What are the experts saying about how reliable Dogecoin is as a cryptocurrency?
The year 2021 has revived the hype around Dogecoin. This cryptocurrency founded in 2013, holds a spot among the world’s largest digital currencies due to its approximate $9 billion worth of market capitalization.
US News notes that while the crypto is priced at a humble 7 cents, as of this year, Dogecoin has gone up to a shocking 1,400%. Contributing to the boost of its popularity comeback are multiple celebrities, including Elon Musk who apparently wants to use it as the moon’s currency.
Underneath all this talk up, however, is a genuine question of practicality. Is Dogecoin a smart investment, or is its worth just as light and silly as the meme that inspired it?
It started out as a joke
Julian Hosp, Cake DeFi’s CEO and co-founder acknowledges how interesting of a development Dogecoin has been for traders, especially when one remembers that it was literally conceptualized as a joke in tribute of the Doge meme’s shiba inu mascot, which was all over the internet in 2013.
In comparison to Bitcoin, however, Dogecoin is not quite as reputed in terms of store value. Presently, there exists over 129 billion DOGE which is expected to keep on growing, meanwhile there’s just a little less than 19 million Bitcoin (with a limit of 21 million) going around. This huge supply for Dogecoin explains how its worth hasn’t gone above 7 cents despite its increase in trading.
To invest or not to?
Unfortunately, despite the easygoing air surrounding this crypto, Financer.com’s global marketing manager, George Chrysochou (also an investor), points out that the community-driven nature of Dogecoin, its lack of institutional adoption, official team and road map make it rather unstable. To add to this, its leading developers and founder have, since 2015, discontinued working on the project, even calling it “overpriced”.
Such qualitative factors are critical to cryptocurrencies, as they do not possess the benefits of dividend yields or earnings expectations. As for quantitative factors, before Dogecoin becomes a proper competitor in the world of cryptocurrency, Chrysochou states that it has yet a long way to go before it can even get close to Bitcoin’s mark of 90 cents.
At 7 cents, investing in Dogecoin may sound like no big deal, but realistically, considering how heavily it relies on the relevance of its origin (a literal meme), coupled with the fact that it holds potential for unrestrained dilution, should come as a warning to those wondering if it truly deserves the time of day.
Celsius Network’s CEO, Alex Mashinsky, says that new users need careful education on the risks that come with assets of “little to no value or utility”, regardless of how amusing the upfront attention that phenomena such as Dogecoin bring. Thus, those whose interests in cryptocurrency have been piqued because of it must first broaden their knowledge on the matter before making any serious decisions.
The popularization of a blatantly risky investment can tempt anybody, but money matters are no joke. Looking to expand knowledge on investing but aren’t quite so bent on cryptocurrency? A copy of How to Make Money in Stocks may have some gold nuggets. There’s also the Magnetic MagSafe Leather Wallet for those who prefer to keep cash within reach.