Invest In Dogecoin: A Beginner's Guide To Getting Started

Dogecoin is a cryptocurrency that was created as a joke based on a popular internet meme. Despite its lighthearted origins, it has gained a passionate following and is now one of the top 10 cryptocurrencies by market capitalisation.

Dogecoin can be purchased on a cryptocurrency exchange, such as Coinbase, Binance or Kraken. These platforms allow users to buy, sell and trade multiple cryptocurrencies, including Dogecoin.

However, investing in Dogecoin is risky. It is highly volatile and there is no limit on the number of Dogecoins that can be created. Before investing, it is important to do your research and only invest what you can afford to lose.

Choosing a Dogecoin wallet

When it comes to choosing a Dogecoin wallet, there are a few different options available to you. Firstly, it's important to understand the difference between a hot wallet and a cold wallet. A hot wallet is a cryptocurrency wallet that maintains a constant connection to the internet, while a cold wallet is a hardware device that does not have a constant connection to the internet.

Hot wallets are typically more convenient and accessible than cold wallets, as they can be accessed from anywhere with an internet connection. They are also usually free to use and can be set up in just a few minutes. However, hot wallets are generally less secure than cold wallets, as they are more vulnerable to hacking attempts.

Cold wallets, on the other hand, offer greater security for your Dogecoins. They are not connected to the internet, so they are less likely to be targeted by hackers. However, cold wallets can be more expensive and may have a steeper learning curve for those new to cryptocurrency.

When choosing a Dogecoin wallet, it's important to consider your own needs and preferences. If you prioritise convenience and accessibility, then a hot wallet may be the best option for you. Popular hot wallets for Dogecoin include:

• Binance
• Kraken
• Exodus
• Coinomi
• Dogecoin Wallet

If security is your main concern, then a cold wallet may be a better choice. Some of the most popular cold wallets for Dogecoin include:

• Ledger Nano X
• Trezor Safe 3
• Trezor Model T
• Ledger Nano S Plus
• Trezor One
• KeepKey

Ultimately, the best Dogecoin wallet for you will depend on your individual needs and preferences. It's important to do your own research and choose a wallet that offers the features and security measures that are most important to you.

Selecting an exchange

When selecting an exchange to buy Dogecoin, there are a few things to keep in mind. Firstly, Dogecoin is not as widely available as some of the more established coins, so you may need to find a new exchange that trades Dogecoin and is legally operating within your jurisdiction. It is important to ensure that the exchange complies with regulations and has the proper licensing and certifications. Some of the popular exchanges that offer Dogecoin include Coinbase, Binance, Kraken, Gemini, Robinhood, SoFi, Webull, and eToro.

• Security: Choose an exchange with robust security measures such as two-factor authentication, cold storage of funds, and regular security audits.
• Fees: Compare the fees charged by different exchanges as these can significantly affect your trading costs.
• Supported cryptocurrencies: Ensure the exchange supports the cryptocurrencies you want to trade, as well as any fiat currencies you plan to use.
• Wallet quality and safety: Look for an exchange that provides a high-quality wallet with strong security features. Consider the reputation of the wallet provider and their track record for security and reliability.
• Storage and custody: Select an exchange that offers secure storage and custody solutions, such as cold storage, multi-signature authorization, and insurance coverage for theft or loss of funds.
• Volume and liquidity: Consider the trading volume and liquidity of the exchange, especially if you plan to engage in frequent transactions. High trading volumes can also indicate a reputable exchange.
• User reviews: Research user reviews and feedback to get an idea of how the exchange operates and how it treats its users.

Payment methods

There are several ways to pay for Dogecoin. The first step is to open an account with a cryptocurrency exchange, such as Coinbase, Kraken, Binance, or Gemini, or a brokerage platform like Robinhood, SoFi, Webull, or eToro. These platforms may require you to provide a valid ID, proof of address, and bank account and routing numbers.

Once you have set up an account, you can add a payment method. Most platforms allow you to use a bank account, debit card, or wire transfer to fund your purchases. Some platforms, like Coinbase, may also allow you to use a credit card, but it's important to note that the bank will treat this transaction as a cash advance, which can result in higher interest rates and fees. It is generally recommended to avoid using credit cards for purchasing cryptocurrency.

After funding your account, you can place an order for Dogecoin on the exchange or brokerage platform. You can search for Dogecoin using its ticker symbol, DOGE, and then specify the amount you want to invest or the number of Dogecoins you want to buy. The order should go through immediately, and you can buy or sell Dogecoin 24 hours a day, seven days a week.

It's worth noting that some crypto brokerage apps have limitations, such as not being able to use Dogecoins to purchase products where crypto is accepted or transfer them to an external crypto wallet. If these features are important to you, be sure to choose a platform that offers them.

