How Are Dogecoin And Bitcoin Different?

It may feel like Bitcoin and Dogecoin are not that different, but these two coins are vastly different in reality. The following table summarizes differences between Dogecoin and Bitcoin:

BitcoinDogecoin
Supply Cap21 MillionUnlimited Supply
Number of Coins Exists Today18.7 Million128 Billion. 5 Billion more coins per year for eternity.
Block Time10 Minute1 Minute
Block Size1 MB1 MB
Hash AlgorithmSHA-256Scrypt
Max Transfer Speed7 Tx/Second70 Tx/Second
Institutional SupportYesNo
Types of SupplyDeflationaryInflationary, Similar To USD
Market CapMore than $1,000 BillionLess than $10 Billion
Price PredictionWill Cross $100,000/tokenWill NEVER cross $10/token
Investment PsychologyDigital GoldUnknown.
Number of Miners Node8,9201,007
Average Transaction FeesMore than $20Less than $1

Coin Supply:

The total supply cap on Bitcoin is 21 million, and so far, 18.7 million coins have been mined, and the last Bitcoin will be mined in 2140. 

On the other hand, Dogecoin has an unlimited supply, and so far, 128 Billion Doge has been mined. Each minute, 10,000 coins are added to the Dogecoin network. At this rate, 5.256 Billion more Doge is added each year. Compared to Bitcoin, Doge has 7,000X more supply. 

Market Cap and Price Per Token:

Bitcoin is deflationary and considered digital Gold, whereas Doge is inflationary. Here is a chart that shows Dogecoins inflation until 2030.

YearEstimated DogecoinsInflation rate
2021130 Billion3.85%
2022135 Billion3.70%
2023140 Billion3.57%
2024145 Billion3.45%
2025150 Billion3.33%
2026155 Billion3.22%
2027160 Billion3.13%
2028165 Billion3.03%
2029170 Billion2.94%
2030175 Billion2.86%

The following table shows the number of coins in the supply and their respective market cap of the most popular cryptocurrencies.

CryptocurrencyCurrent SupplyMarket Cap
Bitcoin18.7 Million$1.1 Trillion
Ethereum115.1 Million$206 Billion
Cardano31.9 Billion$38.7 Billion
Polkadot922.3 Million$34.2 Billion
XRP45.4 Billion$23.1 Billion
Dogecoin128 Billion$7.4 Billion

If we assume that Dogecoin’s price would rise to $1/coin within the next two years (10 billion more coins), then the total market cap of Doge has to be (130 + 10 ) billion x $1/coin = $140 billion. 

Bitcoin has a market cap of around $1100 billion ($1.1 trillion). Even if we assume that the Dogecoin would become the world’s largest crypto, its price will not cross $10/Doge. 

If we disregard Dogecoin’s inflation, for Doge to reach a $1.1 trillion market cap, each coin will have a price of ($1100 billion market cap) / (130 billion coins) = $8.46/Doge. 

However, if Dogecoin takes four years to reach the $1.1 trillion market cap, then each coin’s price would be $1100 billion / 150 billion coins = $7.33/Doge.

Therefore, even if Dogecoin becomes the world’s most popular cryptocurrency, Dogecoin’s price would not rise to $10/coin. 

Hash Function:

Bitcoin uses SHA-256, and Dogecoin uses a Scrypt based hash algorithm. It means that a Bitcoin miner can’t mine Doge using the same hardware or vice versa. 

SHA-256 is more complex and hardware intensive. It’s why Bitcoin needs 10 minute block time. In contrast, Scrypt hash is easier than SHA-256 but more memory intensive. It’s why Dogecoin has a 1 minute block time.

Block Time And Transfer Speed:

Bitcoin has a block time of 10 minutes, and Dogecoin has 1 minute block time. It means that Bitcoin takes a minimum of 10 minutes to process transactions, whereas Dogecoin can clear those transactions in 1 minute. So, theoretically, Dogecoin is ten times faster than Bitcoin.

Let’s compare USD, Bitcoin, and Dogecoin transfer speed.

We can use USD both offline and online, whereas we can use Doge online only. There’s no offline use case. 

