Should you buy some Dogecoin (DOGE)?
This is not financial advice. Cryptocurrency is unregulated in the UK; profits may be subject to tax; and the value of any investment could fall.
Is Dogecoin Now a Good Investment? Understanding DOGE
Since the eruption of Bitcoin, tons of other cryptocurrencies have been getting into the crypto market. One of those is Dogecoin. It is an open-source, peer-to-peer cryptocurrency that is built on blockchain technology.
It started as a meme-inspired cryptocurrency in 2013; funny enough, it took off. As of 2021, it was one of the best-performing cryptocurrencies. The GameStop rally and Elon Musk’s revelation that he was working with Dogecoin developers fuelled this upsurge.
Dogecoin overview
Dogecoin (DOGE) was created as a joke based on a viral internet meme of a Japanese Shiba Inu dog. Two software engineers, Billy Marcus and Jackson Palmer, were the brains behind it. They designed it as a simple blockchain-based coin with no utility and supply limit.
It was officially launched in December 2013 and immediately attracted a high volume of traders, experiencing a price surge of over 920% by January 2014. The founders expected little out of Dogecoin, but it took a life of its own. It quickly gained many supporters who found new uses for it. One of them is the third-party tipping service bot “DogeTipBot,” that linked with Reddit, and users could use it to tip on the content they like.
During the cryptocurrency bubble in early 2017, there was an increased uptake and investment in Dogecoin. It saw its prices increase by 2,196% in just months, giving investors the impression there is more to DOGE than meets the eye. In consequent years, there were similar price spikes. However, it was only in early 2021 that Dogecoin hit the jackpot.
A chain of events caused this when traders opted to buy GameStop stocks. For speculative purposes, retail investors put their money in “meme coins” like Dogecoin. The result was that the Dogecoin price rose exponentially from $0.01 in January 2021 to $0.7579 in May 2021, experiencing a 7400% increase.
It lasted only a short time as investors withdrew. Prices fell drastically to a low of $0.06 by June 2021. In mid-October 2022, when Elon Musk took over Twitter, there was a race to buy DOGE. The coin gained over 140% as speculation was rife that they would use the coin for tipping or paying subscriptions on the platform. There has been no official statement, and the price dipped below $0.10.
Dogecoin’s current performance
The price of Dogecoin in 2022 has been between $0.1416 to $0.081365. In January 2022, it started at $0.1416, a 16.8% price drop from December 2021. The price went up in March to $0.1380 and then went down again in May to $0.0858. As of November 14, 2022, Doge was worth $0.084, with 132 billion coins in circulation.
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4 Reasons why Dogecoin is a good investment
1. Dogecoin is decentralized
Dogecoin is built on a decentralized blockchain network, runs on a proof-of-work algorithm, and anyone can mine it. It means each network member has a copy of the distributed ledger and can verify transactions without an intermediary.
It also means there is no reliance on any member, eliminating the risk of the network failing because of a data breach. With this level of decentralization, it is safe to invest in Dogecoin, as it is spread all over globally, and impossible to corrupt the network.
2. Dogecoin is a Favourite with the Wallstreetsbets crowd
Even though the Wallstreetbets community does not officially endorse Dogecoin, it gets regular mentions in its Reddit. When it came under the radar of the Wallstreetsbets crowd in May 2021, Dogecoin grew by over 12,000%.
The Wallstreetsbets crowd believes the financial system is rigged and is determined to stick it to the establishment. They take random assets, prop them up, and profit from them. One example is the GameStop stock, which Wall Street heavily shorted.
Wallstreetbets rallied, aggressively bought the stocks, and squeezed out the shorts to push GameStop stock to over $350. As a result, hedge fund investors lost over $5 billion in days. However, retail investors made money and, on top of that, made a point they could hold their own against institutional traders.
As such, Dogecoin will always have the possibility of being propped up by the Wallstreetbets, as it did in May 2021. As an investor, you can consider Dogecoin with this possibility in mind.
3. Dogecoin has a unique market position
Dogecoin is associated with being the first meme coin. Other meme coins are built around Dogecoin. This is why Dogecoin has a unique market position and an edge over other meme coins.
