Dogecoin recently witnessed a price surge following Elon Musk’s endorsements and its involvement in the Reddit r/WallStreetBets forum. But despite the hype, many retail investors still aren’t sure if dogecoin worth investment.
The coin started as a meme. It features the face of the Shiba Inu dog from the “Doge” meme as its logo and namesake.
Dogecoin was invented by software engineers Billy Markus and Jackson Palmer, who created it as a payment system that is instant, fun, and free from traditional banking fees.
What is Dogecoin?
Jackson Palmer co-created Dogecoin, but he meant nothing more than a joke, a mockery of the cryptocurrency space that he didn’t take seriously.
For one, Dogecoin’s inflation is significantly larger than Bitcoin’s own and it hasn’t had a supply halving since 2014.
Each block contains 10,000 DOGE, so some 5.2 billion DOGE are mined each year. Dogecoin’s mining difficulty adjustment, which controls how hard or easy it is to find a block, is tweaked every block, unlike Bitcoin, which adjusts every 2,016 blocks.
It is sometimes “merged mined” with Litecoin, meaning miners run programs to mine both chains simultaneously.
Additionally, DOGE has faster bocks than Bitcoin. A dogecoin block only takes 1 minute to create while a bitcoin needs 10 minutes. So, transactions are faster and cheaper than Bitcoin.
This comes at the cost of producing many more orphan blocks than Bitcoin. Orphan blocks are blocks that are rejected by the network and do not contribute to the longest blockchain transaction history.
Dogecoin also includes a community-donated developer fund, which currently holds just over $1,700,000 worth of DOGE. Nicoll said that the developers share access to the fund via a multi-signature wallet.
Dogecoin Price Overview
DOGECOIN prices have experienced a true renaissance this year with the value of the meme cryptocurrency skyrocketing by 1,400 percent.
Dogecoin has hit a massive market cap value of more than $9billion, sending ripples through the cryptocurrency markets.
As of now, the coin is exchanged for something around $0.06. For comparison, on February 12, 2020, the token was trading for just $0.003.
Dogecoin’s newfound popularity can also be partially attributed to SpaceX and Tesla SEO Elon Musk promoting the crypto on his Twitter profile.
The South African billionaire has been frequently tweeting about the token, even claiming this week he bought some for his nine-month-old son so that he can “be a toddler holder”.
Crypto analysts have also attributed the token’s success to the Lindy Effect.
According to the Lindy Effect, the longer something sticks around, the more likely it is to be around in the future.
In this case, crypto analyst Willy Woo argued DOGE is listed on most exchanges, is supported by most crypto wallets, and has a liquid market.
Billionaire Mark Cuban has also called DOGE “the best entertainment bang for your buck”.
He said: “That’s not to say it has any intrinsic value. It doesn’t. But so what.
“It gives you a better chance of winning than a lottery ticket all while teaching the economics of supply and demand and introducing people to crypto-assets.”
What is next for Dogecoin?
The coin is up by about 2000% from last year this time. Meaning that if you had bought 1000 dollars worth of dogecoin last year, now you would have your money times by 20, 20,000 dollars.
However, unlucky that you are, the coin is now believed to be in a bear market.
Dogecoin has managed to hold onto most of the gains accrued throughout the last weeks. However, it is essential to mention that a correction occurred from the new record high of $0.089 to price levels slightly above $0.06.
As of now, DOGE is dancing at $0.068 amid the push by buyers to avert potential losses.
Dogecoin, at last check, was trading at 0.06784 cents, down over 20% from its Feb. 7 record high of 0.087159, according to data from CoinDesk.
That decline meets the commonly used criteria among Wall Street chart watchers and technical analysts for a bear market.
It isn’t clear where dogecoin is headed from here, it is still up by about 50% over the past seven-day period. That ranks dogecoin just outside the top 10 cryptos, with bitcoin atop the leaderboard with a market value surpassing $880 billion.
While many celebrities promote this coin, crypto experts have warned that dogecoin has limited utility compared with other decentralized cryptographic assets, including bitcoin.
As the Dogecoin co-founder Billy Markus describes this coin, it is a “lighthearted cryptocurrency,” made to serve as the fun version of bitcoin.
Nic Carter, a crypto and blockchain venture capitalist who founded Castle Island Ventures, on CNBC earlier in the week cautioned that average investors could be badly hurt by making speculative bets on an asset with no real purpose. He also found it quizzical that Musk would support the virtual asset.
“It’s somewhat disconcerting to see Elon Musk so enthusiastic about it,” the Castle Island co-founder said.
To summarize, there isn’t anything so promising about dogecoin except the Lindy Effect. An enthusiast can argue that it has passed the test of time and it is here to stay, but that is all he can argue. There is no more for dogecoin.
This is not to say that the doge price may not keep going up, but that there is no clear path for this coin. As long as investors buy and hold it, it will be valuable. But as soon as investors start selling it, it will turn to the joke it was the first day.