Elon Musk once called himself “the DogeFather” and described the cryptocurrency as a “hustle” on an episode of “Saturday Night Live.”
And that tells you just about everything you need to know about Dogecoin.
Or does it?
In reality, contrary to the media poking fun at Dogecoin, there is actually a thriving community of Dogecoin loyalists who have built it into more than just an internet meme. Dogecoin continues to captivate investors, and has changed from a joke currency to a cryptocurrency with real-world utility. In this article we’ll break down what Dogecoin is, how it can be used, where to buy it, and the pros and cons of Dogecoin.
You own shares of Apple, Amazon, Tesla. Why not Banksy or Andy Warhol? Their works’ value doesn’t rise and fall with the stock market. And they’re a lot cooler than Jeff Bezos.
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What Is Dogecoin (DOGE)?
Dogecoin (DOGE) is an open-source cryptocurrency that offers peer-to-peer transactions on the Dogecoin blockchain. Started as a joke by Jackson Palmer and Billy Marcus in 2013, Dogecoin was built using Litecoin technology, and has an unlimited supply of coins that can be mined.
Dogecoin got its name from the popular internet meme, Doge, based on the Shiba Inu dog. Dogecoin was originally meant as a parody of Bitcoin and other emerging cryptocurrencies at the time but ended up becoming beloved by the crypto community and, in turn, the price of Dogecoin went up.
Way up.
In fact, Dogecoin has gone up in price by over 16,000% since its inception. Part of this is organic growth due to its inherent meme-ness and various publicity stunts. And it’s in part due to various celebrity business leaders like Elon Musk continually supporting Dogecoin on Twitter.
Dogecoin continues to evolve in its scope and community and remains one of the most popular cryptocurrencies in the world.
How Dogecoin Differs From Bitcoin & Other Cryptocurrencies
Dogecoin is a proof-of-work (PoW) cryptocurrency that can be mined, just like Bitcoin. It utilizes scrypt technology (a crypto mining algorithm), borrowed from Litecoin, and can be exchanged as a currency, similar to most cryptocurrencies.
But Dogecoin is the first popular internet meme cryptocurrency, and no other cryptocurrency is as beloved by celebrity billionaires, as both Mark Cuban and Elon Musk have touted its usefulness over Twitter and in interviews with media outlets.
And speaking of utility, Dogecoin has become integrated with several online applications. Bitpay and Coinbase both support using Dogecoin with their crypto debit cards, letting users spend Dogecoin on regular purchases. Dogecoin can be used to buy Dallas Mavericks tickets. Dogecoin can even be used to purchase Tesla accessories!
Dogecoin is an inflationary asset because more and more Doge will be mined over time (more on why this matters shortly). There is no cap on the amount of coins that will be mined. In contrast, Bitcoin has a finite supply of 21,000,000 and lowers the amount of BTC that can be mined every four years (on average).
Pros & Cons of Dogecoin
Dogecoin is controversial. From an internet joke to making average investors millionaires overnight — and then not millionaires again — Dogecoin is one of the most storied cryptocurrencies around. Here are a few things to like (and not like) about the furriest cryptocurrency.
Pros
Dogecoin is an internet phenomenon, just like the meme it represents. It has skyrocketed in value and has more media attention than most other cryptocurrencies. Here are a few things we like about Dogecoin:
- Faster Transactions Than Bitcoin. A little-known fact is that Dogecoin is actually faster at processing transactions than Bitcoin. Whereas Bitcoin transactions may take up to 10 minutes to mine a new block in the blockchain, Dogecoin miners can add new blocks every minute, making the technology 10x faster than Bitcoin currently.
- Can Be Used to Buy Real-World Items. Dogecoin can be used at many online retailers for purchases, and can even be used with crypto debit cards to spend the cryptocurrency just like cash. Both Mark Cuban’s Dallas Mavericks and Elon Musk’s Tesla retailers accept Dogecoin as well.
- Has Been Used for Charitable Purposes. Did you know that the Dogecoin community donated nearly $30,000 in DOGE to send the Jamaican bobsled team to the 2014 Winter Olympics? Users also donated funds in Dogecoin to help dig a water well in Kenya. Dogecoin has become a philanthropic tool for the entire DOGE community.
- Available on Most Crypto Exchanges. Dogecoin has become so popular that it is available on almost every crypto exchange. This makes it easy to trade and transfer, and has helped boost the price of the coin.
Cons
Dogecoin is a beloved cryptocurrency, but it’s not perfect. There are a few notable downsides to this dog-loving meme coin:
- Inflationary (Supply Keeps Going Up). Dogecoin has no lifetime cap on how many coins can be mined. This will directly impact the price, making it a poor long-term investment. As the supply increases, the price will decrease in the long run unless there is an increasing demand forever.
- Extremely Volatile Price. The price of Dogecoin has risen like a Space-X rocket, but crashed down in a massive way over the past two years. This extreme volatility takes away from its status as a currency because the value of Dogecoin goes up and down wildly.
- May Be Difficult to Use. Although Dogecoin integrates with several popular applications and can be used for online purchases at some retailers, it requires a working knowledge of blockchain technology and digital wallets to use. This may make it difficult for average users to make purchases with Dogecoin.
Should You Invest in Dogecoin?
Dogecoin is a fun crypto, so naturally you might be wondering if it’s a good investment. The price has skyrocketed over the past few years, and there have been notable Dogecoin millionaires minted as well.
So should you invest in Dogecoin?
The short answer is…it depends.
Dogecoin is a speculative investment, as are all cryptocurrencies, and although it’s not advisable to put your entire net worth into the lovable dog-themed cryptocurrency, treating it as speculation is reasonable.
But for long-term investors, the inflationary supply of Dogecoin and its reliance on cult-following status among celebrities does not make it a viable investment. The supply increasing by up to 5 billion new coins per year will put downward pressure on the price. And long-term, Dogecoin may fall out of favor with online communities and continue to drop in price.
Bottom Line: Investing in Dogecoin is speculative and comes with the real risk of loss, including total loss of capital. But it might be fun for investors willing to take the risk.
Where to Buy Dogecoin
Dogecoin can be purchased at most popular crypto exchanges, such as Gemini, Coinbase, or FTX.us. Users can deposit U.S. dollars to exchange it for an equivalent amount of DOGE. Dogecoin is also available on decentralized exchanges, such as Uniswap, and can be traded for other cryptocurrencies directly.
As a proof-of-work cryptocurrency, Dogecoin can also be mined using a CPU or GPU mining rig. There are Dogecoin mining pools that allow users to combine their computer processing power (“hash power”) to mine for DOGE tokens.
Final Word
Dogecoin is a fun cryptocurrency, meant to poke fun at the seriousness of other cryptocurrencies while still offering real-world utility. Investors can benefit from its popularity with outspoken business leaders. DOGE users can use it like currency, making purchases with online retailers or spending it through an exchange-connected crypto debit card.
Dogecoin, like most other cryptocurrencies, has fallen in price drastically since the all-time-high prices in 2021. DOGE saw a high of $0.68 at the height of its popularity, when Elon Musk shouted it out on “Saturday Night Live” in May 2021, and now trades for just under $0.07. This nearly 90% price drop is drastic but typical of the meme-based coin.
Overall, Dogecoin is a fun, speculative investment that offers some real-world use cases while still remaining popular online. The future price and utility of DOGE is anyone’s guess, but don’t expect to become a millionaire overnight by investing in it.
Or, if you do, don’t hang onto it long enough for its price to drop again, like some did in 2021.