Bitcoin vs Dogecoin: An Honest Comparison

In the modern world of cryptocurrencies, bitcoin and dogecoin are two names dominating the headlines. However, both cryptocurrencies have their own unique properties that make them market favorites. 

In this article, we will talk about both currencies. But before we do that, let’s do a quick introduction to both digital assets. 

Table of Contents

1. What is Dogecoin?
2. What is Bitcoin?
3. Bitcoin vs. Dogecoin: Market Supply and Concentration
4. Bitcoin vs. Dogecoin: Mining and Transactions
5. How Bitcoin and Dogecoin Transactions Take Place
6. Day-to-day Usage Between Dogecoin and Bitcoin
7. Dogecoin vs. Bitcoin: Volatility

What is Dogecoin?

Dogecoin started as a joke back in 2013 when IBM engineer Billy Markus and Adobe engineer Jackson Palmer created it. They wanted to make a cryptocurrency that sounds simple and friendly, unlike Bitcoin. 

The meme that featured Shiba Inu was a thriving meme at that time and was featured as the coin’s logo. Fast forward to 2021, the mass adoption of cryptocurrencies like Bitcoin and Ethereum did lead to some hype around Dogecoin as well. However, the coin got a real boost when Elon Musk expressed his support in multiple tweets. 

Soon afterward, the coin was trending on TikTok.

What is Bitcoin?

On the other hand, Bitcoin is the pioneer of cryptocurrencies, and its birth dates back to 2009. The coin was launched by an unknown individual who used the pseudonym Satoshi Nakamoto. However, that is all we know, as the developer kept their identity a secret to promote the decentralization of the newly introduced technology. 

The very first cryptocurrency faced many challenges before being recognized by entrepreneurs, people in business, government officials, etc. Thanks to its origin, there are now thousands of different digital currencies circulating in the market. 

Bitcoin vs. Dogecoin: Market Supply and Concentration

The total supply of Bitcoin was pre-defined at 21m. We already have 18.8m Bitcoin circulating in the market, leaving behind a very limited value before the mining stops for good. This allows the coin to have a relatively high value and respond effectively to the demand and supply theory.

Limited supply and high demand lead to a higher value, so it is no surprise that the coin currently stands at a value of around $48,000 on the 26th of August, 2021, only after dropping from its peak value of around $63,000 reached on 13th of April, 2021.  

Both cryptocurrencies exist in the form of a digital ledger called the blockchain. Blockchain records all of the transactions. 

To mine a coin, miners compete against each other to find solutions to mathematical problems. All these problems hold information for coin transactions and use cryptographic hash functions. Solving each problem rewards miners in the form of small amounts of cryptocurrency. High-performing computer hardware is required to perform mining. 

Mining Bitcoin requires high electrical power and powerful hardware capabilities.

As a result, 65% of Bitcoin’s miners are in China because of the access to cheap electricity and hardware components.

This makes it unfair to users around the world. The coin is so concentrated that the top 2% of its users currently hold 95% of Bitcoin’s supply.

In contrast, Dogecoin is reported to have no market cap and already has a circulating supply of $131.8b. The unlimited supply of Dogecoin makes it widely distributed, available, and affordable to almost everyone who wishes to use it. 

It was designed this way to keep people from hoarding and make it well distributed in the market. We can say that this has been going according to plan so far. The coin currently stands at a value of $0.1923.

Bitcoin vs. Dogecoin: Mining and Transactions

Bitcoin mining is a very high maintenance task that requires costly investments. It not only involves high electricity power or powerful computers but also takes a long time. A new block in Bitcoin is discovered every 10 minutes, whereas it takes only a minute for Doge. To find the detailed analysis of mining comparisons, click here. 

Furthermore, being a Bitcoin miner will not always be beneficial because once it reaches the supply limit, the only rewards left for miners will be transaction charges. On the flip side, Doge offers an annual supply of $5bn, which is much more profitable for miners in the long run.

Bitcoin is a decentralized network that does not charge any transaction fee. Miners need to mine a new block of transactions, and that is the only delay. This is why many people pay a tip to the miners to speed up their transactions. A mandatory fee is only charged if you involve any third party in the transaction, like an exchange. 

Dogecoin has a very different approach to transactions. It charges a fixed fee of 1 Doge per kilobyte of data transferred. This leads to average charges of 2.64 Doge per transaction. This fee was implemented in 2018 and was negligible back then. However, it now seems like a huge surge in the price. 

How Bitcoin and Dogecoin Transactions Take Place

Here are the details of how Bitcoin and Dogecoin transactions take place:

Bitcoin

The transaction from one wallet to another takes place in a very secure manner. When an amount is transferred, the transaction has to be recorded on the blockchain. After being registered on a Bitcoin block, the record for the transaction is added to the digital ledger. This is why bitcoin miners play an essential role in the completion of any transfer. 

A Bitcoin transaction requires three confirmations before it can be considered complete and the receiver can spend the amount. The first confirmation comes when the transaction is added to the block, and then the following confirmations are from every block that adds it. The transferred amount is only spendable once it has received all three confirmations. 

Dogecoin

In the case of a Dogecoin transaction, the number of confirmations required is variable. This change occurs due to the changing requirements of the receiving address. Any address that requires 2 confirmations will most likely complete transactions faster than an address that requires 4. Coinbase requires 60 confirmations for Doge whereas Kraken asks for 40.

Day-to-day Usage Between Dogecoin and Bitcoin

Bitcoin being the first of its kind has faced challenges to be accepted by users for everyday tasks. We have seen it all from strictly being opposed by everyone in 2009 to becoming one of the most hot-topics in 2021. Bitcoin is now becoming one of the most common means of payment.

Bitcoin stands as the third most frequently used payment method in Italy, only behind PayPal and PostePay.

Bitcoin is now being used to purchase villas, get COVID tests, pay taxes, and even for dental services in some states. 

So, Bitcoin is now being used as more than just an investment tool and becoming an everyday means of payment. It is now also being used to transfer money because there are no intermediary parties involved. 

Thanks to Bitcoin paving the way for others, Dogecoin is fully benefiting from the situation as well. The newly famous cryptocurrency is increasingly becoming mainstream for different payment methods. Along with the world-renowned basketball team, Dallas Mavericks, over 48 other businesses and retailers accept payments in the form of Dogecoin. 

Dogecoin vs. Bitcoin: Volatility

Despite all the factors, the one thing that remains common in both coins is volatility. You can never be sure of what is more likely to rise in value and what will drop. So, you need to be aware that investing in Bitcoin could mean huge amounts of money losses (as well as gains).

Dogecoin currently stands as a safe option because of small investments required to mine or purchase assets.

But you must not expect Doge to reach the same level in value as Bitcoin in the near future. Doge is expected to reach a value of $1 and become a highly usable and distributed asset in the market, according to hints from Musk.

Let us know on Hackernoon Community what you like or don't like about Dogecoin and Bitcoin!

DISCLAIMER: The views in this article belong to the author alone. Nothing in this article constitutes professional investment advice. Please do your own thorough research before making any investment decisions.