4 Great Things About Dogecoin – No We’re Not Joking!

A Brief Introduction to Dogecoin (DOGE)

Like most other cryptocurrencies, Dogecoin is a digital currency with speculative and fungibility attributes. Although most cryptocurrencies share fundamental similarities with their peers (for example, the code behind Dogecoin comes from the script used in developing Litecoin), they all have their unique differences.

Unlike Bitcoin, which has a fixed supply of 21 million coins, Dogecoin has a relatively infinite supply as new blocks enter the circulating DOGE supply every year. With this, you begin to understand the stark difference in prices of both assets.

As more crypto assets continue to gain more acceptance and adoption for real-world uses, the first-generation cryptocurrency has not made many strides in this regard, given its relatively non-existent utility.

Nonetheless, the meme coin has a blustering community base, arguably one of the most active and influential groups in the crypto industry, making it a fun currency. This group, remarkably active on Reddit and Twitter, has made DOGE into a symbol for charitable causes with their numerous donations across the globe to different organizations for different reasons.

Speaking about Dogecoin in an academic paper, Usman Chohan, an economist at the University of New South Wales Business School, described the digital asset as this,

“Dogecoin is not so much an alternative deflationary numismatic instrument as it is an inflationary leisured exploration of community-building around a crypto asset.”

The Origin Story of Dogecoin

As mentioned earlier, Dogecoin came about as a joke by two software engineers in December 2013 amid the flurry of several digital assets attempting to copy Bitcoin back then.

Billy Markus, the pioneering founder of the digital asset, was an IBM programmer from Portland, Oregon, and aimed at creating a crypto asset different from Bitcoin. At the time, Bitcoin, an obscure technology, attracted a small, niche group of miners, and Markus sought to create a crypto asset that was “open to the masses.”

Luck struck when he found Jackson Palmer, Dogecoin’s co-founder, who worked with Adobe. Palmer subsequently purchased the domain dogecoin.com, which was in agreement with the “doge” meme making rounds on the internet at the time. The website featured the image of the meme-Shiba Inu as its mascot surrounded by some Comic Sans text in broken English.

On dogecoin.com, the official website, the mascot bears the caption:

“Dogecoin is an open-source, peer-to-peer digital currency, favored by Shiba Inus worldwide.”

Dogecoin’s Rise to Fame: The Elon Musk Effect

2021 saw Dogecoin record a meteoric rise, buoyed partly by the increased adoption of Bitcoin and other cryptocurrencies for mainstream use.

The boisterous community behind the meme cryptocurrency played a critical role in this meteoric rise. In the center of this community is Elon Musk, arguably the loudest and most influential DOGE supporter.

The billionaire Tesla and SpaceX Chief Executive Officer has spent several months propounding the token, primarily via his 62M-follower-strong Twitter account. The world’s richest man has a record of pumping cryptocurrency using his robust follower base via memes and jokes.

Many of such memes have sent DOGE rallying by double-digit figures in the past, with the most recent of such tweets coming in October.

UberFacts tweeted in October that “Elon Musk is predicted to become the world’s first trillionaire, thanks to SpaceX.” Musk immediately saw that as an opportunity to pump his favorite coin and replied with “*In Dogecoin,” which sent the crypto on a sharp rally.

While it is not completely clear why Musk is so fond of Dogecoin, the CEO stated in a Clubhouse interview in February that:

“Arguably the most entertaining outcome, the most ironic outcome would be that Dogecoin becomes the currency of Earth of the future.”

However, when it comes down to business, it appears that Musk prefers Bitcoin, considering that Tesla holds BTC on its balance sheet and not DOGE.

That said, many cryptocurrency community members have expressed their displeasure in the billionaire’s antics, noting that his actions could undermine the industry’s integrity.

Elon Musk is not the only prominent personality supporting the Shiba Inu-themed coin. Other popular individuals openly endorsing DOGE include Dallas Mavericks’ Mark Cuban, hip hop star Snoop Dogg, and Kiss bassist Gene Simmons.

