Between continuous endorsement from Elon Musk (who recently changed the Twitter logo to a Shiba Inu dog), a dedicated subreddit with 2.4 million members, and a base of committed investors, it is no wonder why Dogecoin became the fourth-largest cryptocurrency by market capitalization back in 2021. Since then, the price of the meme coin tanked dramatically. However, the digital token’s novelty remains, and plenty out there believe its price will rise again.
Of course, a cryptocurrency created as a joke can’t be taken seriously at a large scale. However with the increasing popularity and adoption of cryptocurrencies, Dogecoin has unironically remained relevant, despite its weaknesses and clear lack of substance. This begs the question: Is Dogecoin worth it in 2024? In this article, we will analyze Dogecoin, its history, and its current state to determine whether or not it is a viable investment opportunity today.
What is Dogecoin?
Dogecoin is a cryptocurrency created in 2013 by software engineers Billy Markus and Jackson Palmer, who intended the coin to be a silly, lighthearted parody of Bitcoin. Dogecoin quickly gained popularity due to its cute Shiba Inu mascot, which came from the “Doge” meme.
The main difference between Dogecoin and most other coins is its lack of use case. Unlike Bitcoin, Ethereum, or Litecoin, there are no unique features or structures that could potentially be useful for businesses or individuals. Instead, Dogecoin relies on its popularity and price appreciation to remain relevant.
The coin is based on Litecoin blockchain technology, but unlike Bitcoin, which has a limited supply of 21 million coins, Dogecoin has no supply cap. Theoretically, the coin’s price could continue rising indefinitely if it remains popular enough.
Why did Dogecoin gain popularity?
The Dogecoin price skyrocketed 23,000% in 2021, primarily due to a surge in meme-fueled speculation from retail investors. This rise was further supported by the endorsement of billionaire investor Elon Musk, who often tweeted (and still does) about Dogecoin and changed his Twitter profile picture to a Shiba Inu dog. However, even if this kind of celebrity endorsement is enough to create short-term price spikes, it is not enough to sustain a coin’s long-term value.
To Dogecoin’s credit, it is considerably more efficient than Bitcoin. Similar to Bitcoin and other cryptocurrencies, it relies on the proof-of-work method and mining to authenticate transactions. Dogecoin miners use advanced computers to solve mathematical equations that validate and record transactions on Dogecoin’s blockchain. Miners earn Dogecoin as payment for authenticating transactions on the network.
Compared to Bitcoin mining, Dogecoin mining is faster and uses significantly less energy, resulting in a much lower environmental impact. It is also much less expensive to transact with than Bitcoin. For prospective retail investors looking for a reason to keep heading “to the moon,” these small benefits could make Dogecoin a more attractive investment option.
The Weaknesses of Dogecoin
The primary weakness of Dogecoin is its lack of use case. Although the digital token has a dedicated Reddit community with 2.4 million members, it has no real-world application or utility. While this isn’t necessarily a problem for investors looking to make a quick buck, it definitely hinders Dogecoin’s long-term growth potential and sustainability.
Another major issue with the coin is its high inflation rate. With no cap on supply, the number of coins in circulation constantly increases, creating an overabundance of supply and downward pressure on the price. Currently, there are more than 130 billion Dogecoins in circulation, with about 5 billion new coins mined annually.
Dogecoin is also subject to the same risks as other cryptocurrencies, such as volatility and regulatory uncertainty. This could make it difficult for investors to accurately predict its future performance.
How to Buy Dogecoin
Dogecoin is one of the easiest cryptocurrencies to buy. It’s available on nearly every major crypto exchange, as well as a few stock trading apps. Here’s a step-by-step guide to purchasing Dogecoin:
- Open an account on a cryptocurrency exchange. Binance, Coinbase, Kraken, eToro, and Gemini are the most popular cryptocurrency exchanges to buy Dogecoin.
- Verify your identity by uploading the required documents. Exchanges usually require a government-issued ID and proof of address (utility bill, bank statement).
- Deposit funds into your account. You can use either fiat money or other cryptocurrencies to buy Dogecoin.
- Buy as much Dogecoin as you want with the funds you have deposited.
- Store your coins in a secure wallet. For best practice, always store your coins in a private wallet, not on the exchange.
Is Dogecoin worth the investment?
As of May 2023, Dogecoin is in the news again as Elon Musk changed the Twitter logo to the classic Shiba Inu that represents both Doge and Dogecoin. Considering the cryptocurrency soared 30%, people are clearly still interested.
One forecast predicts Dogecoin will reach $0.95 in 2024 before consolidating around $0.25 by 2025. These figures underscore a critical factor impacting its investment feasibility: volatility.
Like all cryptocurrencies, Dogecoin is subject to intense price swings that leave uninformed investors vulnerable to significant losses. Some Dogecoin investors have gotten extremely rich from their trades, but those who don’t understand crypto markets generally find themselves in a difficult spot.
While Dogecoin may have an amusing concept, it is not a wise investment choice for most. Unlike stablecoins that derive their value from other assets or Ethereum that adds value to a financial system, Dogecoin doesn’t offer any benefits. Its community and entertainment value are its primary assets.
When investing in any cryptocurrency, it’s important to remember they entail considerably higher risk than other investment options. Before opening an account and investing your hard-earned money into a meme cryptocurrency, it’s best to evaluate the fundamentals of Dogecoin and research your investment strategy thoroughly.
With a long-term view, high risk tolerance, and dedication to becoming a member of the community, there is a small chance a Dogecoin investment could pay off handsomely. For most, it is best to avoid the coin and look elsewhere for investment options with higher upside potential.