When the market for meme coins heats up, Dogecoin will enjoy its first-mover position over the other coins. They already have strong brand recognition and a strong community and have the option to perfect Dogecoin further. It is, therefore, a worthy cryptocurrency to add to your portfolio.
4. Dogecoin’s inflationary nature is sensible
One argument for cryptocurrencies is that they would replace fiat currency. However, Bitcoin, the first cryptocurrency, has not replaced fiat currency. Instead, it has become more of a store of value rather than a medium of exchange, and in that case, it is deflationary.
Bitcoin is capped at 21 million coins. Therefore, it has a limited supply, and as people buy and hold on to it, the amount left for everyday transactions is scarce. It makes it difficult for it to work as a normal fiat currency.
For starters, deflationary currencies dampen spending. It is because their price will always go up in the long term. Therefore, people hoard it with a guarantee they will have a return. However, this is different from how the economy works. The economy needs people to spend money, which creates a demand for goods and services and, eventually, wealth creation.
Another thing is that Bitcoin, being a deflationary currency, makes it impractical to borrow and lend money. For example, Bitcoin, at the start of 2017, was going for $1000. Come January 2018, the value of Bitcoin had shot up to $17,527. If you had borrowed Bitcoin in 2017 at $1000, you’d be repaying it at $17,000 in 2018.
Being a deflationary currency, the increase in value means employers cannot afford labour. It makes it counterproductive for economic development. With all these things going against a deflationary cryptocurrency like Bitcoin, it makes sense to look at an inflationary cryptocurrency.
Dogecoin is an inflationary cryptocurrency and has no limit to supply. Fiat money is also inflationary and grows as the economy grows. The good thing about Dogecoin is that the government cannot print it.
The price of Dogecoin depends on the number of transactions rather than so much on the amount of Dogecoin in circulation. It has held its own in the past market rallies, in fact, better than most altcoins in the crypto crash of 2017. It makes Dogecoin the perfect cryptocurrency to buy for transactions and speculation.
Dogecoin use cases
Dogecoin has raised a lot of issues regarding its utility. So far, it has shown no real-world use. As a result, it has no power to control its price. Cryptic tweets by Elon Musk influence its price, and it is hard to say how long it will stay in the crypto market exchange.
A few instances where Dogecoin has been used include when The Dogecoin Foundation (a (nonprofit created by Dogecoin’s founders) raised ($50,000) worth of Dogecoin to fund a water project in Kenya. Wag, an on-demand dog-walking mobile app, accepts Dogecoin, among other cryptocurrencies, for payment. Crypto.com accepts Dogecoin as payment for online shopping.
Besides these few instances, Dogecoin has shown no utility. It’s about time Dogecoin developed its utility like Bitcoin, which acts as a store of value and serves as a medium of payment.
Dogecoin community
Crypto communities are no joke; they are alive and have ardent members. Dogecoin is no different. It has a vibrant Reddit community with 2.4 million members (and growing) that calls themselves Subshibers. The subreddit is for sharing, discussing, hoarding, and wowing about Dogecoins.
Their community is incredibly active, and initially, some bought Dogecoin to be part of the community, not thinking of making money. As it started as a joke, people gravitated to it. People want to be a part of something bigger than themselves.
On its website, Dogecoin opines: “The Dogecoin community cares about supporting each other, being kind, teaching people about cryptocurrency, fundraising, having fun, making memes, and being absurd. This is nicely captured by Dogecoin’s unofficial tagline: Do Only Good Every day.”
Dogecoin Summary
Cryptocurrencies are here to stay. Dogecoin will be one of those that will have staying power. The right time to invest would be now and take advantage of its low price. When you invest, think of it as a long-term game. Take your time, and don’t rush for a quick return on your investment.
Author bio: Cosmas Mwirigi
Cosmas alias Cosii-Riggz is a technology enthusiast and SAAS writer who helps clients understand products by explaining services for businesses.
He has been featured on websites such as PV Magazine and Bitcoin Kenya. He likes traveling to new places and exploring what’s new on the internet during his free time