What is Dogecoin?Dogecoin Advantages and Disadvantages

What is Dogecoin?Dogecoin Advantages and Disadvantages

Untitled (1)

What is Dogecoin? Learn all you need to know about this cryptocurrency.

Whether you’re new to cryptocurrency or have been following it for some time, you may wonder, “What is Dogecoin, and how does it work?”

In this article, we’ll answer those questions and give you general tips to help you decide whether or not you want to add Dogecoin (DOGE) to your crypto portfolio.

First, let’s see how cryptocurrency and Dogecoin fit into the current crypto marketplace.

Why Choose Crypto?

Cryptocurrencies are digital currencies underpinned by cryptographic systems — encryption algorithms and other “crypto” techniques. This encryption safeguards online payments and other financial transactions and makes the currency virtually impossible to counterfeit.

They are often based on blockchain technology, which enables a distributed digital database ledger to maintain a secure and immutable record of transactions without the participation of a third party.

In general, cryptocurrencies are not issued by or controlled by a central authority, such as a government. This means they cannot be manipulated by government fiscal policy.

While not commonly used for retail transactions, cryptocurrencies such as Dogecoin have become popular trading assets.

What is Dogecoin?

Dogecoin is an open-source peer-to-peer digital currency. It’s also an example of a cryptocurrency known as a “meme coin.”

Instead of being created to provide some specific functionality, meme coins draw on a theme — an internet meme or popular character — to establish an identity and attract attention.

In fact, Dogecoin’s creators — software engineers Billy Markus and Jackson Palmer — began it as a joke on the crazy speculation rampant in 2013. It featured the face of a Shiba Inu breed of dog featured in the internet “doge meme.”

While its inception was satirical, it gained traction and within weeks of its launch, a dedicated following had established a blog and forum on Dogecoin.

In 2021, Dogecoin benefitted from celebrity tweets from Elon Musk and others, sending its value soaring. This attracted the attention of mainstream audiences, giving Dogecoin some staying power.

Dogecoin Advantages

Now that we understand what Dogecoin is, let’s take a look at its pros and cons.

No Third-Party Control

Because of its decentralized nature, Dogecoin is generally not subject to central control and manipulation and is difficult to counterfeit.

Upside Potential

As with many speculative currencies, Dogecoin has historically enjoyed sudden episodes of incredibly high increases in valuation. Between January 28 and 29 of 2021, for instance, it soared 219%.

Historical Data

Considered the first meme coin, Dogecoin has been around for almost a decade. This means there are historical data and trends for users to consider before buying the token.

Large Supply And Low Price Per Token

Because of Dogecoin’s large supply and low price per token, it’s easier to buy and amass a large number of tokens. It also makes the currency suitable for online tipping.

A Dedicated Community

As we mentioned above, Dogecoin has a dedicated fanbase and online following. It touts a community that welcomes participation and the fun implied by the meme coin but is dead serious about supporting its success.

Potential Dogecoin Disadvantages

Volatility

What goes up can come down. And anything that soars fast can plummet just as quickly. Some cryptocurrencies can be volatile, and meme coins in particular have a history of volatility.

Almost Unlimited Supply

With no ultimate limit on the number of Dogecoins that can be created, it is, by design, a highly inflationary cryptocurrency.

Limited Use Cases

Other than trading, Dogecoin’s chief use is for online tipping. In contrast to Dogecoin, many of the world’s most popular cryptocurrencies offer some or multiple forms of utility.

Affected by News Cycles

Dogecoin’s initial increases in value from community support were followed by a huge jump based on celebrity tweets. Historically, the price of Dogecoin has fluctuated based on how prominently it features in news cycles.