Dogecoin Review – Is It a Good Investment?
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To those used to using paper money, cryptocurrency may seem... well, cryptic. Legal currency that you can never see or touch? “Coins” that can be spent with the click of a button?
As if that isn’t unusual enough, along comes the digital currency that started as a joke but has gained a loyal following of serious users.
That currency is Dogecoin, an open-source, peer-to-peer cryptocurrency that exploded in popularity after Tesla and SpaceX founder Elon Musk and other prominent figures lavished it with attention.
Here’s everything you need to know about this more irreverent of cryptocurrencies.
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What is Dogecoin?
Developers Jackson Palmer and Billy Markus created Dogecoin — pronounced “dohj-coin” — 2013 as a parody of the popular Bitcoin cryptocurrency. As such, Dogecoin gives new meaning to the word “altcoin” — a shortening of “alternative to Bitcoin” that refers to cryptocurrencies that aren’t the initial and most popular cryptocurrency.
Palmer and Markus drew the name from an Internet meme featuring a photo of a Shiba Inu dog with a skeptical expression surrounded by deliberately misspelled words and phrases representing its thoughts. “Doge” is the misspelling of “dog” in this meme language.
The Doge meme proliferated wildly. People appropriated a vast array of comedic expressions. Know Your Meme named it the #1 meme of 2013.
Everything about Dogecoin was initially meant to be a spoof of cryptocurrency. Even the process of obtaining it was nonsensical. Where people usually receive a rational amount of cryptocurrency for solving mathematical puzzles with powerful computers (a process called “mining”), Dogecoin miners (called “diggers”) get a random number — maybe one, maybe hundreds of thousands — with no apparent rhyme or reason.
Markus left the Dogecoin project in 2015. He made just enough from selling out to buy a used Honda Civic. He says he left due to harassment from the dogecoin community and continues to face harassment. Parker is also no longer involved with the project.
How does Dogecoin work?
As a cryptocurrency — or form of digital money — Dogecoin exists entirely online, though you can spend it on digital and tangible purchases. Cryptocurrency is a decentralized, peer-to-peer form of money that allows people to trade it among themselves without banks, governments, or other institutions playing a moderating or middle-man role.
The digital, person-to-person nature of the currency is made possible by cryptography called blockchain technology, which serves as an online ledger to track each transaction’s details. The blockchain stores this information as non-fungible tokens (NFTs) and shares it across a network of nodes, which makes it extremely reliable and secure despite being decentralized.
Like other cryptocurrencies, Dogecoin can be “dug” (mined) or obtained using high-powered computers to solve mathematical problems. While Dogecoin uses the script mining algorithm, which is less energy-intensive than Bitcoin's SHA-256 mining algorithm, digging for Dogecoin is still a very expensive task that uses tremendous energy.
Like other cryptocurrencies, Dogecoin uses private and public keys to stay secure. This system uses one method of encoding and a separate method of decoding so that only those with the right keys can code the encryption and take possession of the currency.
How did Dogecoin become so popular?
Dogecoin was initially just popular with crypto-enthusiasts on Reddit, but soon began to gain more attention. In December 2013, Dogecoin’s value popped up by almost 300% in just three days, and while it reverted to 80% down soon after, this incident was a defining moment for the new currency.
Shortly after that, hackers made off with millions of Dogecoin from the company’s native wallet, Dogewallet. What would have spelled doom for many other crypto projects was a rallying cry to the tight-knit Dogecoin community. They began fundraising and managed to replace all of the stolen assets. The community also showed its whimsical nature by sponsoring a fundraising event that raised $30,000 for the Jamaican bobsled team in 2014.
Dogecoin has made news at various other points in the last several years, including when its value jumped 800% in 24 hours due to a campaign to ruin predatory hedge funds.
At one point, Tesla and SpaceX chief Elon Musk seemed to have developed a kind of obsession with Dogecoin, talking about it regularly on social media. In December 2020, he posted a series of tweets about the topic, starting with “One word: Doge.” In February, among other Doge-related tweets, he tweeted that he bought some Dogecoin for his infant son “so he can be a toddler hodler,” which refers to those who buy a cryptocurrency and hold onto it.
His digital expressions of interest have real-world results: Each time he tweeted about Dogecoin, its value jumped. For example, when he tweeted, "SpaceX is going to put a literal Dogecoin on the literal moon," Dogecoin’s value shot up 35%, reaching a six-week high. On April 14, his tweet of an odd photo of an animal braying at the moon with the caption “Doge Barking at the Moon” sent the currency soaring 68%.
Other celebrities, from rapper Snoop Dogg to Gene Simmons, co-founder of the rock band Kiss, have joked about Dogecoin online.
