Dogecoin (DOGE) review: Is DOGE still a joke crypto?
Is Dogecoin’s recent success a sign it has carved itself out a space in the world of cryptocurrency? Or is it little more than a social media fueled pump and dump? In this article we’ll discuss its entertaining history and what the future may look like for the internet’s second-favorite crypto.
What is Dogecoin?
Utilising the popular Shiba Inu dog meme as its mascot, the tongue-in-cheek coin has branded itself as a friendly, approachable cryptocurrency for popular use online. It’s perhaps been even more successful than BTC in getting those put off by the cold complexity of cryptocurrencies to dip their toes into the world of crypto investing.
Dogecoin defines itself as “a decentralized, peer-to-peer digital currency that enables you to easily send money online”. It has many similarities to Bitcoin in that it is actually a fork of Luckycoin which is a fork of Litecoin which is an early fork off of the original Bitcoin protocol.
Note: a fork is a code rewrite of a blockchain that changes the chain and creates a new one.
DOGE is acquired via a static block reward received for mining a block. With only a one minute block interval, its blockchain runs faster than most other blockchains, with no cap to the supply.
Despite not offering anything particularly new over its dominant competitors like Bitcoin or Litecoin, DOGE has carved out a productive niche for itself. It has a large supply and low price point allowing for efficient micro-tipping on social media, with users of sites like Reddit sending DOGE to content creators they find particularly entertaining or valuable.
Dogecoin was born of a joke between JackPalmer, a product manager at Adobe, and Billy Markus, an IBM software engineer in late 2013. They made the crypto to satirise the huge influx of alternative cryptocurrencies (alt coins) spawned in the wake of Bitcoin’s success.
Despite reportedly writing the code in only a few hours, the developers were surprised to find people adopting it immediately after its launch. Their website recorded over a million unique visitors to dogecoin.com within the first month.
Reddit was central in the development of the token’s subculture, as it became a popular method of tipping contributors on the web for their altruistic or entertaining deeds.
In 2015, Palmer announced an extended leave of absence from the cryptocurrency community. He stated this was due to it being, “toxic, white male dominated, and filled with buzzword-filled business ideas.”
In July of 2020 a TikTok trend encouraging people to buy into Dogecoin pumped the price up over 1,900% to $1 before the price immediately settled back to roughly where it started.
How many Dogecoins are left?
At the time of writing, there are 128.58 billion Dogecoins in circulation. Despite an initial cap of 100 billion (this was eventually removed by the founder), there is currently no limit to the amount of DOGE that can be minted. The block time is 1 minute, with a block reward of 10,000 DOGE.
Many investors argue that the price gains in other popular tokens, such as Bitcoin, are supported by the limited supply inherent in their coding. Only 21 million BTC will ever exist, and the complex computational problems needed to mine it become harder and harder over time.
Coins with a limited supply are like a huge pie, you can buy some and take a piece of that pie and if you don’t sell, your piece will always stay the same size. With coins that have an unlimited supply, your piece will always be shrinking (unless you’re constantly buying more).
So does Dogecoin risk becoming worthless? With no cap and a quick mining rate, the supply of Dogecoin should always keep up with (if not exceed) demand for the coin, keeping the price low, and not boding particularly well for Dogecoin’s future price for investors.
How much is one Dogecoin worth?
Like many cryptocurrencies, Dogecoin has experienced high volatility. Its major boost came alongside the Gamestop short squeeze and the post-pandemic crypto rush, encouraged by celebrities like Elon Musk, Snoop Dog and Gene Simmons. With so much of its success attributed to social media, should existing investors in Dogecoin hold or sell?
DOGE peaked on February 8th, 2021 at $0.082605, with a bullish charge pushing the market cap to $10.7 billion, following a series of viral celebrity tweets. It has since experienced a minor pullback, dropping 31.6 % at the time of writing, with a market cap of $7.26 billion.
However, especially considering its atypical road to success predicting Dogecoin’s future is particularly challenging. Will the community-driven token reach the moon? Or is Dogecoin worthless in the long run?
Is Dogecoin a good investment in 2021?
On the one hand, you cannot buy the kind of publicity enjoyed by Dogecoin. Its tongue in cheek branding, celebrity endorsements, and loyal community support may be enough for it to continue its upward trajectory. But there are some considerable risks to holding DOGE.
As highlighted by CZ, the CEO of Binance, one wallet address holds 27% of all Dogecoin, and the top 20 addresses hold more than 50% of all Dogecoin. If they all decide to jump ship, the price of the token will practically collapse.
Even Billy Markus himself reportedly told The Journal that Dogecoin’s surge ‘doesn’t make sense,’ attributing its boom to the volatile forces of social media, such as Reddit’s r/wallstreetbets (that also helped drive up the price of Gamestop and AMC) and celebrity endorsement rather than being a reflection of its inherent value.
So, should I buy Dogecoin?
Despite the risks, at the time of writing CoinMarketCap ranks Dogecoin as the 14th largest cryptocurrency by market value. It remains an excellent method for micro-tipping due to it’s fast confirmation times, lower transaction fees, and low value. And it has proven staying power as one of the longest-running crypto projects. It may find itself well-positioned to capitalise on the success of its organic marketing.
Where to buy Dogecoin
If you’ve decided to take the plunge, even if it’s just for the memes, Dogecoin can be purchased using Fiat or traded for other tokens on major exchanges like Binance and Kraken.
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