Viability of Dogecoin as an Investment Tool

With all that said, what does Dogecoin look like as an investment?

Day Trading DOGE is Profitable

Because of the immense volatility embedded in Dogecoin, you can earn decent profits day trading and even swing trading DOGE. Many traders take advantage of price pumps, like when Elon Musk or other prominent individuals tweet or make remarks about Dogecoin, to realize substantial profits. Once momentum begins to wane, Dogecoin day traders convert their holdings to stablecoins like USDT or USDC.

Dogecoin has a Loyal Fan Base

As mentioned earlier, DOGE has one of the most active supporter bases, with a booming online presence across social media networks like Reddit, Twitter, and Facebook. This group devotes significant time and resources to ensure that Dogecoin remains relevant and advances in value.

That said, monitoring the online feeds and activities of DOGE supporters gives you firsthand information on possible price movements, making it even easier to day-trade this crypto asset.

Dogecoin is a Humanitarian and Charity Tool

DOGE has garnered a degree of recognition as one of the de facto coins for donations to charities, humanitarian projects, and other social causes, helping it attract more support across the globe.

DOGE is also commonly used for tipping people on social media.

Disadvantages of Dogecoin

As always, no cryptocurrency is perfect and there are some drawbacks to Dogecoin.

Skepticism About Leaderless Status

With most cryptocurrencies and financial instruments in general, their founders/leaders remain financially invested in the asset as a show of confidence. However, with Dogecoin, it is a different story. In 2015, co-founder Billy Markus sold all his DOGE holdings to buy a Honda Civic. In July, co-founder Jackson Palmer criticized the cryptocurrency, asserting that the crypto industry is under the control of the wealthy and is a trap for the naive.

Not holding and even criticizing your creation raises doubts about the future of a project for prospective investors, which does not bode well for any asset.

Dogecoin Lacks Real Innovative Function

While most cryptocurrencies have recorded significant upward strides in innovative uses and applications, Dogecoin remains a transactional currency and nothing more due to its lack of innovation. This stagnation has sparked many questions about the future of the token as other coins leave it behind in terms of adoption.

Dogecoin has an Infinite Supply

Dogecoin originally began with just 100 billion coins in circulation. However, due to the 1-minute block time on the network, all 100 billion DOGE coins got mined two years after its launch. As such, the developers decided to issue an additional 5 billion DOGE, and before long, this issuance became a yearly affair.

This act took away the fundamental principle of scarcity from the future of DOGE, unlike other crypto assets with fixed supply numbers.

Conclusion – Should You Invest in Dogecoin?

With the disadvantages mounted against it, is investing in Dogecoin still a viable idea? Here’s what I think.

Some spectators argue that Dogecoin is not a viable investment vehicle because it fails to meet specific standards compared to other digital assets. However, this line of thinking fails to recognize that DOGE was created specifically for that reason, as a parody of the digital asset world.

Dogecoin goes beyond the corridors of investment or money; it goes deeper than that. The retail investor of DOGE is no longer an individual; they are a team, and DOGE is their mascot—regardless of whatever price it resides.

Speaking on Dogecoin, CEO of Celsius Network Alex Mashinsky noted that:

“If you have found yourself interested in cryptocurrency because of Dogecoin, I urge you to keep going because beyond the hype, there is a real revolution happening that demands more attention.”

That said, it goes without saying that you need to have a solid understanding of the risks involved in investing in DOGE. While it might not have a solid long-term prospect, DOGE’s near-term prospects are incredibly encouraging and beneficial.

This year alone, Dogecoin has rallied by over 9,000% year-to-date and over 25,000% to its $0.7390 all-time high recorded in May, making several overnight millionaires.

All the same, make sure to do your research and invest based on your risk tolerance to avoid getting swept by FUD spikes.

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