How to Invest in Dogecoin (and 1 Major Downside to Consider)

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Supported by the likes of Elon Musk and Mark Cuban, Dogecoin is one of the most popular cryptocurrencies today. But is it a smart investment?

Due to social media buzz, many people are considering an investment in Dogecoin.

But before you invest, there are a few things to consider. In this guide, learn about what Dogecoin is, its bullish factors, and its biggest risks.

Lastly, discover how to invest in Dogecoin using three of the most popular cryptocurrency platforms.

What is Dogecoin?

Most people are surprised to learn that Dogecoin was originally created as a joke.

In 2013, Billy Markus and Jackson Palmer created Dogecoin to make fun of the cryptocurrency community and their wild speculation. As such, Dogecoin is sometimes referred to as a “memecoin.”

Despite this origin story, Dogecoin has an extremely devoted following and has remained one of the most popular cryptocurrencies since its creation. Like all cryptocurrencies, Dogecoin is extremely volatile, but its price has been particularly reactive to news and social media.

Elon Musk (whose fans refer to as “The Dogefather”) and billionaire Mark Cuban have both voiced their support of the Dogecoin on Twitter – even calling it “the people’s crypto.”

However, other investors and analysts continue to view Dogecoin as a speculative bubble, and insist that the billionaires’ comments are satirical.

Dogecoin Fast Facts

  • Created: December 2013
  • Ticker symbol: DOGE
  • All-time high: 74 cents, May 2021 (as of writing)
  • Market cap: Roughly $54B
  • Exchange rate: Floating

Is Dogecoin a Good Investment?

Dogecoin attracts plenty of investors. However, their reasoning usually revolves around momentum, hype, and wild speculation.

By investing in Dogecoin, these investors are betting that the coin will return to the social media spotlight in Musk’s or Cuban’s good graces, and blast off to new highs.

To be fair, this strategy may not be as far-fetched as it seems.

Dogecoin hasn’t sustained its all-time high of 74 cents that it hit in early May 2021. Now that the price of the coin has capitulated, a positive tweet from Musk or Cuban could indeed send it skyrocketing.

Typically, when Dogecoin sees large swings to the upside (or downside), it is because of specific news or social media activity.

Many people also choose to speculate on Dogecoin because it seems relatively cheap, averaging a price between just 25-40 cents.

Of course, most cryptocurrency exchanges allow you to purchase partial shares of crypto. So, you could just as easily buy $500 worth of Bitcoin (even though a whole Bitcoin is $30,000+) as you could buy $500 worth of Dogecoin.

Risks of Investing in Dogecoin

Thinking about investing in Dogecoin? It’s important to consider the risk you’d be taking on.

One of the biggest controversies surrounding Dogecoin is its uncapped currency supply. Many investors are attracted to Bitcoin because it has built in scarcity and value. Its supply is capped at 21 million Bitcoins, meaning only 21 million Bitcoins will ever come into existence.

This has caused a new interest in Bitcoin as an inflation hedge because its supply cannot be artificially inflated by governments and institutions.

With Dogecoin, however, there is no supply cap. More coins can be created at any time. Since the coin can be devalued whenever more Dogecoin is created, it’s similar to owning fiat currency.

Many crypto investors argue that this destroys the most important criteria and use case of cryptocurrency in the first place – as a store of value.

To be fair, other coins like Ethereum also do not have a capped supply. However, Ethereum bulls argue that Ethereum’s fixed issuance schedule and gas fees keep Ether from being an inflationary cryptocurrency.

Dogecoin vs. Bitcoin and Other Altcoins

There may be an opportunity in Dogecoin, especially now that it has fallen off of its recent highs.

However, most bullish activity in Dogecoin is a result of hype, momentum, and social media attention, rather than a result of fundamentals or the desire for a store of value.

Other altcoins have more fundamentally bullish factors that help justify them as investments. including:

  1. Litecoin
  2. XRP
  3. Cardano

For these reasons, savvy cryptocurrency investors tend to prefer those altcoins as investment vehicles. Of course, there are other investors who refuse to touch any crypto aside from Bitcoin. This camp is known as the “Bitcoin Maximalists.”

How to Invest in Dogecoin Instantly

Still want to invest in Dogecoin? As one of the top 10 cryptos, Dogecoin is available on a growing number of platforms. The following three exchanges are worth checking out

Here are the three best places to buy Dogecoin and the pros and cons of each:

Robinhood
Robinhood is one of the most popular apps and investing platforms. Dogecoin is available to trade on Robinhood, under the ticker symbol DOGE.

Robinhood’s ease of use and the fact that you can also trade stocks make it an attractive way to dip your toes into the cryptocurrency game.

However, they still do not allow users to withdraw cryptocurrency from the Robinhood platform. They’ve said that they are working on allowing this function in the future, though.

Robinhood

Buy and Sell Cryptocurrency

Robinhood Crypto offers commission-free cryptocurrency investments 24/7. Some of the crytocurrencies available are Bitcoin, Dogecoin, Ethereum, and Litecoin. This offer is currently available to selected states.

Coinbase
Coinbase made Dogecoin available on June 3rd, 2021.

Coinbase offers a very simple interface, and you have the added advantage of being able to withdraw your cryptocurrency off of the platform if you choose. In this way, it still has a leg up over Robinhood.

However, users do sometimes complain about high fees on Coinbase. If you’re more of a trader, those fees can really eat into your overall returns over time. For this reason, Coinbase is better suited for more of a buy-and-hold-style investor.

Coinbase

Gemini
Gemini is a cryptocurrency exchange founded by the Winklevoss twins. This platform is popular because of its commitment to security – even describing itself as “the safest crypto exchange.”

For those who want optimal safety while still choosing to leave their coins on an exchange, Gemini may be the platform for you.

Gemini users can buy Dogecoin and many other coins. The company also recently launched a new service known as Gemini Earn. This allows users to earn a yield, or APY as high as 7.4% on their cryptocurrency.

Again, this makes Gemini a great choice for long-term holders who want to keep their cryptocurrency on an exchange.

Gemini

Investing in Dogecoin: Bottom Line

So, is Dogecoin a good investment? While it could certainly see another explosion to the upside, we’d still recommend coins with stronger fundamentals and use cases.

Coins like Bitcoin have a role as a store of value, while others like Cardano or XRP are trying to solve a specific problem in the financial ecosystem. By comparison, Dogecoin fluctuates based on pure speculation and news alone.

That’s not to say there isn’t money to be made in Dogecoin, but you may be able to make equally great returns with potentially way less risk by opting for some of the other coins out there.

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