Like other cryptocurrencies, Dogecoin can be bought on various cryptocurrency exchanges, including Coinbase, Kraken and Gemini, among others. Basically, a cryptocurrency investor has to sign up for an account and fund it. Some exchanges will only accept cash, such as a transfer from a bank account. Others allow the use of credit cards. But buying crypto with plastic can turn out to be an expensive proposition, due to additional fees.
Once an account is set up, an investor can then place an order to buy the cryptocurrency. This involves searching for the cryptocurrency’s ticker symbol — for Dogecoin, DOGE — and entering the amount of dollars or the number of Dogecoins that the investor wants to purchase.
A crypto investor also needs a digital wallet to store cryptocurrency. Wallets can be kept on a special device about the size of a thumb drive, or by downloading and installing a wallet app, but exchanges also offer hosted wallets. An investor’s crypto can automatically be held in the hosted wallet, similar to a checking or savings account. A hosted wallet also enables an investor to retrieve a lost password or key, which otherwise might result in the person losing the investment.
In general, people who invest in cryptocurrency should be forewarned that it involves significant risk. Here’s a Federal Trade Commission primer on what to know about cryptocurrency. Securities and Exchange Commission chairman Gary Gensler, in a speech given Aug. 3, 2021, called for greater regulation of cryptocurrency trading to protect investors.
Like other cryptocurrencies, Dogecoin uses blockchain, a decentralized system of ledgers that exist on many computers at once. Processing transactions and recording them on the blockchain requires a process called mining, in which people use computers and software to solve complex math problems, a method called proof of work. In exchange for those efforts, the blockchain rewards miners with new Dogecoins, which leads to the creation of millions of new Dogecoins every day, as this recent Forbes article from April 20, 2021 explains.
According to Coindesk.com, a miner competes with other miners in trying to create a piece of code known as a “hash,” in hopes of getting one that is equal to or larger than the target value of the new block being added to the blockchain, until there’s a winner. Some miners work solo, while others join in mining pools or opt for cloud mining, in which computational power is rented from a data center.
Dogecoin miners often use a piece of electronic hardware called an ASIC — application-specific integrated circuit — to identify and download special software to use in the mining.