Ethereum vs Dogecoin: Two Different Approaches to Utility in Cryptocurrency

Explore Ethereum and Dogecoin, comparing Ethereum’s broad ecosystem versus Dogecoin’s meme-driven appeal and use as a digital currency.

Introduction

The cryptocurrency space has evolved in vastly different directions, with some networks prioritising innovation and utility, while others focus on community engagement and cultural appeal. Ethereum (ETH) and Dogecoin (DOGE) are two great examples of these different approaches.

Billy Markus and Jackson Palmer created Dogecoin in 2013 as a fun cryptocurrency with broad appeal beyond the cryptographers and software engineers flocking to Bitcoin. While DOGE could theoretically facilitate electronic payments, its creators intended it as a joke with no purpose beyond perhaps introducing more people to crypto, and it offers no utility. Yet, the project quickly became the first meme coin, as a robust community developed. Countless competitors followed, including Shiba Inu (SHIB), POPCAT, and BONK.

Launched in 2015 by Vitalik Buterin and a team of co-founders, Ethereum focused on finding more utility in cryptocurrencies and blockchain technology, introducing a programmable blockchain that supports smart contracts, non-fungible tokens (NFTs), play-to-earn (P2E) gaming, altcoins, decentralised finance (DeFi), and other decentralised applications (dapps). Ethereum’s unparalleled utility quickly established it as the most-used blockchain ecosystem and spawned many direct competitors, including Solana (SOL), Avalanche (AVAX), Cardano (ADA), and Polkadot (DOT).

ETH is popular because of its impressive utility, and DOGE is popular because it embraces lightheartedness and simplicity. Let’s look at these two completely different approaches to utility and popularity in cryptocurrency.

Key Differences Between ETH and DOGE

Ethereum Overview

Ethereum is an open-source software platform that supports the creation of dapps and smart contracts without downtime, centralised control, or any form of outside interference. It was the first major programmable blockchain network to support smart contracts, making it possible for developers to create dapps that extended beyond simple payments.

Vitalik Buterin, then a Canadian software engineer, first described Ethereum in a 2014 white paper, and launched the project in 2015 with several co-founders, including Anthony Di Iorio, Charles Hoskinson, and Dr Gavin Wood. To support the project’s development, the team established the nonprofit Ethereum Foundation, though many of the co-founders eventually moved on to other projects. For example, Hoskinson left to work on Cardano, while Wood created Polkadot and Kusama (KSM).

Through Ethereum, artists can sell NFTs representing images, music, and text; gamers can own digital assets in titles like Axie Infinity and Big Time; and developers can launch altcoins without building an entire blockchain around them. Ethereum’s ERC-20 token standard has made launching blockchain projects much easier.

While Ethereum continues to evolve, one of its most significant upgrades to date was The Merge, which took place on 15 September 2022, when Ethereum shifted from a Proof of Work (PoW) consensus mechanism to Proof of Stake (PoS). This immediately reduced network energy consumption by an estimated 99.95% while preparing the ecosystem for subsequent scalability upgrades.

Check out ETH’s current value and recent price trends.

Dogecoin Overview

DOGE is a meme coin based on the popular Doge internet meme. Dogecoin co-creators Billy Markus and Jackson Palmer recognised Bitcoin’s potential to change the world but believed that cryptocurrencies would need support outside of the existing community base to get there. They created Dogecoin by forking the Litecoin blockchain in December 2013, hoping a fun, accessible cryptocurrency would entice the public to learn more about Bitcoin and the emerging DeFi movement.

While DOGE was never intended to be taken seriously, it unexpectedly gained traction, introducing many newcomers to the crypto space. It became a popular tipping system to reward content creators for quality posts on social media platforms, helping to establish a community around the coin. The Dogecoin team built on this early momentum by promoting a ‘Do Only Good Everyday’ (DOGE) ethos using internet jargon like ‘hodl’ and ‘much wow’, helping DOGE holders feel like members of a broader movement transcending any individual.

