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How does Dogecoin work?

Dogecoin is built on a blockchain, a distributed ledger that permanently records all transactions. This ensures transparency, immutability, and prevents double-spending or fraudulent activity. Transactions are created and signed with digital signatures, broadcast to the network, verified by nodes and miners, and then grouped into blocks.

Network Security and Verification

Dogecoin uses the Proof-of-Work (PoW) consensus mechanism with the Scrypt hashing algorithm. This makes it compatible with Litecoin mining hardware and less resource-intensive compared to Bitcoin’s SHA-256.

Since July 2014, Dogecoin supports Auxiliary Proof-of-Work (AuxPoW), enabling merged mining with Litecoin. This allows miners to secure both blockchains with the same computational work, increasing network security and efficiency.

Mempool

When a new transaction is created, it is broadcast across the Dogecoin network and stored in the mempool (memory pool) until confirmed. Transactions with higher fees are prioritized by miners to maximize block rewards.

Block Creation

  • Block time: ~1 minute

  • Block size limit: 1 MB (same as Bitcoin pre-SegWit)

  • Miners collect unconfirmed transactions and create a block candidate.

  • Each block includes a coinbase transaction, which issues the miner reward of 10,000 DOGE, plus any transaction fees.

Hashing

Mining uses the Scrypt algorithm. Input data includes:

  • Block header

  • Previous block hash

  • Merkle root of transactions

  • Timestamp

  • Nonce

Miners use Scrypt ASIC hardware to compute billions of hashes per second, searching for a valid hash that meets the network difficulty target. Difficulty adjusts automatically to maintain ~1-minute block intervals.

Block Validation

Once a miner discovers a valid hash:

  1. The block is broadcast to all Dogecoin nodes.

  2. Other nodes verify:

    • The block hash meets the difficulty requirement.

    • All transactions are valid and signatures correct.

    • The block header matches the chain’s state.

  3. If valid, the block is added to the blockchain.

Confirmations

A transaction in Dogecoin is considered secure after multiple confirmations (subsequent blocks added on top of the block containing it). This makes altering past transactions computationally infeasible, ensuring strong network integrity.