryptocurrency can also be earned by participating in the processing of currency transactions.

Since bitcoin was first invented, the movement surrounding cryptocurrency has been growing. As more and more people have been growing interested in digital currency, other parties have been taking notice. For example, it’s known that both the FBI and the IRS have gotten more advanced at tracking the transactions people make as well as freezing accounts.

What Is the Difference Between Bitcoin and Dogecoin?

While Dogecoin and bitcoin are both cryptocurrencies, there are a number of different things that distinguish them from one another. Let’s take a look at what sets these two digital currencies apart.

The Purpose of the Currency

The purposes behind creating bitcoin and dogecoin are kind of on opposite ends of the spectrum. Bitcoin was initially made as a sincere attempt to create a currency or a store of value. Dogecoin, however, was created as a joke that satirized the rising popularity of bitcoin as a digital currency.

The Market Capitalization

Another big difference between these two is the market cap. A quick econ lesson before we continue: market capitalization is what you get when you multiple the total number of existing coins by the current trading price.

When you look at market cap, bitcoin has dogecoin beat. Dogecoin’s market cap is only a little over $41 billion, while bitcoin has a market cap of more than $1 trillion.

Bitcoin is really the mainstream cryptocurrency at this point. It has been getting a lot easier to access and use bitcoin over the years. While dogecoin might have made a big splash in 2021 and might be a popular topic in certain circles, it’s much less well known than bitcoin by the general public.

The Coin Issuance

Lastly, another difference is how many coins can be issued of each of these currencies. There is a hard limit on precisely how many bitcoin can be issued. This leads many to believe that the price will continue increasing over time as money continues flowing into the currency and demand rises.

This creates an interesting problem, though. This hard limit of 21 million coins makes bitcoin great for traders, but it also makes it harder to use bitcoin as a legitimate currency.

A part of the joke with dogecoin is that there is no limit at all to coin production. Initially supposed to be a funny bit of satire, the unlimited issuance cap seems to not have bothered all of the people who helped the currency “moon” in 2021.

Buying Bitcoin: What to Know

At first glance, you might think that investing in bitcoin might be too complicated for anyone who isn’t super techy. However, it’s actually pretty simple at this point.

Before you invest, you’ll need a cryptocurrency exchange account, a secure internet connection, a payment method, and personal ID if you’re using a KYC platform.

You can pay for bitcoin using credit cards, debit card, and bank accounts.

Whether you are buying dogecoin or bitcoin, you’ll need to choose a crypto trading venue or service. Once you have chosen one, it’s time for you to connect your payment option an exchange. This will include entering personal information and maybe even pictures of your social security number or driver’s license.

It’s worth understanding that there are fees per transaction when you use exchanges. There is also a processing fee when you use credit cards.

The next step is to place your order. The liquidity of bitcoin and other cryptocurrencies have grown significantly since digital currency has gotten more mainstream.

Once you’ve ordered your crypto, you’ll need a safe place to store it. You’ll need a cryptocurrency wallet where you can securely store your digital assets. You can use the wallets provided by most exchanges, but many experts suggest keeping your digital currency in your own wallet off the platform.

You can either have a hot wallet or a cold wallet for your digital currency. A hot wallet runs on devices that are connected to the internet, while cold wallets are stored on devices that aren’t connected to the internet.

You can also use bitcoin ATMs to purchase bitcoins. These are bitcoin exchanges that you can access in-person. At these machines, people can put money into the machine in order to buy bitcoin and have it transferred to their digital wallets.

This concept has been getting more and more popular in recent years. Even Walmart is flirting with the idea of letting customers purchase bitcoins.

Check out this article to learn the answer to the question: how do bitcoin ATMs work?

You can also use P2P exchanges and mainstream brokerages to buy bitcoin. However, there is a lot of uncertainty around cryptos regulatory status, so there are only a few mainstream brokerages that offer this service.

Buying Dogecoin: What to Know

There are plenty of stories that have gone viral about people investing a small amount of money into dogecoin and they are now walking amongst the millionaires. However, don’t get too excited by these stories. For every one person who made an incredible win, there are likely hundreds of people who experienced painful losses in the same currency.

Dogecoin is uniquely volatile because there is no cap on its issuance. The fact that dogecoin is uniquely volatile is worth repeating here, considering that cryptocurrencies are also considered to be fairly risky investments.

If you do decide to buy dogecoin, you’ll want to pick out a cryptocurrency exchange to use. Coinbase is one of the big ones, but there are a number of popular exchanges.

Crypto Investments: Are They Right for You?

Whether you are thinking about making crypto investments or you’re just interested in dogecoin and bitcoin from a cultural standpoint, there’s no shortage of interesting tales to tell in the world of crypto. If you are thinking about making an investment in the world of crypto, it’s always a good idea to make sure you do your research.

Just because someone you know made a killing investing in a cryptocurrency doesn’t mean you’ll be able to repeat the same thing. It also doesn’t necessarily mean they know what they’re doing. It’s possible that they got lucky and are attributing their success to skills rather than luck.

Or, maybe they really are a genius when it comes to digital currency investment. Either way, you’ll always want to spend time doing your own due diligence. Otherwise, you could end up feeling pretty bummed when you watch your hard earned money flush down the tube.

Did you enjoy this article about the difference between bitcoin and dogecoin? If so, be sure to check out the rest of our blog for more informative articles!

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