The Dogecoin Foundation was created as a nonprofit to promote Dogecoin, but its decentralised community has maintained control over the token’s future direction. As Dogecoin’s popularity has grown, security concerns have emerged, and the network has lacked the infrastructure to defend itself from cyberattacks. In response, Litecoin creator Charlie Lee proposed ‘merged mining’ DOGE and LTC since they share the same Scrypt hashing algorithm, allowing miners to secure both networks without compromising performance. The proposal was hotly debated by the Dogecoin community but eventually accepted, and merged mining began in 2014.

Check out DOGE’s current value and recent price trends.

Ecosystem Comparison: ETH and DOGE

Ethereum and Dogecoin’s Consensus Mechanisms

Ethereum has used a PoS consensus mechanism since The Merge, where special nodes, called validators, stake ETH in a smart contract on the Ethereum network. Every 12 seconds, the system selects one validator at random to propose a block, while a committee of other validators verifies that the proposed block is valid. Successful validators receive ETH as staking rewards, while any validators attempting to defraud the network are subject to ‘slashing’ penalties (the loss of staked ETH), creating a more level playing field and protecting the system.

Validators can improve their chances of random selection by staking more ETH, and ETH holders can participate in staking as ‘delegators’, who choose validators to back for a proportional share of any earned rewards. Validators must maintain strong records of uptime and reliability to attract delegators. This system promotes decentralisation and security, since anyone can participate, and delegators will often choose trustworthy validators to maximise their rewards.

Dogecoin uses a PoW consensus mechanism, where miners compete to be the first to solve a cryptographic math puzzle through trial and error in order to propose a block. The winner receives the right to add a block to the blockchain, thus claiming all associated transaction fees and a set block reward. With no supply cap, DOGE has inflationary tokenomics.

While the PoW system is very secure, it tends to promote centralisation since the miners with the highest hashrate claim the most rewards; it is also energy-intensive. Ethereum replaced its original PoW protocol with PoS in part to reduce the network’s energy consumption. The DOGE community is considering a similar switch, with Buterin serving as board advisor of The Dogecoin Foundation and offering Ethereum’s code to help with the transition. However, DOGE’s switch to PoS has not been approved as of this writing.

Ethereum and Dogecoin’s Scalability

Ethereum’s network averages about 15 transactions per second (tps), with a recorded maximum of 62.3 and a theoretical cap of 119. While this outperforms a number of other more mature cryptocurrencies, it’s far slower than blockchains with more modern architectures like Solana and Stellar (XLM). Ethereum also has relatively high and volatile transaction fees, ranging from around US$.30 to $2.30 (at the time of writing). Fees vary based on network conditions, adding unpredictability to transaction costs. While The Merge made Ethereum more scalable, slow processing times and high transaction fees remain key challenges.

Dogecoin’s network averages 33 tps, nearly twice as fast as Ethereum but short of industry leaders. Dogecoin’s average transaction fee is just under $0.03, though these fees also fluctuate based on transaction size and network conditions. DOGE’s consideration of a PoS consensus mechanism may help it provide the opportunity to achieve better scalability in the future.

Tokenomics Comparison

Ethereum Use Cases

ETH is the native digital currency of the Ethereum network and plays a vital role in its ecosystem. Holders use ETH to purchase dapps and ERC-20 tokens, secure the network through staking, and pay transaction fees for executing smart contracts. ETH also functions as a digital store of value, with trading available on reputable platforms like Crypto.com. Additionally, ETH has gained traction in traditional finance (TradFi), with exchange-traded funds (ETFs) providing Wall Street aficionados with exposure to Ethereum in their portfolios.

Acceptance as a Payment Method

Ethereum is widely accepted as a payment method across various industries. Merchants accepting ETH payments include Travala (travel booking platform), Crypto Goodies (apparel), and Play-asia.com (entertainment). ETH holders can also buy gift cards to popular retailers and nearly anything through services like Crypto.com Pay, making it a versatile option for cryptocurrency transactions.

Dogecoin Use Cases

DOGE serves as the native crypto of the Dogecoin network and is used primarily for paying transaction fees and compensating miners. While DOGE also serves as a digital store of value, its lower liquidity relative to tokens like ETH may produce larger spreads when exchanging for fiat currency. The financial industry is interested in ETFs tied to DOGE, but such products lack regulatory approval in the US as of this writing.

