Dogecoin vs. Bitcoin: How Do They Compare?
Over the last years, there has been a distinct shift toward virtual currencies. While most people have only heard of Bitcoin, there are now over 20,000 digital currencies on the market.
Clearly, many people are looking to buy more than just Bitcoin. They want to diversify while also investing in digital currencies that offer promising futures.
One such currency that you should learn more about is Dogecoin. While it doesn’t possess the same decades of use or millions of dollars in funding, it’s still an intriguing currency to invest in.
But what’s the deal between Dogecoin vs Bitcoin? Which one holds more promise for an investor? We will compare and contrast these two currencies, so you know which is the better option for you?
Keep reading!
Dogecoin vs Bitcoin: An Overview
Dogecoin and Bitcoin are digital currencies used to purchase goods and services online. However, there are some key differences between the two. For one, Dogecoin is much cheaper than Bitcoin.
One Bitcoin is currently worth about $19,668.00, while one Dogecoin is only worth around $ 0.060. This means you can purchase a lot more Dogecoins for the same amount. Another difference is that Dogecoin is faster than Bitcoin.
Bitcoin transactions can take up to 10 minutes to process, while Dogecoin transactions only take about 1 minute. Finally, Dogecoin has a much higher supply than Bitcoin.
There are currently around 132.7 billion Dogecoins in circulation, compared to about 19.1 billion Bitcoins. This means that it is easier to find someone willing to accept Dogecoin as payment.
Parallels Between Dogecoin and Bitcoin
Referring to the fact that Dogecoin was, at first, a joke duplicate of Bitcoin, and even relied on much of Bitcoin’s source code, it’s natural for both to have similarities. Quite a lot, in fact, that it’s easy to see what those common points are.
One example is that both cryptos have a proof-of-work (PoW) consensus system with miners. In a blockchain PoW, transactions are recorded in blocks. For each full block, certain users will call on miners to validate that block.
The process calls for miners to use special hardware to track down a lone-existing hexadecimal code for every block. Once the 64-digit hexadecimal code is located, the entire block is deemed valid and will now be accepted into the blockchain.
In return, miners are paid for their work in a network’s cryptocurrency. As a result, more of an asset ends up circulating in the market. For either Bitcoin or Dogecoin, miners can work alone or with a team.
On the other hand, both cryptos can be used for storing and transacting value. Merchants worldwide may take one or both as payment for their products and services.
However, that’s all there is when it comes to the parallels between Dogecoin and Bitcoin. Although Dogecoin was based on Bitcoin, there have been many changes over the years that make the two cryptos inherently unique from each other.
Dogecoin Enhancing Bitcoin
Despite their many similarities, Bitcoin and Dogecoin are hardly the same. In fact, they can have quite dramatic differences.
For instance, the Pow method for Bitcoin is based on the SHA-256 hash standard, a modern, widely accepted encryption system developed by the U.S. National Security Agency laid down in 2001.
Dogecoin, however, uses Scrypt, the hash standard that came to public attention through Litecoin. The goal of Scrypt is to make crypto mining easier than mining on the SHA-256 network.
On a PoW blockchain network, only the first successful miner receives a reward. As a result, users that rely on less potent hardware make a lot less than those with bigger money to invest in stronger hardware, such as companies and rich individuals.
Nonetheless, certain graphics cards were created for PoW mining, such as the Application-Specific Integrated Circuit (ASIC). A miner who uses ASICs has better chances of getting a reward than those who don’t. That also means they end up with more mines than anyone else.
One thing about the Scrypt standard, however, is that it is impervious to ASICs. Blockchain networks that run with Scrypt were created to ensure that common mining hardware will continue to work. That simply means mining will be easier because of the absence of ASIC support.
Advantages of Bitcoin Over Dogecoin
Bitcoin is largely advantageous over Dogecoin despite the latter’s strong points. Here are some key pros of Bitcoin:
Value
To put it simply, Bitcoin’s value is drastically higher than Dogecoin’s. Bitcoin’s reached an all-time high of over more than $68,000 – a far cry from Dogecoin’s highest at around $0.74. Although this price difference can have good and bad effects, it’s undeniable that more people invest in Bitcoin because of its long-term reliability.
Bitcoin Improvements
On top of that, Bitcoin is currently being improved, and there are forecasts of Dogecoin sinking into irrelevance as time goes by. One recent improvement with Bitcoin is users now being allowed to make smaller transactions, like buying a single product using what is known as Lightning Network off-chain tunnels.
These two tunnels are made available to two users entering instant transactions that require tiny fees. When they’re done, they can close the tunnel, and the transaction will be forwarded to the main network.
Although Dogecoin transactions are currently faster, they are believed to become eventually useless with the advent of the Lightning Network.
Investor Confidence
Of course, it’s undeniable that with Dogecoin’s meme history, institutions are going to have second thoughts about whether they should buy Dogecoin or buy Bitcoin instead. Bitcoin is held with more prestige, and high-value investors are more inclined to invest in Bitcoin instead, which has had a solid, respectable run ever since it was invented.
Inflation Resistance
Picture this. Dogecoin miners get 10,000 Dogecoin with every block they mine. That means 10,000 Dogecoin will be thrown into circulation in the network, which decreases the asset’s value with time.
On the other hand, Bitcoin is inflation-resistant. In fact, considering its hard capitalization and constantly dropping release rate, the value of Bitcoin logically goes up like gold.
Which Is Better, Dogecoin or Bitcoin?
The debate continues about Dogecoin and Bitcoin and which is superior to the other. Any investor who really knows what’s going on can only shy away from answering. But they can bring some very crucial points to the table, including the following:
Relatively Equal Performance
It’s important to see that notwithstanding their price differences, Bitcoin and Dogecoin performed very well for their investors at varying points in time. For example, in 2021, Dogecoin ran from below $ $0.032 to $0.682, which means early investors did make quite a profit.
Also, remember that such a hike in Dogecoin’s price was attributed to Elon Musk talking about it – not any technological news, which is the usual factor that drives changes in the blockchain.
At the same time, it’s also impossible to predict whether this kind of development can repeat itself for Dogecoin moving forward.
Scarcity Points
Of course, there’s that issue with Dogecoin always throwing new coins around the network, devaluing the asset continuously as a result. This is one of the biggest disadvantages for those who invest in Dogecoin.
On the other hand, Bitcoin is designed to create the exact opposite: an increase in value over time because of its scarcity. If people continue to buy the cryptocurrency and increase its demand, this will ultimately dictate whether its value will keep going up. In any case, all signs point to a rosy future for this crypto asset.
Short-term vs Long-term Returns
If you’re thinking of long-term returns, that is probably not within the design and realm of the Dogecoin network. With people’s unrelenting digging, which pumps up more and more Dogecoin, the value of the asset is going down with time by pure logic alone.
Still, we’re not discounting the potential contributions of continuing scalability and security upgrades in the network, which can possibly cover any loopholes for the crypto as a long-term investment.
When It Boils Down to History
Some people treat Bitcoin as a substitute for cash and Dogecoin as a store of value. In most cases, these people have even enjoyed returns following this philosophy.
From a historical perspective, Dogcoin’s numbers have consistently pointed to the network being for short-term gain and Bitcoin’s for the opposite. Of course, that can still change. If you want to learn more, keep reading and updating your knowledge.
So Is It Going To Be Dogecoin or Bitcoin?
There are clear advantages to both cryptos, so there’s no black or white answer to the question of which one wins in the toss between Dogecoin vs Bitcoin. However, considering the pros and cons of both as a whole, you can determine which one is more suitable for your current financial situation and goals.
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