Dogecoin Investment Guide: Getting Started And Strategies

Dogecoin is a cryptocurrency that was created as a joke based on a popular internet meme. Despite its lighthearted origins, it has gained a devoted community and a reputation for being used for charitable causes. Dogecoin is also known for its extreme volatility, with its value increasing by over 7,000% in 2020, only to drop to less than half that amount by the end of 2021.

If you are considering investing in Dogecoin, it is important to be aware of the risks involved. As with any cryptocurrency, the value of Dogecoin can fluctuate significantly, and there is no guarantee of returns. It is recommended that you only invest an amount that you are willing to lose.

1. Choose a cryptocurrency exchange or brokerage app, such as Coinbase, Binance, Kraken, or Robinhood.

2. Sign up for an account and verify your identity with a government-issued ID and proof of address.

3. Decide on a payment method, such as a bank account or credit card, and deposit funds into your account.

4. Search for Dogecoin on the exchange and place your order, specifying the amount you wish to invest.

5. Consider your storage options. You can keep your Dogecoin in the exchange's crypto wallet or transfer it to a separate hot or cold wallet for added security.

How to buy Dogecoin

Dogecoin is a decentralised cryptocurrency that was initially created as a joke. It has gained significant attention due to its meme-inspired branding and support from Tesla CEO Elon Musk.

• Consider how much you want to invest in Dogecoin: Dogecoin is highly volatile, and it's important to remember that cryptocurrencies are very risky investments. Dogecoin is especially volatile because it has an unlimited supply. For Dogecoin's price to increase or even remain steady, investors have to continually buy more coins. The limit on the number of Dogecoins was removed by one of its creators to discourage people from holding it long-term. When deciding how much to invest, consider your overall financial situation, investment portfolio, and risk tolerance.
• Choose a cryptocurrency exchange: To purchase Dogecoin, you need to open an account with a cryptocurrency exchange, where buyers and sellers meet to exchange cryptocurrency for dollars. Popular exchanges include Coinbase, Kraken, and Binance. You can also purchase crypto using beginner-friendly investment apps like Robinhood. Make sure any exchange you're considering has Dogecoin available for purchase.
• Sign up for an account: Create an account on your chosen cryptocurrency exchange by providing information such as your email address, name, and phone number. You may also need to verify your account with personal details such as proof of address and government-issued identification documents.
• Add a payment method: Connect a payment method to your account. Most exchanges allow you to use a bank account, debit card, or initiate a wire transfer. Some also accept PayPal transfers.
• Deposit funds into your account: Fund your account by depositing money through your chosen payment method. The methods available will depend on the exchange's policies and your jurisdiction.
• Place your order for Dogecoin: Once your money is in your account, you can purchase Dogecoin. Search for Dogecoin or enter its ticker symbol, DOGE, on the exchange's trading or purchase platform. Then, input the dollar amount you want to invest or specify how many Dogecoins you want to buy.
• Consider your storage options: When you buy Dogecoin, it is typically stored in your exchange's crypto wallet. However, some investors prefer to withdraw their crypto from the exchange and store it in a separate wallet for added security. You can choose between a hot wallet, which is digital and connected to the internet, or a cold wallet, which is physical hardware that can be disconnected from the internet, making it less susceptible to hacking.

Please note that investing in cryptocurrencies is highly risky and speculative, and the markets can be extremely volatile. Consult with a qualified professional before making any financial decisions.

Dogecoin's pros and cons

Dogecoin Pros:

Dogecoin has been described as one of the most lucrative cryptocurrencies in the market. It has a growing community of holders and supporters, and its investors actively promote it on social media. Dogecoin is compatible with the emerging decentralised finance movement within the crypto market. It is also easy to transact, and there are no mining limits. Dogecoin has been listed on major stock and crypto exchange platforms, including eToro and Coinbase, and has been used for charitable projects.

Dogecoin Cons:

Dogecoin has poor technical support, and there have been no technological updates since 2015. It has been associated with pump and dump schemes, and it is not the number one transactional currency. Dogecoin is also energy-intensive, prone to extreme fluctuations in value, and it has an unlimited supply.

Dogecoin vs Bitcoin

Dogecoin and Bitcoin are two of the most well-known cryptocurrencies, but they have very different characteristics and were created for distinct purposes. Here is a detailed comparison of the two:

History and Creation:

Dogecoin was created as a joke by software engineers Billy Markus and Jackson Palmer in 2013. It was named after the "Doge" meme featuring a Shiba Inu dog. On the other hand, Bitcoin was introduced in 2009 by Satoshi Nakamoto, an anonymous person or group, as a decentralized digital currency intended to replace traditional financial systems.

Purpose and Community:

Dogecoin was initially intended as a satirical spoof of Bitcoin and the doge meme. It gained a cult following and is known for its community spirit, with enthusiasts referring to themselves as "Shibes". In contrast, Bitcoin has always been viewed as a serious investment and a potential alternative to traditional currencies.

