In years past the internet was suddenly inundated with pictures of an adorable Japanese dog covered in Comic Sans captions. This dog soon became the mascot of a new cryptocurrency, named Dogecoin in honor of its canine inspiration. Dogecoin has not gained the wide acceptance of other cryptocurrencies, but a significant number of retailers accept the currency – Dogecoin's business directory boasts over 200 companies that accept it as a form of payment. Dogecoin also has an enthusiastic and committed user base, and holders of the currency have engaged in several charity campaigns to help establish its legitimacy.
Under the hood, Dogecoin is essentially a proof-of-work currency. Dogecoin's main technological difference is its hashing algorithm – the code it uses to create the difficult math problems that power its proof-of-work scheme. Dogecoin uses an algorithm called Scrypt, which is designed to require more computing power to run than the traditional SHA-256 algorithm. Scrypt was originally introduced in the hopes that it would break the dominance of users running specialized hardware to monopolize mining, but it turns out that Scrypt can be run on specialized hardware as well, so that benefit has been negated.
The main advantage of a Scrypt-based cryptocurrency today is that many of these currencies allow "merged mining" with other compatible currencies. This means that users of one Scrypt-based cryptocurrency can compete to verify transactions on multiple different currency networks at once without having to expend more processing power. This can offer greater financial rewards and improve a currency's energy efficiency, by allowing one processor to be doing multiple jobs at once. Some SHA-256 currencies also allow merged mining with Bitcoin, but the practice is much less common.
Dogecoin is a highly secure cryptocurrency, and its dedicated community helps to ensure that it remains a medium of exchange as opposed to a short-term investment. Its value has also remained fairly stable, although it was affected by the recent cryptocurrency crash along with almost every other cryptocurrency. The main concern with Dogecoin is its extremely low per-coin value, which stems in part from the extremely high coin supply.
As a community of forward-thinking cryptocurrency enthusiasts, Dogecoin stands out as a welcoming and lighthearted group. As a serious financial investment, it lacks value. Overall, though, the monetary risk of trying Dogecoin is incredibly low.