How it works
Technically it descends from Litecoin, which descends from Bitcoin. It uses the Scrypt mining algorithm and produces a block every minute, four times faster than Litecoin and ten times faster than Bitcoin.
The significant departure is supply. Bitcoin caps at 21 million coins; Dogecoin has no cap and issues roughly 5 billion new coins a year on a fixed schedule. That is inflationary in absolute terms, and the percentage shrinks each year as the base grows.
Since 2014 Dogecoin has been merge-mined with Litecoin, meaning miners secure both chains with the same work. For a network that would otherwise have modest mining interest, this borrowed security matters.
Why it works as a payment coin
Three properties, and none of them were designed on purpose.
Fees are tiny
Fractions of a cent, consistently, because blocks are never congested.
Confirmation is fast
One minute per block means a first confirmation arrives quickly enough for a checkout to feel normal.
People actually spend it
This is the unusual one. Most cryptocurrency is held rather than used, and Dogecoin’s culture grew around tipping and small transfers, so its holders are more willing to part with it than holders of assets they consider investments.
Where it is accepted
Coverage is broader than the coin’s reputation suggests. Most crypto payment gateways support it, which means any merchant using one can enable it without additional work.
Direct acceptance by large retailers has fluctuated over the years, with various companies adding and removing it. The reliable route is through a gateway rather than through any individual merchant’s own integration.
How it compares to its relatives
Against Litecoin, from which it descends, blocks are four times shorter and supply has no cap. Fees land in a similar place, and Litecoin has broader exchange support.
Against Bitcoin, the difference is a factor of ten on block time and orders of magnitude on fee. What Bitcoin has that Dogecoin does not is the fixed supply and the institutional attention that follows from it.
Against stablecoins on a fast network, Dogecoin loses on the one thing that matters most at checkout: the value of what arrives does not stay put. It wins on needing no issuer and no reserves behind it.
The obvious caveat
The price moves, sharply and often on sentiment rather than on anything structural. A merchant holding DOGE between the payment and the payout carries that, and the size of the movement can exceed the margin on the sale.
Converting on receipt removes the question, which is what nearly every business accepting it does.