Dogecoin is a booming cryptocurrency based on the popular Doge meme. Originally created as a joke, Dogecoin trading has seen record growth that has resulted in many investors taking this crypto seriously. In this review, we cover what Dogecoin is, how to buy and store the token, and the pros and cons of trading this popular crypto.
What Is Dogecoin?
Originally a satirical cryptocurrency based on the Shiba Inu dog breed meme, Dogecoin (abbreviation DOGE) has now become one of the leading altcoins, regularly reaching new record prices. In May 2021, it was announced as the fourth most valuable cryptocurrency, with a market capitalisation of $69 billion – up from $2 billion just three years ago.
Its huge popularity has resulted in fans downloading Dogecoin Zoom backgrounds, the Doge Reddit community raising money to sponsor a NASCAR driver, and even using fundraisers to send the Jamaican bobsled team to the Winter Olympics.
Dogecoin was developed by Jackson Palmer and Billy Markus using the same underlying algorithm as Litecoin.
The official website describes Dogecoin as an ‘open-source peer-to-peer digital currency’, with developers able to contribute to the code on Github.
However, its recent price surges have exceeded all expectations, shown in Dogecoin one year charts.
Like many other cryptocurrencies, Dogecoin is based on blockchain technology and uses the proof-of-work mechanism.
This requires members to solve complex algorithms for verification, known as mining.
The Scrypt algorithm which it shares with Litecoin makes it easy to mine without complex equipment and has a lower hash rate, which means it uses less computational power.
However, its transaction confirmation time of just 6 minutes (compared with 15 minutes for Litecoin and 60 minutes for Bitcoin) is what makes Dogecoin so suitable for payments and transfers.
Another unique element of Doge is its unlimited supply.
This is a bonus for miners as the reward does not decrease with the number of coins already mined.
However, it does make Dogecoin very sensitive to inflation (while most other currencies are subject to deflation).
The founders’ goal is to keep the same quantity of Dogecoins in circulation (approximately 100 billion), with new coins replacing those that have gone missing in lost crypto wallets.
Dogecoin Price Chart
Pros Of Trading Dogecoin
There are several reasons to trade Dogecoin:
- Doge’s block production rate is just 6 minutes, making it a great option for payments and transfers.
- Doge has a highly active online network, resulting in plenty of readily available trading tips and resources.
- Ranked in the top 50 cryptocurrencies, Dogecoin is an extremely popular crypto that can be traded on many platforms and exchanges.
- Though the price of Doge has increased exponentially in recent months, its cost is still low vs other cryptocurrencies such as Bitcoin.
Cons Of Trading Dogecoin
However, traders should be aware of the risks associated with trading Dogecoin:
- Doge is very sensitive to inflation as there is no limit on the number of coins that can be produced.
- This differs from most other cryptocurrencies which are deflationary.
- The price of Dogecoin is volatile and highly affected by influencers such as SpaceX CEO Elon Musk tweeting about the cryptocurrency. This means the price is not necessarily a reflection of its underlying value.
- The technology isn’t unique and lacks development, with Doge having gained a lot of success through its branding and publicity instead.
- Dogecoin customer support and user guides are limited.
Future Price Forecasts
The rapid increase in Dogecoin price has resulted in many traders suddenly taking an interest in this crypto. So what is the Dogecoin 2023, 2022, 2025 or even 2030 price prediction?
Currently, Doge has a highly active community, across sites such as Reddit, Discord, Quora and YouTube, so it’s unlikely that interest in this cryptocurrency is likely to dwindle anytime soon. In particular the community is focussed on getting Dogecoin ‘to the moon’ – a goal of a single Dogecoin being worth 1 dollar. Dogecoin also has a very valuable use case, being a fee-free method of making internet payments, meaning it does have some underlying worth.
Many people carry out analysis on Doge, such as Zakaria M, a well know-crypto trader, who in 2020 predicted that the value of a single Dogecoin would be 1 dollar within 5 years.