With all this high-profile attention on the “dog stocks,” its popularity has continued to increase.
What is Dogecoin worth?
Dogecoin now has a market cap of about $13.17 billion — more valuable than many large companies. The market cap of cryptocurrencies can be determined by multiplying the current market price by the number of coins in circulation — otherwise known as the circulating supply. Dogecoin has a circulating supply of 142.21 billion. Each coin is currently worth $0.092.
How to buy and store Dogecoin
Unless you’re interested in learning to mine crypto, buying some, including Dogecoin, is the best way to obtain it.
You can check out the price of Dogecoin on CoinMarketCap, a price-tracking website for digital assets, and then snap some up with your credit card on a cryptocurrency exchange or crypto trading platform, such as Coinbase, Binance, or Kraken.
Once you own some Dogecoin, you can store it in a cryptocurrency wallet — an online location on your computer hard drive or some other digital hardware that keeps your cryptocurrency secure. Digital wallets are available from Coinbase, SoFi, Robinhood, and Mycelium. Another option is a hardware wallet that stores your private keys on a dedicated hardware device.
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What can I buy with Dogecoin?
The answer to what you can buy with Dogecoin is “it depends.” Most online brick-and-mortar retailers won’t accept cryptocurrency, so you can’t just walk into your nearby pet store and order dog food with your Dogecoin.
However some specific retailers or other institutions do accept this currency. For example, Latvian airline airBaltic announced that passengers can now use Dogecoin and Ether to book flights. You can also use Dogecoin to buy gift cards for certain retail platforms, like Amazon and the Apple store, via Bitrefill.
Because of its peer-to-peer nature, Dogecoin can also buy things directly from others. Or you can exchange it into traditional currencies on currency exchange sites.
Should I buy Dogecoin?
When considering whether to buy any cryptocurrency, it’s good to look at all the factors that make it a risky bet and a potentially good investment.
Cryptocurrency is a risky choice since any government does not back it. Governments back national currencies, like U.S. dollars and British Pounds, to protect investors from certain losses. With crypto, you have no recourse if the worst happens, such as the company that issued your cryptocurrency going out of business.
Crypto’s value tends to be very volatile, swinging up and down frequently and rapidly. There’s never any guarantee the value will go back up once it has tanked, and there’s little way to predict which direction the crypto you’ve invested in will go. The volatility does provide a lot of upside potential, though, so if you like to take risks, crypto could be a nice place to try your luck.
What are some other cryptocurrencies I could buy instead of Dogecoin?
Dogecoin isn’t the right fit for every crypto investor. Quite a few may be put off because it originated as a joke and is only barely taken seriously now. Some may be uncomfortable with how Elon Musk’s online musings tend to play fast and loose with the currency’s value.
If you’re interested in purchasing cryptocurrency but aren’t sure Dogecoin is for you, check out our Beginner’s Guide to Cryptocurrency and investigate these alternatives that you might want in your digital wallet.
- Bitcoin. The grandfather of crypto, Bitcoin burst onto the scene in 2009 and started a new currency era.
- Bitcoin Cash. This offshoot of Bitcoin, which features faster transacting speed and lower fees, was forced into existence by a “hard fork,” or a split in the blockchain.
- Ethereum. Second in popularity after Bitcoin, Ethereum focuses more than Bitcoin on decentralizing data.
- Litecoin. True to its name, Litecoin is faster and cheaper than Bitcoin and features high trade volume and liquidity.
- Zcash. Calling itself “digital money,” Zcash prides itself on being fast and private, and it has low fees.
- Ripple. Ripple is a platform with an associated cryptocurrency, XRP, on which institutions can transact globally.
- Lumen. By the same creator as Ripple, Lumen is about individual usage instead of Ripple’s focus on institutions.
The bottom line
In a world of finance that can feel all too serious, Dogecoin’s quirky, irreverent identity is a breath of fresh air. Its founder, Billy Markus, believes that the "friendly, low barrier to entry" nature of the currency has encouraged its popularity, which is rapidly rising.
Its quirkiness makes Dogecoin a special case, however — one that’s not right for every investor. It has yet to be seen how seriously the crypto community will take the jokey currency over the long term and what will happen to its value as time goes on.
But investing in Dogecoin could be a nice way to spend a little extra cash for those interested in getting in on a hot cultural moment and seeing what all the fuss is about.
If nothing else, it’ll give you something to tweet about.
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Writer
Katherine Gustafson is an author and personal finance expert from Portland, Oregon. She writes about investing and havs written for Forbes, Business Insider, TechCrunch, and LendingTree.
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