E*Trade Dogecoin Investment: A Beginner's Guide

Dogecoin, known as the people's currency or underdoge, has sparked both optimism and skepticism in the cryptocurrency world. Despite gaining mainstream attention in 2021, its future remains uncertain. Dogecoin is a digital currency introduced in 2013 as a more memorable and fun alternative to other cryptocurrencies. It was created by software engineers Billy Markus and Jackson Palmer in the early days of crypto, soon after major players like Bitcoin and Litecoin.

There are several ways to buy Dogecoin. The easiest way is through a cryptocurrency exchange. Some popular exchanges that support Dogecoin include Binance, Bitpanda, Uphold, eToro, Robinhood, and Coinbase. Alternatively, you can use a software or hardware wallet to store your Dogecoin.

It is important to note that investing in cryptocurrencies like Dogecoin is risky due to its high volatility and uncertain future.

Dogecoin's value and investment potential

Dogecoin is a cryptocurrency that was created as a joke by software engineers Billy Markus and Jackson Palmer. It was designed to be a more approachable alternative to Bitcoin, and it quickly gained a dedicated online community. Dogecoin is highly volatile and prone to large surges and dips, making it a risky investment. Its value is largely based on speculation, and it has a history of scams and theft. On the other hand, Dogecoin has strong community support and has been endorsed by celebrities such as Elon Musk, who described it as the "cryptocurrency of the people".

Dogecoin has seen a major price surge, reaching an all-time high of $0.73 in May 2021. This surge was partially due to an influx of users chasing GameStop-style highs and Musk's tweets about the coin. Dogecoin's price is expected to increase modestly in 2022, with an average end-of-year prediction of $0.08. It is projected to be worth around $0.19 in 2025 and $0.64 by 2030.

Dogecoin is considered a legitimate investment prospect by some, but it is essential to understand the risks associated with investing in cryptocurrency before purchasing Dogecoin. It is also worth noting that Dogecoin has an unlimited supply, which could dampen its long-term price appreciation compared to coins with capped supplies.

How to buy Dogecoin

Step 1: Get a Dogecoin Wallet

To buy Dogecoin, you'll first need to get a Dogecoin wallet to store your cryptocurrency. There are two main types of Dogecoin wallets: hardware wallets and software wallets. Hardware wallets are physical devices that keep the private key to your Dogecoin offline, making them one of the safest options available. Software wallets, on the other hand, store the private key to your Dogecoin on your device, such as your phone or computer. While software wallets are more vulnerable to malware, they are usually free.

• Hardware Wallets: Ledger Nano S, Ledger Nano X, TREZOR One, TREZOR Model T
• Software Wallets: MultiDoge (Windows, Mac, Linux), Exodus, Coinomi, Dogecoin Mobile Wallet (Android)

Step 2: Find a Doge Exchange

Once you have your Dogecoin wallet set up, it's time to find a reputable exchange to purchase Dogecoin. Surprisingly, Dogecoin doesn't receive a lot of support from major exchanges, and only a handful of vetted exchanges allow you to buy Doge with Dollars or Euros. Here are some of the most reputable exchanges that allow you to buy Dogecoin:

• Binance: A leading cryptocurrency exchange that supports the purchase of over 200 cryptocurrencies. Binance allows users to buy Dogecoin with a variety of traditional currencies and payment methods.
• Bitpanda: An Austrian exchange founded in October 2014 that allows residents of the EU and a few other countries to buy Dogecoin and other cryptocurrencies using various payment methods.
• Uphold: A New York-based platform that offers trading for cryptocurrencies, commodities, equities, and fiat currencies. Uphold doesn't have any fancy crypto features, but it's easy to fund your account and get started.
• EToro: A user-friendly platform that allows you to exchange Dogecoin for fiat currency (USD, EUR, etc.). eToro is less recommended for accessing and using the actual coins, as their withdrawal process is relatively complicated.
• Kraken: A US-based exchange that allows users to deposit funds via credit card or wire transfer. Users in Europe can also benefit from fast and free SEPA deposits. Kraken uses the XDG ticker symbol for Dogecoin, instead of the widely accepted DOGE symbol.
• Changelly: One of the few places that allow you to buy Dogecoin with almost any currency (fiat or crypto). Changelly is a conversion service that works quickly, but it can take a lot in fees, especially for credit card purchases.
• Gemini: An exchange based in New York, founded by the Winklevoss twins. Gemini offers instant purchases using a bank card, as well as fiat currency deposits via wire transfers or ACH.
• Bittrex: A US-based cryptocurrency exchange that has grown in popularity in recent years. Bittrex offers a DOGE/BTC pair, which means you'll need to buy or deposit Bitcoin to exchange it for Dogecoin.
• Coinbase: A regulation-friendly, publicly-traded US-based cryptocurrency exchange that has been around since 2012. Users can easily buy Dogecoin on Coinbase using a linked credit card or bank account.

