Have you had a jokester at school? You know, the boy sitting in the back of the room with his feet on the desk, chewing his bubble gum, and going to the principal's office regularly? This also exists in the Bitcoin world, with Dogecoin being one of the most lucrative jokesters in the sector!
Dogecoin and Its History
Dogecoin (DOGE) was one of the first "meme tokens," created by Billy Markus and Jackson Palmer as a joke in 2013. Why is it booming years later? It has thrived due to two factors.
To begin with, it was early in the game. Back then, investors had fewer options, so merely becoming a part of the crypto community had a more prominent feeling of purpose. Dogecoin's reputation as a joke enticed fans to join for purposes other than financial gain.
Then, because of recent celebrity endorsements (mainly by Tesla CEO Elon Musk), Dogecoin rose from obscurity to a position among the top ten cryptocurrencies in terms of market capitalisation.
So, here are some reasons investors should take Dogecoin seriously, which has evolved from a joke coin into a prominent meme coin.
The popularity of Dogecoin is insane.
If there were a cryptocurrency popularity contest, Dogecoin's iconic status would make it the top candidate.
Musk and hip-hop singer Snoop Dogg are two of the most well-known names to have promoted Dogecoin. Besides, there are 2.2 million "subshibers" (Shiba Inu subscribers) on the Dogecoin sub-Reddit.
Considering the risky nature of cryptocurrencies, mere popularity is crucial. Those who invest in DOGE are likewise betting on more celebrity-driven headlines. Obviously, the fact that Dogecoin has become so trendy is insane.
No wonder there are various platforms like eToro, Kraken, and Immediate Edge that allow even beginner traders to get started without wasting precious time.
Nevertheless, investors are taking a risk by purchasing a coin that has soared so quickly based only on popularity. If another cryptocurrency captures most investors' interest, Dogecoin may be pushed to the sidelines.
Dogecoin is ideal for cryptocurrency newcomers.
Dogecoin's high volatility has put off some investors over the last year. Putting any significant sum of money into whatever might skyrocket or crash in a matter of seconds necessitates a steel stomach and the right financial mindset. Surges and drops caused by volatile sentiment are regular. Investors must be prepared to ride out the tidal crypto waves as they arise.
On the other hand, Dogecoin is an excellent alternative for investors wishing to be in the crypto game. Owning Dogecoin for a longer time could give investors a taste of what cryptocurrency trading is all about. Investing in cryptocurrencies necessitates firm confidence that a technology revolution is unfolding and that cryptocurrency will soon reshape the world as we know it.
No surprise Dogecoin is regarded as a more adventurous and volatile cryptocurrency. As a result, folks looking to embark on an extraordinary journey may opt to invest in Dogecoin. This cryptocurrency will indeed create a roller coaster journey that is both entertaining and terrifying at times.
With such risky assets, investors must only invest what they are willing to lose.
The market positioning of Dogecoin is distinct.
Dogecoin's mining model, inflationary state, and links to Litecoin are all appealing. These characteristics distinguish Dogecoin and make it an attractive investment for many cryptocurrency fans.
First, we should mention that Dogecoin's mining mechanism depends on proof-of-work (given its pioneer crypto entrant status). This means that, similar to Bitcoin, complex computational challenges must be addressed to validate transactions on the Dogecoin blockchain. Interestingly, given the environmental concerns surrounding crypto mining, experts expect Dogecoin to transition to a proof-of-stake mechanism in which coin owners validate transactions. Such a step may persuade more investors interested in cryptocurrency from a sustainability standpoint.
Furthermore, it's worth noting that now Dogecoin's blockchain is validated by miners using the Scrypt method, which is also used to generate Litecoin, a Bitcoin fork. This may be attractive to Litecoin fans and attract more investors.
Finally, Dogecoin's inflationary character is interesting. Note that purchasing anything that organically inflates over time (supply isn't limited) necessitates that demand exceeds the natural inflation rate. If people start withdrawing from Dogecoin in large numbers or shifting to the next most famous cryptocurrency, for example, Dogecoin values might plummet quickly.
However, because only 5 billion new DOGE tokens are generated each year, investors can carefully predict the inflation rate over time. Given the current supply of DOGE of over 132 billion DOGE, this year's inflation rate calculates to about 3.8 per cent. Knowing the economic growth of Dogecoin allows investors to assess the likelihood of price appreciation. Thus, Dogecoin is an excellent option also for people searching for an intellectual challenge.
Risks in Investing in DOGE
Dogecoin is one of the most volatile cryptocurrencies available. It is indeed making the headlines, which contributes to its outperformance.
Investors, though, must be mindful of the risks involved. Adding a tiny stake in DOGE to a well-diversified portfolio of cryptocurrencies is a great idea.
Going all in, on the other hand, is not recommended. Let's not forget that Dogecoin is mainly driven by social media excitement. Dogecoin's value rises whenever celebrities like Dallas Mavericks owner Mark Cuban or Tesla CEO Elon Musk promote it on social media.
Having said that, this token has upside potential. "To the moon!" as crypto enthusiasts say!
* This is a contributed article and this content does not necessarily represent the views of techtimes.com
