July 4, 2022

Daily Bama Blog

Daily Bama Blog

Dogecoin – Is it Worth Investing in the Meme Coin?

Dogecoin – Is it Worth Investing in the Meme Coin?

On the international Dogecoin holiday, April 20, everyone was talking about the meme token. The day before, the Dogecoin (DOGE) reached its recent all-time high after Elon Musk and other influencers diligently advertised and caused a lot of excitement in the crypto market. This has allowed Dogecoin to grow quite a bit with a market cap of around $50 billion.

Strongest Increase Among All Cryptocurrencies

The meme coin, Dogecoin, was created in 2013 as a parody of Bitcoin and has been one of the most popular cryptocurrencies ever since. At that time there was a separate blockchain for each new cryptocurrency and it was not yet possible to simply create new tokens on an existing blockchain with just a few clicks, as is the case today, e.g. B. is the case with Ethereum.

Of course, the hype surrounding this meme tokens with a dog as its symbol has had a major impact on the course and has led to an increase since the beginning of the year – by an incredible 7,900 percent! After this incredible success, DOGE was able to overtake even some large and established altcoins and is now in the top ten of the largest cryptocurrencies. Many investors are wondering whether, after such a rapid increase, a strong correction is imminent within a very short time and whether investing in Dogecoin is still worthwhile. The fact is that Dogecoin is the best performing cryptocurrency so far this year.

DOGE vs Bitcoin and Litecoin

Dogecoin is basically similar to Bitcoin. The difference lies only in the hashing algorithm adopted from Litecoin, but also in the block time and the maximum number of DOGE coins. This is how 5.256 billion Dogecoins are created annually, while the maximum number of all Dogecoins is not fixed.

The current block time is 1 minute per block, which includes a block reward of 10,000 DOGE. This is how around 14.4 million coins are created every day, the total value of which is currently around USD 763,000. Transactions on the Dogecoin network are processed 10 times faster compared to Bitcoin and 2.5 times faster compared to Litecoin.

The DOGE network is neutral, censorship-resistant and decentralized – and thanks to these properties and the current hype, Dogecoin made it into the top 5 cryptocurrencies.

The Problem: Most Of The Dogecoins Are In A Few Wallets

Only 11 previously unknown wallets own about 70% of all Dogecoins. This increases the risk that the Dogecoin course will be brought to its knees by the sell-off. Which DOGE whales are behind the wallets remains unclear. The fact that the meme coin lives solely from the hype and the desire for a quick profit does not inspire confidence either. Currently, Dogecoin is only for speculation and has no specific purpose or clear direction.

Binance, Bitfinex, OKEx list DOGE derivatives after meme-coin volume jumps  683%CryptoSlate

How Long Does The Hype Last?

The hype surrounding Dogecoin is not over yet – at least not as long as Tesla boss Elon Musk tweets about it and helps the fun currency to attract renewed attention. Thanks to the huge hype surrounding DOGE, copies of the cryptocurrency are now being created on Ethereum and the Binance Smart Chain (BSC). Many investors who are looking for a quick profit and missed out on getting started with DOGE use this opportunity to jump on one of the copies. This gambling is nothing new, but such hypes are usually short-lived. In the past, it has often been shown that investors eventually drive the price down. It cannot be ruled out that this will also happen with Dogecoin.

Experts: Doge Is Not A Long-Term Investment

Even though DOGE is a fun project, it has been around for many years and has a loyal community behind it. Nonetheless, it is still a shaky affair. The hype on social media is still high at the moment, but that is what makes the course more fragile. In the long term, Dogecoin does not have high potential and lives exclusively from the influencers, who are usually the only ones who benefit from it.

Since there is no limit to the maximum amount of Dogecoin and the coin does not serve any real purpose, the experts warn against investing in the cryptocurrency. DOGE is not a long-term investment, because, after such a strong increase in such a short time, a strong correction is also increasingly likely. Only in the bear market, which often follows a bull run, does the true substance of a project become apparent – and this is hardly or not at all present with Dogecoin. At that point at the latest, investors in Dogecoin must expect heavy losses.

Instead, the experts recommend dealing with the leading cryptocurrency first when entering the crypto market. Only after understanding how Bitcoin works do the difference to other crypto assets become clear.