Is Dogecoin Really All It’s Cracked Up to Be?

Cryptocurrencies are famous for turning the investment landscape on its head, and Dogecoin has been one of the biggest disrupters.

Inspired by a Shiba Inu Japanese breed of dog, Dogecoin has evolved into a wildly popular internet meme of which Doge, the project's mascot, has been at the center.

dogecoin
Source: Dogecoin.com 

The meme coin's role in the economy has gained prominence with validation from the likes of Elon Musk and Mark Cuban.

In response, Dogecoin's value has ballooned from a fraction of a penny this time last year to $0.17 at last check, with an eye-popping market cap of $22.5 billion. Dogecoin has muscled its way into the top 12 of the crypto rankings, surprising everyone from crypto market influencers to the co-founders of the Dogecoin project.

dogecoin 12 months
Dogecoin 12-Month Chart | Source: TradingView

Dogecoin co-founders Jackson Palmer and Billy Markus created the meme coin in 2013 as a parody of leading cryptocurrency bitcoin. While it was intended to be a silly joke, investors have been laughing all the way to the bank as users have flocked to Doge for its fast and cheap payments.

Now an entire litter of dog-themed meme coins has emerged, with Dogecoin leading the pack.

Dogecoin Mechanics

Dogecoin is a decentralized cryptocurrency built on the blockchain and used chiefly for payments. The blockchain's decentralized nature means that Dogecoin does not require a third party, like a bank, to complete transactions. But transactions need to be verified somehow, and that's where mining comes into play.

Dogecoin, like Bitcoin, relies on the proof-of-work (PoW) process through which individuals and groups use their computers to solve complicated equations on the blockchain, complete transactions, and create blocks, in exchange for which they receive new coins. PoW has drawn criticism for its energy-intensive nature.

While Elon Musk has aimed at Bitcoin for its energy consumption, he likes Dogecoin, one of the three cryptos that he owns in addition to bitcoin and Ethereum. Musk touts Dogecoin for its transactions per day, the potential for which he says is much higher vs. bitcoin. He says he has been “working with Doge devs to improve system transaction efficiency,” calling the results “potentially promising.”

What Is Dogecoin's Main Use Case?

Dogecoin's use cases are two-pronged: as a store-of-value asset and as a payment method, the latter of which has increasingly gained popularity thanks to companies adding support for Doge transactions. Among them, AMC Entertainment and the NBA's Dallas Mavericks both accept Dogecoin as a payment method, and the Doge community is waiting with bated breath for Tesla to do the same.

Dallas Mavericks owner Mark Cuban provided some perspective on trends, revealing that while fans can pay in any crypto, 95% of the time, they prefer to pay with Dogecoin for tickets and merchandise. He called Dogecoin “the people's way to pay.”

Tipping is another widespread use case for Dogecoin. This practice gained traction on Reddit, where members reward one another with Doge micropayments for good content. The tipping feature has since made its way onto Twitter, too.

How High Can the Dogecoin Price Go?

This is the million-dollar question. Dogecoin was good to investors in 2021, generating more than 4,100% returns. Dogecoin was a leading topic of discussion on social media platforms like Reddit, and that momentum appears to continue in 2022.

The Dogecoin price reached a fresh all-time high of $0.74 in 2021 and since then has been volatile, much like bitcoin. While Doge is currently trading below the $0.20 level, market bulls believe it's only a matter of time before it reclaims its former glory and goes higher, with some calling for Dogecoin $1 as soon as 2022.

One potential catalyst is Elon Musk's plans to “put a literal Dogecoin on the literal moon” via a SpaceX mission funded with Dogecoin.

Dogecoin Risks

One of the most significant risks for holders of Dogecoin — or any crypto-asset for that matter — is sending funds to an incorrect wallet address. The blockchain's decentralized nature means nobody is on the other side to help if things go awry. Sadly, if a user mistakenly sends their DOGE to the wrong wallet address, chances are it's gone forever.

Another potential pitfall is scams, especially for high-profile projects like Dogecoin. If somebody promises you the world in exchange for the private keys that control your crypto wallet, you can rest assured it's a scam. Like Dorothy and her magic slippers in “The Wizard of Oz.”

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Where Can I Buy & Store Doge?

As Dogecoin has risen in popularity, the number of exchanges and brokers that support the meme coin has soared to include the likes of Coinbase and commission-free online broker Robinhood. The first thing you'll need to do is whittle down the list and choose one. Here are a few options:

  • Coinbase
  • Kraken
  • Binance
  • Robinhood

After opening an account, you'll need to fund it with money from a bank account, debit card, credit card (this option could trigger higher fees from the issuing bank), or even PayPal, depending on which fiat onramps the exchange or broker supports.

You could have instant access to your funds, or it could take a few days, depending on the size of the transfer. Next, choose Doge, the symbol under which Dogecoin trades, and the purchase option on the exchange or broker of your choice. Select an amount or number of coins. Considering that cryptocurrencies trade around the clock, you should have the coins in your account in a flash.

Next, you'll need a place to store your crypto. Similar to cash, you'll keep your crypto in a wallet, though crypto wallets take the form of either a mobile app or a hardware device that's akin to a USB stick.

Centralized exchanges like Coinbase let you store your Dogecoin in a crypto wallet on the exchange. Robinhood plans to add crypto wallets in 2022, allowing users to spend Doge straight from their accounts.

To be more in control of your funds, however, and stay true to the decentralized nature of crypto, you might want to consider getting a wallet of your own, such as a hardware device like Trezor or Ledger Nano X. Plus, here are a couple of online wallet options.

  • The Dogecoin Wallet is a mobile wallet used to pay for goods and services by scanning a QR code at merchants that support Doge. There are fees associated with Dogecoin Wallet transactions, the minimum for which is currently 1 Doge.
  • Coinomi is also behind a Dogecoin wallet. It supports Android, iOS, Windows, Linux, and macOS. Coinomi lets you buy Dogecoin with a credit card. Its claim to fame is that it's never been hacked.

The Dogecoin community boasts millions of users, many of whom believe that the meme coin is all it's cracked up to be. But as an investor, you'll have to make that call for yourself.

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This post was produced and syndicated by Wealth of Geeks.

Featured Image Credit: Shutterstock 


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