Should you invest in dogecoin

Move over Ethereum, there is a new silver to Bitcoin’s gold, and its name is Dogecoin.

Are you even slightly into cryptocurrencies? Then you’ve heard about this seemingly joke meme crypto coin. But Dogecoin saw a jump of over 5000% in 2021, with 400% happening in just one month.

This turned the cryptocurrency into one of the most popular speculative assets among traders, especially the wealthier ones. Heck, billionaire Tesla founder Elon Musk is nearly synonymous with it. Although his recent stint as a Saturday Night Live host sent the coin tumbling after he called it a “hustle”. We’ll get to that later.

What does the future hold for the Shiba Inu casting us a side-eye from the coin’s face? Let’s dive in and find out.

What is Dogecoin?

Dogecoin is a form of digital money that allows peer-to-peer transactions over a decentralized network. And even though it took a tumble, it’s currently worth $52.60 billion.

Some experts believe its popularity can simply be attributed that it was early to the cryptocurrency party, while digital coins were just gaining awareness. And, as they have said, the whole hype may also be linked to it being easily replicable and having a meme on itself.

History of Dogecoin

The coin was created by Jackson Palmer and Billy Markus. They began the whole story based on the famed Shiba Inu meme, riding on the wave of the Bitcoin popularity that was sweeping Silicon Valley.

We could call the whole shtick a find-and-replace job. Billy Markus claims that the creation of Dogecoin took about three hours. Even though he didn’t understand the Bitcoin source coin, he replicated it easily. He made about 100 billion Dogecoins – a stark contrast to Bitcoin’s 21 million. He also made them simple to mine – sorry – dig. Since, you know, dogs dig, not mine.

But, all jokes hold a grain of truth in them. And the coin became a real digital coin, based on Bitcoin’s code.

It came across some obstacles – it was a target of a hack, after seeing early price jumps of 300% in its first weeks of trading.

Nevertheless, its small loyal base stuck with it. And interestingly, the coin managed to maintain its “underground” position and “cool” status.

Dogecoin’s Pandemic Jump in Popularity

Cryptocurrencies at large were on the roll during the Covid-19 pandemic. Large investors and funds have started accepting them more. So the Bloomberg galaxy cryptocurrency index, which tracks popular digital coins, surged 272 percent since 2021 began.

Apart from the ever-present talk about Bitcoin’s investing opportunities, Dogecoin was the, ahem, underdog of the year for now. From $1.07 billion in January this year, it got to $62 billion now.

One of the reasons for this jump is the whole GameStop incident. The other was the fact that not only was Elon Musk hyping it but KISS frontman and human enigma Gene Simmons, too. Jumping on the bandwagon was also one of 2020’s breakout stars – cat rescuer Carole Baskin, from shady “Tiger King” fame.

Investing in Dogecoin in 2021

But we know why you’re here. You’re wondering if you should take part in investing in Dogecoin.

There are some enticing benefits to Dogecoin, such as it being:

  • Decentralized, seeing how a bank or government doesn’t issue it or back it
  • “Mined” independently and recorded on a blockchain
  • Anonymous, seeing how privacy is part of the reason cryptocurrencies is so popular

But Bitcoin is also extremely volatile. During his recent guest spot as a host on the cult sketch comedy show Saturday Night Live, Elon Musk tuned into the Weekend Update segment and called Dogecoin (justifiably, yet jokingly) a hustle. The coin then made a 23% freefall. Musk rushed to announce later on that they will accept Dogecoin as payment for Doge 1 mission to the moon, which then helped the crypto make somewhat of a recovery. Take it as you will. We’ll just say that 2021 is wild as it is.

Even experienced tech investors are in a conundrum about the creation, allocation, and validation of Dogecoin.

There isn’t a bank, corporation, or government, that backs the coin. This isn’t unusual for cryptos in general.

Should You Invest in Dogecoin?

If you want to invest in cryptocurrency, then Bitcoin may be a better starting point. It is more validated and has been in the game longer, thus it is reasonably more trustworthy. Sure, it has its ups and downs, especially this year. But investors accept it more widely and is thus still less volatile than an extreme niche coin that adorns a picture of a meme dog.

Bear in mind that, yes, we do believe that Dogecoin is more than a joke. But beginners and experienced investors should both steer clear of stories that seem like short-term hype for now.

It does seem like retailer investors are more in control in the last few months, thanks to the Gamestop incident. Though, while Redditors were driving the Gamestop story, Dogecoin’s price seems to be driven more by larger forces in the background (and foreground – hi, Elon and Gene!).

Conclusion

If you decide to invest in Dogecoin, follow the basic rule of not investing more than you can afford to lose. And bear in mind that other exciting prospects are coming, too. And they seem to be more thoroughly researched. Such as Cardano. Head over to our course about Cardano and blockchain to find out what it’s all about.

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