The first cryptocurrency rage was Bitcoin in 2009, but now there are thousands with their own native blockchain. While scepticism towards these digital alternative currencies is natural, it’s also garnering a lot of excitement and people jumping into the cryptocurrency pool without first learning how to buy, sell, trade, or mine the cryptocurrency. One of the most popular alternative currencies is Dogecoin, but is mining this alternative currency worth it?
Benefits of Cryptocurrency
The reason many people love cryptocurrencies is that there are so many benefits that go with them. Not only is there no company owner or central authority, but people can transact directly with each other. Below are a few more benefits cryptocurrencies have to offer.
All people need are a smartphone app and a hardware wallet and they can send and receive cryptocurrencies to each other. You can receive some types of cryptocurrencies at a Bitcoin ATM and you don’t need a bank account.
One of the major benefits cryptocurrencies have is that they’re based on blockchain security and cryptography, which makes them one of the most secure forms of payment. The security of the cryptocurrency is determined mostly by hash rate, with higher hash rates being more secure.
Hedges Against Inflation
Cryptocurrencies have a limited supply, which prevents inflation that happens with paper money and coins. Inflation occurs when banks and governments print more money, thereby increasing the supply and lowering the value of the money.
What Is Dogecoin?
Billy Markus and Jackson Palmer created Dogecoin in 2014 as a joke since they based the mascot off a dog meme. While Dogecoin crashed and stagnated for several years, it is now the 10th largest cryptocurrency based on market cap and reached a high of $0.70 in 2021.
How Does Dogecoin Work?
Bitcoin mining involves using machines to create a hash, which is a fixed length of code, that is equal to or lower than the target value of the new block. The person who owns the machine who creates the code that meets the target is granted the right to add new data to the next block and they receive crypto coins at the same time.
How Do You Mine Dogecoin?
According to SoFi, “Mining Dogecoin involves running powerful computers known as nodes that process transactions for the network. In exchange for this work, miners receive block rewards of newly minted DOGE.” Before you start mining, you need to know that the computer you use for mining will create a lot of heat, so you may need additional cooling equipment, especially if you wish to run the mining software 24 hours a day for maximum profit. To mine Dogecoin, you need a DOGE wallet, a desktop or laptop computer, reliable electricity, and basic computer knowledge.
Is It Worth It To Mine Dogecoin?
If you’re considering mining Dogecoin or any other cryptocurrencies, there are many factors you need to consider. One consideration is the cost of electricity in your area as some cities have higher KwH rates than other cities and towns. You might consider using hydroelectric, wind, or solar power for your mines for more profitability.
Other considerations to keep in mind are the software you need, the hardware you need, and the price of DOGE in relation to the local currency or the value of the cryptocurrencies. After taking in all the factors, the choice to mine DOGE or other cryptocurrencies is entirely up to you.