Supply and Value:

Dogecoin has no lifetime cap on its supply, with millions of new coins created daily, making it highly inflationary. This makes Dogecoin more suitable for transactions and social media tipping but also leads to continuous downward pressure on its price. Conversely, Bitcoin has a hard cap of 21 million coins, creating scarcity and contributing to its value as a store of value. As demand increases, Bitcoin's price tends to rise.

Transaction Speed and Fees:

Dogecoin has faster transaction speeds than Bitcoin, with a block confirmation time of one minute compared to Bitcoin's ten minutes. This allows Dogecoin to process around 33 transactions per second, whereas Bitcoin averages 7 transactions per second. Additionally, Dogecoin's transaction fees are typically lower than Bitcoin's.

Stability and Volatility:

Bitcoin is known for its volatility, often swinging thousands of dollars in value per day. Dogecoin is also volatile, but its price range is mostly below $1, making it more stable and suitable for daily transactions.

Mining and Accessibility:

Both Dogecoin and Bitcoin use the proof-of-work consensus method, where miners validate transactions and are rewarded with the respective cryptocurrency. However, Dogecoin utilizes the Scrypt hash standard, which makes mining more accessible to users with less powerful hardware. In contrast, Bitcoin's SHA-256 standard is considered state-of-the-art encryption but favors those with more advanced hardware or specialized ASIC miners.

Longevity and Updates:

Bitcoin has faced significant upgrades, such as the Lightning Network, which enables smaller transactions and enhances its potential for everyday use. Dogecoin, while consistently receiving updates, may become less relevant in the long run due to these advancements in Bitcoin's network.

Investor Perception:

Dogecoin, despite its popularity, is still seen as a meme by many in the crypto community and institutional investors. In contrast, Bitcoin has gained widespread acceptance among institutional investors and is considered a reliable long-term investment.

In summary, Dogecoin and Bitcoin represent two very different approaches to cryptocurrency. Dogecoin is a community-driven, lighthearted project with faster transactions and a more inclusive mining process. However, it lacks the stability and long-term investment potential of Bitcoin, which has stronger institutional support and is designed to increase in value over time due to its limited supply.

Dogecoin's history

Dogecoin was created by software engineers Billy Markus and Jackson Palmer and introduced on December 6, 2013, as a lighthearted alternative to traditional cryptocurrencies like Bitcoin. The Dogecoin name and Shiba Inu logo are based on a viral internet meme. Within two weeks of its launch, the r/Dogecoin Reddit channel started attracting thousands of users and contributors, and its market value reached $8 million, making it the seventh-largest electronic currency in the world at the time. Dogecoin was intentionally abundant, with 10,000 new coins mined every minute and no maximum supply.

On December 19, 2013, Dogecoin jumped nearly 300% in value in 72 hours, rising from $0.00026 to $0.00095, with billions of Dogecoins traded per day. This growth occurred during a time when Bitcoin and many other cryptocurrencies were reeling from China's decision to forbid Chinese banks from investing in the Bitcoin economy. However, three days later, Dogecoin experienced its first major crash when its price dropped by 80% due to large mining pools exploiting the small amount of computing power required at the time to mine Dogecoin.

In 2014, a non-profit foundation was formed to provide support and governance for the Dogecoin project. The Dogecoin community and foundation have since encouraged fundraising for charities and other notable causes, including a fundraiser for the Jamaican Bobsled Team to compete in the Sochi Winter Olympics and a well-building project in Kenya for World Water Day.

In 2020, Dogecoin began to gain traction again, with renewed public support and interest. In 2021, Dogecoin experienced a significant price run-up as personalities like Mark Cuban, Snoop Dogg, and Elon Musk expressed their interest. Musk even joked that "the most entertaining outcome and the most ironic outcome would be that dogecoin becomes the currency of Earth in the future." Dogecoin rose to its all-time high of $0.74 in May 2021, which is remarkable considering it started the year at $0.0368.

Dogecoin's future

Dogecoin is a cryptocurrency that was created as a joke in 2013, inspired by the "Doge" meme featuring a Shiba Inu. It was meant to be a more accessible and less serious alternative to Bitcoin. However, despite its humorous beginnings, Dogecoin has grown into a recognised digital currency with a strong, charitable community.

Dogecoin has an unlimited total supply, and its low transaction fees and quick confirmation times make it suitable for microtransactions. It also has a passionate community that uses Dogecoin for tipping content creators, charitable donations, and crowdfunding initiatives.

On the other hand, Dogecoin is commonly viewed as a less serious cryptocurrency than Bitcoin and as a highly speculative investment. It is considered a risky and volatile investment due to its unlimited supply, and its value is largely driven by social media movements and hype. Additionally, its low price level makes it challenging to get experienced investors to take it seriously.

Overall, Dogecoin's future will likely depend on its ability to maintain relevance in the cryptocurrency space, adapt to the changing market, and continue to build a strong community. While it may not be a good long-term investment, it could still have potential for short-term gains and remain a fun, community-driven project.

Frequently asked questions