Cryptocurrency has been brought back into the limelight after the government announced a new taskforce to explore the possibility of the UK having its own digital currency.
The latest cryptocurrency craze seems to be Dogecoin, a currency that leapfrogged Bitcoin and Ethereum last week - the two largest cryptocurrencies on the planet -as it surged more than 200% in 24 hours.
Over the past week its value as rocketed by as much as 550% which made it more valuable than banks including Barclays and Lloyds Banking Group as of last Friday.
Investors made substantial gains on its rise and social media was filled with memes of the currency “going to the moon”.
It’s inevitable pic.twitter.com/eBKnQm6QyF— Elon Musk (@elonmusk) July 18, 2020
Is it worth investing in and what is it all about? Here is what you need to know.
The history of Dogecoin
Dogecoin was invented by IBM software engineer Billy Markus and Adobe software engineer Jackson.
It was created as a peer-to-peer currency that would be able to reach a larger demographic than Bitcoin.
Dogecoin was officially launched on December 6, 2013 and within the first 30 days following its launch, over a million people visited Dogecoin.com.
The “joke” coin is based on the doge meme that took the internet by storm in 2013, with an image of the Shiba Inu breed whose inner thoughts are displayed in comic sans font.
How does Dogecoin work?
Like Bitcoin, Dogecoin is a form of cryptocurrency, which means it is a type of digital currency that is completely virtual.
Dogecoin is based on a type of Litecoin called Luckycoin.
Similar to Bitcoin, Dogecoin uses a blockchain, a special type of database and data is added over time in structures called blocks.
Each block is built on top of the last and includes a piece of information that links back to the previous one.
There is no administrator to the system, instead, users send information directly to each other and rely on cryptographic techniques to tell if their peers are acting honestly.
Mining and supply
Proof-of-work blockchains or mining, is used to create new coins.
People must prove to the network that they have done “work” which is often something like finding the answer to a complex puzzle.
The puzzle will often require extensive computer power and the puzzle is solved by “hashing” information until a user can provide an output deemed valid by the network.
What can you do with Dogecoin?
Like most cryptocurrencies, there are a number of ways you can acquire Dogecoin.
You can mine it yourself or accept it as payment for goods and services or simply purchase it via the cryptocurrency exchange.
If you are new to cryptocurrency, you may need to first buy Bitcoin and exchange it for Dogecoin.
One you have your own Dogecoin you can use it like any other cryptocurrency.
You could hold onto it in the hope it gains value in a hardware wallet, trade it against other coins or even exchange it for goods.
Be aware that not many shops will accept cryptocurrency.
Is it safe?
Martin Lewis addressed cryptocurrency on The Martin Lewis Money Show, he specifically mentioned Bitcoin but the warning applies to any form of online cash.
He said: "Bitcoin is set up as a currency – a non-governmental currency – so you're meant to be able to spend it, but I'm presuming you're thinking of this not to spend but more as an investment, which is what most people are looking at.
"First of all, is it safe? Well, some people have lost money in their wallets. Like gold it can be stolen, and cryptocurrency is a bit like an equivalent to gold as it's a store of value of what people are putting in. You have to be very careful."
He added: "As to whether it's any good – I don't talk about investing. The thing about investing – and Bitcoin is an investment – is that prices go up and prices go down. With Bitcoin, they go up massively and they go down massively. And the reason for stressing that so much is that you can make a fortune, but you may lose a fortune.
"So if you can't afford to lose the money that you put in, then do not invest in it. It's a gamble, like all forms of stocks and shares, and all forms of investment and putting money in gold. That's your choice, but if you do it the right way the investment should work for you, but it doesn't mean you won't lose money though."
How much is it worth and will it rise in price?
Speaking to Express.co.uk, Sam Onigbanjo, founding partner at the Capital Markets Academy said Dogecoin is on an uptrend.
He said: “Dogecoin is currently at £0.29 ($0.40) and in the short term will overtake £0.70 ($0.50).
“Its first major test will be passing the £0.72 ($1) mark which from all indications could happen before the end of July.
“Once this barrier is broken the next aim will be £7.19 ($10).”
He added: “Dogecoin is driven based on trading fundamentals and events such as celebrity endorsements and acceptance in major corporates, both of these are clearly on the uptrend and are therefore very foreseeable in 2021.”