Another option for purchasing Dogecoin is through peer-to-peer (P2P) transactions. P2P trades are enabled by online platforms and forums that connect local users who wish to trade Dogecoins for products and services. These platforms allow users to socialize and plan face-to-face meetings for trades. P2P transactions can be done by scanning the recipient's QR code or wallet address and authenticating the transaction on the sender's Dogecoin-supported wallet service.

Additionally, some crypto cards, such as the BitPay Card, allow you to spend Dogecoin like cash. You can load this crypto debit card with Dogecoin and use it anywhere that accepts Mastercard.

Finally, you can also purchase Dogecoin using gift cards from major companies like Amazon and Walmart.

Transaction security

Dogecoin is a risky and volatile investment, so it's important to be aware of the transaction security measures available to you. Here are some key considerations for ensuring the security of your Dogecoin transactions:

Choose a Reputable Cryptocurrency Exchange

When buying Dogecoin, it's important to use a trusted and secure cryptocurrency exchange. Popular exchanges such as Coinbase, Binance, Kraken, and Gemini offer user-friendly platforms with security features. These exchanges have a large user base and have established themselves as reliable options for buying cryptocurrencies like Dogecoin.

Payment Methods

When deciding how to pay for your Dogecoin purchase, consider the security implications of different methods. Using a checking or savings account is a common and secure way to fund your purchase. Some exchanges also accept wire transfers and PayPal transfers, which can provide an additional layer of protection. Avoid using credit cards, as they often incur added fees and a higher APR, making the investment riskier.

Secure Storage Options

After purchasing Dogecoin, you need to decide how to store your digital assets securely. While it's convenient to store your Dogecoin on the exchange's crypto wallet, it may leave your assets vulnerable in cases of crashes or hacks. Consider using a digital wallet, which offers increased security. There are two types of digital wallets:

• Hot Wallets: These remain connected to the internet, making them accessible from anywhere. However, they are more susceptible to hacking attempts.
• Cold Wallets: These are physical hardware devices that store your crypto keys offline, providing stronger protection against online hacks. Cold wallets are considered the safest way to store crypto assets, but they are more expensive and carry the risk of losing access if you misplace the device or forget your password.

Two-Factor Authentication and Biometric Security

Enhance the security of your crypto exchange account or digital wallet by enabling two-factor authentication. This adds an extra layer of protection, requiring something you know (a password) and something you have (a code sent to your phone). Some platforms also offer biometric authentication technology, such as fingerprint or facial recognition, for added security.

Regularly Review Security Settings

Stay vigilant by regularly reviewing the security settings and features provided by your chosen exchange or wallet provider. Keep your devices and software up to date, as updates often include security patches that protect against new threats. Additionally, enable automatic updates whenever possible to ensure you have the latest security measures in place.

Investment risks

Dogecoin is a risky, volatile investment. It is important to approach investing in Dogecoin with caution due to its extreme volatility and the potential for fluctuations in value. Here are some of the key risks to consider:

High Volatility and Price Fluctuations

Dogecoin's price is highly volatile and prone to extreme fluctuations. This is partly due to its unlimited supply and the influence of social media movements and hype. The price can surge or plummet within a short period, as seen in 2021 when its value dropped by more than 75% in less than two months after Elon Musk's appearance on Saturday Night Live.

No Intrinsic Value or Fundamental Use Case

Dogecoin doesn't derive value from another asset or add significant value to any financial system. Its worth is largely determined by its popularity, which can lead to short-term gains but is not a sustainable strategy for long-term investing success. Dogecoin's popularity may have already peaked, and it is unlikely to be a good long-term investment.

Security and Hacking Risks

While cryptocurrencies are generally secure by design, Dogecoin is not immune to hacking and fraud. In 2013, about $12,000 was stolen in a Dogecoin wallet hack, and in the following year, Dogecoin investors lost an estimated $750,000 in a fraud scheme. These incidents highlight the potential security risks associated with investing in Dogecoin.

Whale Concentration and Price Manipulation

Dogecoin's price is susceptible to manipulation by a small number of whales (individuals or entities holding a large number of coins). In February 2021, it was reported that one person owned 28% of all Dogecoin in existence, and close to 70% of the total supply was held in just 100 wallets. This concentration of wealth gives whales significant influence over the price of Dogecoin, which can be moved in either direction at their discretion.

Regulatory and Technological Uncertainty

The cryptocurrency industry is still relatively new and unregulated. The prices of Dogecoin and other cryptocurrencies can be influenced by future regulations and the development of blockchain technology. There is a chance that Dogecoin may not withstand the test of time or adapt to changing industry standards and could eventually become obsolete.

Frequently asked questions