Proof of work
Proof of work is the method dogecoin uses to validate new additions of data to the blockchain - namely, transactional data.
When you purchase something using dogecoin, the transaction will consist of certain information. This is for example your name, the seller’s name, transaction amount and so forth.
All of that information is data which can be encrypted with hashing. Dogecoin uses the hashing method Scrypt, where bitcoin uses SHA-256, and ethereum uses Keccak-256.
Tip: Read more about bitcoin mining and ethereum mining here.
Scrypt is a less complicated and therefore less energy intensive hashing method than SHA-256 for example. That’s why dogecoin can also validate far more transactions (or blocks of transactions) per hour than bitcoin can.
Dogecoin can validate about one block per minute, while bitcoin validates around one block every 10th minute.
When data is encrypted with hashing, you’re no longer able to “understand” the information. Here is an example of a dogecoin transaction that’s been encrypted:
Because dogecoin’s blockchain is publicly available, you can always check an encrypted transaction in a blockchain explorer - which is a database and a reference work for all transactions who have ever been registered on dogecoin’s blockchain.
Try to type in the encrypted dogecoin code on chain.so for instance, which is a blockchain explorer. Here, you’ll be able to see what amount there’s been traded with, and who is the sender and receiver - the amount isn’t private, but sender and receiver are encrypted with Scrypt, so you can’t see who actually performed the transaction.
To keep the blockchain alive, it takes a larger collection of dogecoin transactions collected in a block, which in itself has a certain hash.
Example: Dogecoin’s block number #4341556 looks like this:
The block’s hash is very important here. Without a hash for the block, the block wouldn’t be able to be added to the blockchain, and the blockchain will thus come to a standstill. No more dogecoins will be brought into circulation, and new dogecoin transactions will not be able to be validated.
In order to make it attractive for people to spend their time adding transactions and blocks to the blockchain, those people will be rewarded a certain amount of dogecoins as thanks for their trouble. The dogecoins the person receives as a reward, are newly minted dogecoins, which haven’t existed prior to this. They’ve just been “mined”.