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When it comes to cryptocurrencies, three distinct names often crop up, regardless of how well-acquainted one is with the crypto market. They are Bitcoin, Ethereum and Dogecoin.
Today, we’re going to find out how they work, what the differences are between them and, most importantly, how ordinary people like you can invest in them safely, efficiently, and properly, should you wish to do so.
Firstly, for the complete beginners amongst you, let’s look at what cryptocurrency is as a whole. If you’re acquainted with the world of decentralised currency, feel free to skip this part.
What is Cryptocurrency, Anyway?
The best way to explain crypto is as a digital form of currency. In the same way that you use GBP, USD, and other fiat currencies for saving and spending, you can use crypto to do the same. However, while central banks back fiat currencies, cryptocurrencies are not. Instead, they use an encrypted online ledger to validate and secure online transactions.
To obtain cryptocurrencies there are generally two ways to do so. Firstly, digital currencies can be mined by completing intricate maths equations to generate new coins or tokens. This is called “mining”.
The second and far easier option is to buy crypto through an online exchange or platform. There’s a lot to choose from, and some are superior to others but the most important goal is to avoid unreliable platforms that can lure you into a scam. So most experts recommend using platforms such as Immediate Edge, eToro, or Coinbase that have already proven as trustworthy.
Whereas fiat currencies are printed, cryptocurrencies are inherently digital. Some cryptocurrencies, like Bitcoin, have a limited supply which, like gold, gives them the status of being scarce assets.
Decentralised currencies are built on a new and revolutionary form of technology called The Blockchain. This highly secure, distributed ledger can create, track, and manage cryptocurrencies, but it has increasingly been used in various industries, from global tourism to maritime.
So, that’s the basics of cryptocurrency laid out. Now, let’s look at the three most common cryptocurrencies, their roles in decentralised finance, and how they’re all vastly different.
The Original Cryptocurrency: Bitcoin!
First up is the original cryptocurrency where it all started: Bitcoin (BTC). The most well-known crypto asset on earth first hit the market in 2009 when its mysterious creator, Satoshi Nakamoto, released a white paper outlining Bitcoin’s role as a decentralized blockchain currency. Now, in 2022, it is a formidable financial asset traded globally and surrounded by billions of dollars of activity daily.
Satoshi Nakamoto may have created Bitcoin, but that doesn’t mean he owns it. In fact, nobody does! Bitcoin is a network managed by tens of thousands of volunteers operating open-source software on their PCs called nodes.
They’re all securely recorded on the blockchain’s public ledger whenever a transaction is made using Bitcoin.
Remember when I said earlier that Bitcoin had been called “digital gold”? Well, that’s because it has a total supply of 21 million coins, whereas other inferior crypto assets have a total supply numbering billions. Put simply; time is running out to buy Bitcoin. When all 21 million are bought, they’re bought. When that day happens, many predict the value of BTC to skyrocket.
As well as buying Bitcoin people can also mine them using expensive computers. When you successfully mine a Bitcoin, the coin is yours to own. It’s that incentive that keeps the mining going. Naturally, competition is fierce.
The O.G. of Blockchains: Ethereum!
To introduce you to Ethereum (ETH), we first need to introduce you to a man named Vitalik Buterin. One of the youngest billionaires in the world, he is the brains behind the Ethereum blockchain.
Back in 2012, when he was aged just 17, Buterin was making money as a writer for Bitcoin Magazine, where he would often unveil ideas to make Bitcoin better. However, his suggestions often fell on deaf ears, so he threw caution to the wind and founded his own crypto project called Ethereum. It was a decision that would change the world!
Unlike Bitcoin, Ethereum is one of the world’s largest hosts of decentralised applications (dApps) and can also host non-fungible tokens.
However, like Bitcoin, Ethereum tokens (ETH) can be mined. Equally, Ethereum is a distributed network of nodes that verifies transactions that take place within it.
Dogecoin
And then there’s Dogecoin. This particular cryptocurrency began as a joke,, but it certainly isn’t now! The origins of Dogecoin stemmed from a popular internet meme called Doge.
The Doge meme was a photo of a Japanese Shiba Inu dog with a weird face and was usually chaperoned by funny text in broken English. Unlike most memes, Doge refused to die out. In fact, it successfully sold as a nonfungible token in 2021 for a price of more than 1,696 Ethereum, which was around $4 million at the time.
The creators of Dogecoin adopted the meme as the symbol of their crypto project back in 2013. Originally, it was intended as a joke, and, like the coin’s origins, its enormous fanbase is laid back and likes to see the funny side of crypto. However, they’re a force to be reckoned with.
For example, when the founder of Tesla, Elon Musk, publicly unveiled his support for DOGE, Dogecoin fans created a poll on Twitter asking if he should be made CEO. The vote was unanimous, and Musk was subsequently known as the “Dogefather.”
Compared to Bitcoin, Ethereum, and the complicated and intricate roles and technologies behind them, Dogecoin is far more marketable to the average investor. Like Ethereum, but in contrast to Bitcoin, its supply is unlimited.
Compared to Bitcoin and Ethereum, both of which now cost thousands of dollars to obtain an entire coin or token, Dogecoin is immensely cheaper to invest in. However, don’t let its low entry price fool you; DOGE has proven its ability to skyrocket and has made many investors rich beyond their wildest dreams. Just look at this guy!
The Differences Between Crypto’s Major Players
To sum up this guide to Bitcoin, Ethereum, and Dogecoin and how they differ from each other, there is a range of similarities, and stark contrasts between the three and all of them serve vastly different purposes in the world of cryptocurrencies.
All of them are popular, well-liked, and well-established digital currencies. But for beginners looking to invest slowly and affordably, Dogecoin is a good way to dip their toe in the water without the risk of buying an entire Bitcoin or Ethereum.
However, whatever cryptocurrency you decide to invest in, you should always be aware of the risks and volatility involved. Beware of false promises from illicit platforms and instead stick to tried and tested exchanges and platforms.