Step 3: Deposit Funds and Buy Dogecoin

After setting up your account on your chosen exchange, you'll need to deposit funds into your account. Most exchanges support wire transfers, ACH transfers, or credit/debit card deposits. Once your account is funded, you can start purchasing Dogecoin. Open the trading platform of your chosen exchange, check the current price of Dogecoin, and place a buy order at a suitable price. Keep in mind that the prices of cryptocurrencies fluctuate, so you may want to track the price of Dogecoin over time to ensure you don't overpay for your coins.

Step 4: Withdraw Your Dogecoin to Your Wallet

After purchasing Dogecoin, it's recommended to withdraw your coins from the exchange and store them in your Dogecoin wallet. This reduces the risk of your cryptocurrency being lost or stolen. By keeping your Dogecoin on an exchange, you give up control of your coins, and if the exchange gets hacked or goes bankrupt, you may lose them. So don't forget to withdraw your Dogecoin to your wallet using the address you obtained in Step 1.

Dogecoin wallets

Custodial wallets are generally considered more convenient and are favoured by people who trade Dogecoin more frequently. Non-custodial wallets, however, are preferred by those who value control and security. The popular saying ‘not your keys, not your coins’ is in reference to non-custodial wallets. It is important to note that losing your private keys or seed phrases can result in the loss of your Dogecoin, so it is crucial to back up your non-custodial wallet and never share your seed phrase or private key with anyone you do not trust.

Wallets can also be categorised as hot or cold, depending on whether they are connected to the internet. Hot wallets, such as Dogecoin Core, browser extension wallets, and smartphone wallets, are connected to the internet. Cold wallets, on the other hand, are not connected to the internet and include hardware wallets and paper wallets. Cold wallets are generally considered safer and are preferred by those who want to hold their Dogecoin long-term. However, non-custodial hot wallets, like smartphone wallets, are still considered secure enough for day-to-day expenses and for holding small amounts of Dogecoin.

• Dogecoin Core
• Browser extension wallets (e.g. MetaMask)
• Smartphone wallets
• Hardware wallets
• Paper wallets

Dogecoin exchanges

Dogecoin can be bought and sold on cryptocurrency exchanges. Some of the most popular exchanges that support Dogecoin include:

• Binance
• Coinbase
• EToro
• Robinhood
• Kraken
• Gemini
• Public
• CEX.IO
• Uphold
• KuCoin
• FTX
• Uniswap v2 (Ethereum)
• PancakeSwap v2 (BSC)
• Uniswap V2 (Cronos)
• Pancakeswap V3 (BSC)
• AscendEX (BitMax)

Dogecoin's risks and regulatory considerations

Dogecoin, like any investment, carries inherent risks that must be carefully considered. One of the primary risks is price volatility. Dogecoin's price is largely based on speculation, and its value can rise or fall within a short time. It's not uncommon for Dogecoin to lose more than 10% of its value in a single day. The impact of social media and speculation on Dogecoin's price can also lead to sudden surges or crashes, creating a risky environment for traders.

Another significant risk to consider is the security of your Dogecoin holdings. Cryptocurrency exchanges, where Dogecoin is traded, have been targets of hacking and theft. Scams and fraudulent activities are also prevalent in the cryptocurrency trading space, with Ponzi schemes, fake investment opportunities, and phishing attempts aiming to steal your Dogecoin or personal information.

The lack of regulation in the cryptocurrency market poses a further risk to investors. Unlike traditional financial markets, there is no central authority overseeing Dogecoin trading, making it susceptible to fraud and market manipulation. The technological risks associated with Dogecoin are also notable, as cybersecurity threats such as hacking and theft can compromise the safety of investors' funds.

From a regulatory perspective, the classification of Dogecoin as a security, currency, or commodity is uncertain, creating a grey area for investors. While some argue that Dogecoin is created for entertainment and should not be subject to traditional financial instrument scrutiny, others worry about the potential for fraud and investor exploitation. The lack of a consistent regulatory approach across jurisdictions complicates matters, with some countries embracing digital assets while others impose strict limitations or bans.

To mitigate risks while trading Dogecoin, it is crucial to employ strategies for managing volatility, such as diversifying your portfolio and setting stop-loss orders. Maintaining security involves implementing best practices, including using secure wallets, enabling two-factor authentication, and regularly updating software. Understanding Dogecoin's liquidity is also essential for making informed trading decisions and reducing the risk of slippage.

Frequently asked questions