Acceptance as a Payment Method

DOGE has gained traction as a payment method as its popularity has increased over time. Vendors accepting DOGE payments include Tesla, Microsoft, AMC Theatres, and Newegg electronics. Notably, some of these merchants only accept DOGE for select products. For example, Tesla’s website displays the DOGE logo on product descriptions where DOGE payments are an option. DOGE holders can also purchase popular gift cards or nearly anything through Crypto.com Pay, expanding its practical use in everyday transactions.

Key Pricing Moments

Cryptocurrencies are volatile assets, often experiencing price fluctuations based on macroeconomic trends, world news, technology updates, social media buzz, and the other influences within the free market. Below is a brief price timeline for ETH and DOGE.

ETH — Key Price Events

DOGE — Key Price Events

Performance and Market Metrics

ETH has a market capitalisation over $333 billion as of this writing. Ethereum doesn’t have a finite supply like Bitcoin, but its circulating supply of roughly 120.72 million ETH is relatively low, creating some scarcity. Furthermore, demand for dapps and altcoins in Ethereum’s ecosystem is high, giving ETH a recent price range of $1,900 to $4,100 despite inflationary tokenomics.

DOGE has a market cap over $28 billion as of this writing. Dogecoin also doesn’t have a capped supply, but its circulating supply of over 149 billion DOGE and 10,000-DOGE block reward makes the token extremely inflationary. DOGE also lacks utility, but its strong community gives it a recent value in the $0.17 to $0.50 range.

Developments and Roadmaps: ETH and DOGE

Ethereum’s Roadmap

Ethereum’s roadmap has four core components: more affordable transactions, extra security, a superior user experience, and future-proofing. The overall goal is to improve network scalability. For instance, Ethereum’s network uses Layer-2 (L2) blockchains called ‘rollups’ to batch transactions together before adding them to the mainnet. Some of this data quickly becomes obsolete, but Ethereum’s current infrastructure forces it to remain on the blockchain.

A roadmap item called ‘Danksharding’ will address this issue, automatically deleting these ‘blobs’ of data to scale Ethereum to 100,000-plus tps while reducing transaction costs. Notably, Danksharding is unrelated to the ‘sharding’ that was once on Ethereum’s roadmap. Additionally, developers work on Ethereum upgrades at their own pace, and there is no set time frame for any upgrades on the roadmap.

Ethereum’s Community

All cryptocurrencies depend on their communities to maintain value, so tracking a token’s social media followers or developer community may provide insight into its engagement and potential. Ethereum has 3.8 million X followers and 3.7 million Reddit followers as of this writing, indicating a broad and passionate user base.

Ethereum’s network also has the largest developer community of any blockchain ecosystem, and the Ethereum Foundation provides free documentation on foundational concepts and step-by-step tutorials to help onboard new developers. Overall, Ethereum benefits from a vibrant community.

Dogecoin’s Roadmap

Dogecoin’s Trailmap includes a makeover for Dogecoin.com, documentation through Dogecoin Standard and Libdogecoin, and expedited payment processing for businesses through GigaWallet. None of these involve upgrades to DOGE’s core network, which hasn’t significantly upgraded since 2016. This could change if Buterin persuades the DOGE community to embrace PoS, but that hasn’t happened as of this writing.

Dogecoin’s Community

Meme coins are even more dependent on their communities for value, as they lack utility by design. Dogecoin has 4.3 million X followers and 2.6 million Reddit followers as of this writing, indicating a large and passionate following. Influencers like Musk also raise the DOGE community’s visibility.

Conclusion

ETH and DOGE are opposites in many ways. Ethereum was created to offer more utility than Bitcoin, while DOGE shuns utility in favour of internet memes. The crossover between them seems minuscule, yet Ethereum co-creator Vitalik Buterin has endorsed Dogecoin as the second-biggest cryptocurrency behind Bitcoin. Which one is better depends on the intended use case.

Developers may choose Ethereum since its programmable blockchain and established audience for dapps provide more than Dogecoin can offer, and crypto traders could chase ETH’s higher price upside potential or DOGE’s accessibility. Merchants might prefer Ethereum’s established brand or DOGE’s relative price stability.

Always research a digital asset’s price history, tokenomics, development team, roadmap, and documentation before considering a purchase.

Due Diligence and Do Your Own Research

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