The Beginner's Guide To Investing In Dogecoin

Dogecoin is a decentralised cryptocurrency, created as a parody of Bitcoin, that has gained significant attention due to its meme-inspired branding and support from Tesla CEO Elon Musk. Before investing in Dogecoin, it is important to understand the risks involved. Cryptocurrencies are highly volatile and speculative, and the markets can be extremely volatile. Dogecoin is considered particularly risky as it has an unlimited supply, meaning that for its price to increase or even remain steady, investors have to continually buy more coins.

If you are in a strong financial position and can afford to lose money, there are several ways to buy Dogecoin. The simplest way is on a cryptocurrency exchange, where you can buy tokens with US dollars or other digital assets. Popular exchanges include Coinbase, Kraken, and Binance. Alternatively, you can buy Dogecoin via peer-to-peer platforms like LocalBitcoins or using a cryptocurrency ATM.

Where to buy Dogecoin

Dogecoin can be bought and sold on cryptocurrency exchanges, where buyers and sellers meet to exchange cryptocurrency for dollars. Popular exchanges include Coinbase, Kraken, and Binance, which offer simple, easy-to-use platforms. You can also purchase Dogecoin using beginner-friendly investment apps like Robinhood.

Dogecoin is one of the more popular cryptocurrencies, so you should be able to find it as an available option on most of the more popular exchanges. As with any cryptocurrency, be sure to check if the platform allows you to access your own digital wallet, which means you can send and receive Dogecoin. Some brokers only let you buy and sell Dogecoin with USD.

Dogecoin can also be found on decentralised exchanges, where you can coordinate peer-to-peer transactions. While decentralised exchanges are often much cheaper to use, they also require a bit more technical know-how and are best used by investors with some expertise in the world of crypto.

To purchase Dogecoin, you'll need to open an account with a cryptocurrency exchange. Here's how to buy Dogecoin on some of the most popular exchanges:

Coinbase

Create a Coinbase account to buy and sell Dogecoin on a secure crypto exchange. You can buy, sell, hold, send, and receive DOGE using Coinbase and several other financial technology companies.

Kraken

Kraken is a trusted global exchange that has constantly been rated one of the most secure and trusted crypto exchanges in the world. To buy Dogecoin on Kraken, you'll need to sign up for an account, verify your account by providing your name, date of birth, country of residence, and phone number, and deposit cash. Once your account is funded, you're ready to purchase Dogecoin.

Binance

Binance is a centralised exchange where you can buy several cryptocurrencies, including Dogecoin. To use the Binance platform, you'll first need to open an account and verify your identification. You can then buy Dogecoin with a debit or credit card, Google Pay or Apple Pay, or via a third-party payment.

Payment options

Before you can start investing in Dogecoin, you must deposit money in your exchange or brokerage account. Most exchanges will accept fiat currencies like the US dollar, and you can also use a checking or savings account to fund your account. Some exchanges also accept wire transfers and PayPal transfers.

If you deposit a large amount of money, typically more than $1,000, you may have to wait a few days for the transfer to clear before you can use the entire deposit. A few exchanges also allow you to use a credit card to buy Dogecoin, but this is generally discouraged as your credit card company will consider the money to be a cash advance and charge added fees and a higher APR.

Once you have funded your account, you can decide how to pay for your Dogecoin. Generally, there are two ways to pay: with cash or with cryptocurrency. If you pay with cash, you will need to create an account with an exchange that supports Dogecoin and fund that account from your bank account. If you pay with cryptocurrency, you can trade your existing digital assets for Dogecoin, but not all cryptocurrencies can be exchanged for Dogecoin, and each platform is different in terms of what is allowed.

Dogecoin's volatility

Dogecoin is a risky and volatile investment. Its price is prone to extreme fluctuations, largely driven by social media movements and hype. Its value is also impacted by its unlimited supply. For Dogecoin's price to increase or remain steady, investors must continually buy more coins. Otherwise, the supply of Dogecoin increases rapidly, diminishing the value of the coins already in circulation.

Dogecoin's price volatility can be attributed to its unique characteristics. Firstly, it is a parody cryptocurrency based on a viral internet meme of a Shiba Inu dog. It was initially created to mock other cryptocurrency projects being launched at the time. Secondly, Dogecoin is a direct copy of Litecoin's code and was never designed to have any real-world utility beyond being a simple blockchain-based payment system.

