Whether you’re a newbie or a pro-investor looking for some good investment areas, then cryptocurrencies should be your first choice. The reason behind it is the growth of the value of cryptocurrencies in the past couple of months. Many cryptocurrencies like Bitcoin, Ethereum, Dogecoin, etc have recorded high prices.
Initially, Dogecoin (DOGE) started as a meme cryptocurrency. But, the power of social media and memes is so high that cryptocurrency is one of the most popular cryptocurrencies in the industry. In this article, let’s understand more about Dogecoin, how it works, is it a good investment, what do the experts advise, etc.
What is Dogecoin (DOGE)?
Dogecoin is a cryptocurrency introduced by two software engineers Billy Marcus and Jackson Palmer in 2013. The cryptocurrency was introduced for the general public/layman and had a ‘fun and friendly brand image. The image featured a dog Shiba Inu, that became a popular ‘meme cryptocurrency’. Nobody had an idea in the early days that DOGE would be so popular and valuable currency someday.
The main reason for this growth of Dogecoin is the community surrounding it. The community made DOGE so popular that it looks like the money of the future. Moreover, DOGE was played an important role in spreading the value and importance of blockchain technology and cryptocurrencies among millions of people.
Famous personalities like Elon Musk also supported and joked about Dogecoin. But, the cryptocurrency broke all the barriers and today it appears to be one of the most popular cryptocurrencies. At the time of writing the cryptocurrency was trading at $0.3682 with a market cap value of $47,652,076,767.
How does it work?
Dogecoin is a cryptocurrency similar to Bitcoin and Ethereum that runs on Blockchain Technology. Blockchain is a distributed digital ledger that stores all cryptocurrency transactions. All Dogecoin holders will have an identical copy of the Dogecoin blockchain ledger. This copy will be updated regularly with new cryptocurrency transactions.
Similar to other cryptocurrencies, the Dogecoin blockchain network also uses cryptography to secure all cryptocurrency transactions. Crypto miners use computers to solve complex mathematical equations to process transactions and record them on the Blockchain network. It is called the “proof of work” system. Miners who process transactions and support the blockchain ledger will earn an additional Dogecoin, which they can hold or sell in the open market.
You can use Dogecoin for payments and purchases, but you cannot consider DOGE as an effective store of value. It is because the cryptocurrency does not have a lifetime cap on the number of coins that can be mined. Eventually, it means that the cryptocurrency is highly inflationary by design. Miners who mine Dogecoins every day will be rewarded for their work.
How to buy Dogecoin?
You can purchase Dogecoin from popular cryptocurrency exchanges like Binance, Kraken, WazirX, etc. All you need to do is set up your account and fund your account with the supported fiat currency or cryptocurrency. Now, you can buy and exchange cryptocurrencies including Dogecoin.
There are some online brokers like Robinhood and TradeStation who allow you to buy Dogecoin. They also allow the exchange of conventional assets like stocks, mutual funds, and bonds. Although these brokers do not offer exchanges of various cryptocurrencies like the exchanges, they do provide Dogecoin.
Once you purchase Dogecoin or any other cryptocurrency, it is better to move the coins to a crypto wallet. Wallets can be in any form, like the online services offered by Coinbase or any wallets supported by your phone or even a physical hard drive. You can store your cryptocurrencies in the wallet and secure them with a private password. When you store your coins outside an exchange that is in the wallet, there will be an extra layer of protection against hacks.
Is it a good investment?
There is no limit to the number of Dogecoins that can exist while millions of new DOGE are released every day in the market. Hence, there is very little incentive for holding this cryptocurrency for the long term.
For most of 2020, the value per DOGE is been very low around $0.003 per coin, so people sold them away. While a bright side would be, “users on social platforms, like Reddit, Twitter, Facebook, and others, can use Dogecoin to reward, or “tip,” each other for posting content,” says C. Neil Gray, a partner in the fintech practice areas at Duane Morris LLP. Dogecoin has seen immense growth in 2021 which is not sustainable for the longer term.
When investors saw the monumental growth everyone was interested to buy a bite of the pie. One of the cryptocurrency experts, Edul Patel, CEO, and Co-founder, Mudrex said, “Doge is literally a meme coin, built out of the intent to mock the concept of bitcoin. Hence it is extremely volatile and susceptible to random market movements.”
Suggesting to invest in it, he said, “I would not recommend allocating funds here for the long term. On the other hand, a lot of people would just want to bet and be a part of it for fun and get the ‘gamblers rush’ That is completely your choice!”
The Dogecoin community has used the currency for philanthropic purposes. People are more likely to donate to organizations and various causes using Dogecoin. As long as DOGE will be used for these purposes, its follower community will stabilize the crypto market.
Those who bought Dogecoin from the start of 2021, have been rewarded well. Buying any cryptocurrency involves risk and the same is applicable to Dogecoin as well. It’s always better to invest in a few coins and familiarize yourself with the industry. It is also better to refrain from sinking more than you can afford to lose.