For online use, we can transfer USD using various network mechanisms such as ACH and Wire transfer. We also have VISA, Master Card, Amex, Discover, Paypal that processes our online debit or credit card purchases. 

VISA alone can process 65,000 transactions per second. Each transaction clears within seconds. Now, let’s compare it with Dogecoin transaction speed.

As we previously mentioned, Dogecoin and Bitcoin have block time 1 and 10 minutes, respectively.

We can find the theoretical transaction number per unit time of Dogecoin using the following formula:

  • (Block Size Limit) / ((Lowest Possible Transaction Size) x (Block Time In Seconds))

Using this formula, we find that the Bitcoin network can process 7, and Dogecoin can process 70 transactions per second.

  • Bitcoin: (1024x 1024) / (257 x 60 x 10) = 6.8 (10 minute block time, Block Size 1 MB)
  • Dogecoin: (1024x 1024) / (257 x 60) = 68 (1 minute block time, Block Size 1 MB)

However, due to network propagation and other reasons, practically, Bitcoin can process only 3-4, and Dogecoin can process 40 transactions per second. Still, Dogecoin is 10 times faster than Bitcoin.

According to the US Census Bureau, 330 million people are living in the United States.

In a single day, Dogecoin can process 40 x 60 x 60x 24 = 3,456,000 transactions (practical 40 transfers per second).

So, if every American adopts Dogecoin, each person will be able to complete 1 transfer in every 330,000,000 / 3,456,000 = 95 day (3 months) on the Dogecoin network. In Bitcoin’s case, if everyone in America starts using Bitcoin, each person can make a transfer every 950 days.

It does not matter how many computers we add to the Dogecoin and Bitcoin network; the transfer speed will not improve unless we change the core protocol. 

However, Bitcoin is not trying to be a currency anymore. It’s now considered Digital Gold. Thus this slow transfer speed is not an issue, unlike Doge.

Lighting Network:

There are only a handful of developers working part-time for Dogecoin. There’s no active development going on. In contrast, numerous developers and institutions are actively working for Bitcoin development.

Though Bitcoin is slower than Dogecoin, developers already created the lighting network, which improves Bitcoin transaction times and lowers fees. In comparison, even the creators of Dogecoin have left the project.

Purpose:

Bitcoin was started to replace USD. People were fed up with the 2008 housing market crash and the government bailout of big banks. They wanted to create a decentralized financial system free of the federal reserve. The Bitcoin creator put a supply cap of 21 million on Bitcoin because he didn’t like the idea of the unlimited supply of money. For example, the Federal Reserve prints money and adds inflation to the economy.  

Everyone made fun of Bitcoin when it started in 2009. No one took it seriously. To make fun of cryptocurrency, Billy Markus and Jackson Palmer created Dogecoin in 2013. It was started as a joke. The Japanese Shiba Inu dog is its mascot. 

Dogecoin is a copy of Litecoin with minor modifications. Litecoin itself is a copy of Bitcoin with minor changes. 

Buying Options:

Bitcoin is available on every crypto exchange. Moreover, Paypal, Square, and other apps also allow users to purchase and sell Bitcoin. 

Dogecoin purchasing options are limited. Only a handful of crypto exchanges allow trading this coin. For example, Coinbase does not support this coin.

Institutional Investment:

According to the US Federal Reserve, the top 1% controls $36 trillion wealth or 31% of US wealth. The top 10% rich controls 70% of the wealth ($80 trillion). In contrast, the bottom 50% of people control 2% ($2.36 trillion) of US wealth. 

It’s the rich people, hedge funds, and institutions that move the market. Even a few years ago, Bitcoin had only a few billion dollars market cap. However, recently its market cap passed over 1 trillion because of institutional investment. Goldman Sachs, Tesla, JPMorgan, and various other companies have bought Bitcoin in billions of dollars.  

However, because of inflation, institutional investors are not interested in investing in Dogecoin. 

Conclusion:

Bitcoin and Dogecoin are vastly different cryptocurrencies with different objectives. As an investment vehicle, Bitcoin is a far superior cryptocurrency to Dogecoin.

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