Despite its lighthearted origins, Dogecoin has experienced significant price jumps. The first occurred soon after its launch, with a 1,061% increase in 15 days. The second big hike took place in March 2017, during the early stages of a crypto bull market, with a 1,494% increase. The most notable surge, however, occurred in 2021, spurred by renewed interest from celebrity supporters like Elon Musk. During this rally, Dogecoin's price soared by 9,884% and peaked at an all-time high of $0.74.

Due to its volatility, investing in Dogecoin should only be considered if you are in a strong financial position and can afford to lose money. It is recommended that risky assets like Dogecoin comprise no more than 10% of your investment portfolio.

Storing Dogecoin

Once you've purchased Dogecoin, you'll need to store it somewhere safe. There are several options for storing your Dogecoin, each with its own advantages and disadvantages. Here are some of the most popular methods:

Use an exchange:

This is the simplest option, as most exchanges will allow you to store your Dogecoin directly on the platform. However, this method can leave your assets vulnerable in cases of crashes or hacks. For added protection, you may want to consider using a digital wallet.

Use a digital wallet:

Digital wallets offer increased security but require more responsibility from the investor. There are two main types of digital wallets: hot wallets and cold wallets. Hot wallets are always connected to the internet, making them convenient to access but more susceptible to hacking. Cold wallets, on the other hand, are not connected to the internet and require physical possession of the wallet to access its contents. While they offer stronger security, cold wallets are generally more expensive and carry a greater risk of losing access to your crypto if you forget your password.

Official Dogecoin Wallet:

If you're committed to investing in Dogecoin, the official Dogecoin Wallet is an option. It comes in a core version that downloads the entire blockchain and helps secure the network, as well as a lite version called MultiDoge for storing and transferring Dogecoin. There's also a mobile version for Android devices. However, it lacks support for iOS, and it's only compatible with Dogecoin, so you'll need another wallet if you plan to invest in other coins.

Online wallets:

Online wallets like Dogechain can be accessed from any browser, making them a convenient choice for frequent travellers. While they may not offer the strongest security, they can be a solid option for storing small amounts of Dogecoin.

Paper wallets:

A paper wallet is a low-tech option that involves printing your private keys on a piece of paper. This method ensures that your wallet is never connected to the internet, protecting it from online hacks. However, it's still vulnerable to physical theft or destruction, so it's important to keep your paper wallet in a secure location, such as a safe or bank safe deposit box.

When choosing a storage option for your Dogecoin, it's important to consider factors such as security, ease of use, ongoing development, customer support, and independent reviews. Additionally, if you're storing a large amount of Dogecoin, it's generally recommended to use cold storage methods like hardware wallets or paper wallets to reduce the risk of loss.

Pros and cons of investing in Dogecoin

Dogecoin, created as a joke in 2013, has since become one of the largest cryptocurrencies in the world. With high-profile supporters like Elon Musk, Dogecoin has gained legitimacy, but it also faces criticisms. Here are some pros and cons of investing in Dogecoin.

Pros

• Dogecoin has lower transaction fees compared to other cryptocurrencies like Bitcoin.
• It has faster confirmation times.
• Dogecoin is more approachable due to its light-hearted branding and friendly community.
• Dogecoin is accepted as a form of payment by some major companies, including the Tesla and Dallas Mavericks merchandise stores.
• Dogecoin is traded on most of the largest cryptocurrency exchanges, such as Coinbase, Binance, and Crypto.com, making it one of the most accessible cryptocurrencies.
• Dogecoin has significantly lower fees than other networks like Bitcoin and Ethereum due to less traffic and a shorter block time.

Cons

• Dogecoin has lower network security compared to other cryptocurrencies.
• There are fewer payment processors and vendors that accept Dogecoin.
• Dogecoin's value is highly volatile and susceptible to social media trends.
• There is no upper limit to the supply of Dogecoin, and its supply will never stop increasing. This inherent inflation could impact its value over time.
• Dogecoin may be more susceptible to pump-and-dump schemes as only a few wallets own the majority of Dogecoin.

Frequently asked questions