Dogecoin has clearly exhibited the unmatched potential of cryptocurrencies to boom and gain investor confidence. However, cryptos are not tangible, and many are skeptical of DOGE. A detailed analysis of the coin endorsed by Elon Musk will help investors make an educated decision.
What is Dogecoin?
Dogecoin is a cryptocurrency that was created as a joke between Billy Markus and Jackson Palmer in 2013. It is named after the doge meme with the image of a Shiba Inu dog with the wrong spelling “doge” instead of “dog.” Strangely, the more popular the meme became, the more seriously people started taking it.
Why should I invest in Dogecoin?
Investing in cryptocurrencies has tremendous upsides. Following are the reasons to invest in Dogecoin:
- Historical prices: An investment of $100 on New Year 2021 would have increased to more than $15000 in May 2021. Dogecoin’s price is set to grow over the years, with more investors gaining trust about its future.
- Institutional investors: More institutional investors are betting on the growth of Dogecoin. Institutional investors do not make risky investments. Furthermore, analysts are convinced by the surge in Dogecoin’s trading volume and expect prices to rise further.
- Market capitalization: Dogecoin’s market capitalization was $29B at the time of writing (October 2021), more than Gartner’s. Thus, Dogecoin has become an elite-level, first-tier cryptocurrency, i.e., people will make serious investments in Dogecoin.
How can I invest in Dogecoin? or what are different ways of investing in Dogecoin?
Individuals can invest in Dogecoin through the following channels:
- Exchanges: Cryptocurrency exchanges connects traders to buy and sell Dogecoin (DOGE). Traders can fund their exchange account with fiat currency (USD/ AUD/ GBP) or cryptocurrency and start trading. It is suitable for advanced and experienced traders.
- Trading/Brokerage Platforms: Trading platforms act as intermediaries for users who want to buy or sell Dogecoin. It is suitable for the beginners, and also the best option for those who wish to trade in small amounts.
How to invest in Dogecoin and make money
Listed below are multiple ways to make money from Dogecoin.
- Investing: Investing is preferable for individuals with a long-term horizon. It requires research and knowledge to HODL (hold) their cryptocurrency for a longer timeframe.
- Trading: Trading is a short-term instrument for those who do not have enough money to lock away as an investment. Trading requires research and knowledge, but the risk is higher.
- Staking/lending: Staking would involve lending a significant stake of DOGE to earn interest in return. Only proof-of-stake cryptos can be staked. Dogecoin is proof-of-work crypto, but PancakeSwap allows users to stake DOGE.
- Mining: Mining involves using expensive computing machinery to compute complex problems. Miners are then paid with DOGE if they add a block to the blockchain. Early pioneers of Dogecoin made money through mining.
Can I lose all my money in Dogecoin?
Following are factors that can cause investors to lose all their money in Dogecoin:
- Cybercrime: Even though cryptocurrencies are secure by design, losing money through cybercrime is hard but not impossible. Crypto owners can lose all of their money through crypto-jacking, malware attacks, and crypto phishing attacks.
- Ponzy schemes: Humans are prone to manipulation regardless of the amount in question. Dogecoin owners can lose all their money if they fall prey to Ponzi schemes or fraud.
- Gambling: Merely speculating on Dogecoin is not a lesser danger than gambling. Markets fluctuate, and risk-taking investors should be aware of the conditions. Investing without proper research may result in a massive loss of money.
Risks of investing in Dogecoin
All investments are subject to risks, and Dogecoin is no exception. Please read below the possible risks of investing in Dogecoin.
- Price volatility: New developments, news, and speculation may cause rapid swings in Dogecoin prices. Furthermore, there are no indices to measure the price volatility of cryptocurrencies. Such price volatility may result in quick losses before the trader realizes it.
- Regulation: Many governments have not embraced cryptos such as Dogecoin. Cryptos are often viewed as incredulous because they operate outside of government control. The risk lies in governments making cryptos illegal, as China did in September 2021.
- Human error: As Dogecoin is an intangible asset, a human error might prove fatal. Even forgetting one’s password may result in a total loss of cryptocurrencies assets.
- Inability to sell: Common trader instinct is to sell as soon as the crypto price falls. Due to panic among sellers, exchanges may be unable to handle large trade volumes, and some traders won’t sell their Dogecoin at all.
Things to consider before investing in Dogecoin
A good investment involves adequate research and risk analysis. Below are some factors to consider before investing in Dogecoin:
- FOMO backfires: Investing in cryptos based on other people’s investments can result in losses. It is never advised to invest in Dogecoin without thorough research to avoid suffering losses.
- How much?: A great question to decide how much DOGE to buy would be: Would the individual be financially sound even if they lose all of their Dogecoin investments? In case the answer is no, the individual is investing more than they can lose.
- Other cryptocurrencies: The crypto world is full of exciting assets and financial instruments. There is no shortage of investment opportunities. Individuals must research other cryptocurrency assets before deciding to invest in DOGE.
- Investment timeframe: Individuals can ask questions such as: How long should one hold DOGE? What price should one sell the DOGE if it drops? How many losses can one suffer before completely exiting DOGE?
Dogecoin is a good investment for cryptocurrency traders. It has become a favorite after Elon Musk’s endorsement. Dogecoin is inflationary, and we can see it being used for transactional or payment purposes. However, individuals should always trade with adequate research. They should also calculate the risks and take a measured step while investing in Dogecoin.