However, there’s no doubt that the value of Dogecoin has increased exponentially due to its novelty factor and publicity, including the impact of influencers, which is extremely difficult to predict using fundamental trading analysis.
It’s more likely that big names such as Elon Musk will have more influence on the price of cryptos in the short term, with the longer 5 and 10-year forecast more likely to reflect the actual underlying value of Doge, so traders should set their expectations accordingly.
How To Buy, Store & Trade Dogecoin
Now we’ve explained what Dogecoin is, we’ll cover how to buy, store, and trade it.
Crypto wallets are used to store cryptocurrency and can be either hardware or software, online or offline. Each wallet has a public key that is used to identify the wallet (and therefore the Dogecoins), enabling payments to be received. It is used in combination with a private key which only the owner has access to, to send transactions.
Traders can buy cryptocurrency through an exchange. Some exchanges offer a wallet as part of their service, though these may not be as secure as using a personal crypto wallet. An exchange is a simple way to buy and own the underlying asset, with the exchange facilitating the trade between the buyer and seller at an agreed rate and charging a fee for the service. An example of this is exchanging GBP for Dogecoin. Exchanges are the most common choice for crypto holders that are looking to buy and hold Doge for a set period of time.
Another option is to use a broker to trade cryptocurrency.
When using a broker, the trader can deposit funds in return for access to more trading tools such as leverage and additional asset options. Brokers are the best choice for higher deposit amounts, or if more trading flexibility is required. For example, a trader could deposit USD and use it to speculate on the price of DOGE/XRP, without owning the underlying currency.
Here we discuss some of the specific options available:
Dogecoin Core is the official Doge wallet that has a high level of security, but offers limited features via a basic user interface. Alternatively, The Trezor Model T is one of the most popular hardware wallet options that supports Dogecoin. The highly-rated Ledger Nano X hardware wallet is also a great choice for traders looking to manage their Dogecoin through a dedicated app, which makes the public key accessible for payments via QR code.
Zengo is the first keyless crypto wallet that also offers Dogecoin storage, available as an app on Android and iOS. Funds are encrypted using a 3D biometric face scan, removing the need to remember passwords at login.
Look out for updates on the digital bank Revolut, which plans to support Dogecoin soon.
One of the best platforms to buy Dogecoin on is Binance, which offers an e-wallet accessible by app, called the Trust Wallet. Alternatively, Kraken is a trusted exchange that offers Doge to traders in countries including the UK and US, however it does not provide a wallet service.
See our top list of DogeCoin Brokers for all brokers that are available in your location.
Here we list some top tips for trading Dogecoin:
- The price of Dogecoin is mainly driven by the activity of other retail investors, so as well as following the latest token news on outlets such as Yahoo, look out for updates across social media and community forums.
- Be aware of any cryptocurrency regulation changes and the effect this may have on Dogecoin.
- Keep an eye on the Doge price using a tracker. Traders can set notifications for when the price hits a pre-defined limit using the TradingView app.
- As with all types of trading, manage risk by using stop losses and investing only a small percentage of your capital in a single trade. Dogecoin investment calculators can be used to predict the monetary gain or loss for a trade that moves by a certain number of pips, including if the price hits the stop-loss limit.
Final Word On Trading Dogecoin
Dogecoin is a cryptocurrency that has seen soaring prices in a short period of time.
Originally created as a joke using the Shibu meme logo, its huge price jump has placed it among the top crypto rankings, catching the attention of day traders in particular. However, traders should beware of the effect influencers can have on the Dogecoin price, which is extremely volatile and unreflective of its underlying value.
Is Dogecoin Trading A Joke?
Dogecoin is a real cryptocurrency, though it was originally created as a joke using the Shibu meme logo. One of its strengths is the ability to make fast internet payments without transaction fees.
Is Dogecoin A Good Buy?
Dogecoin may be a good investment for day traders because of its high volatility. However, its potentially high reward comes with equally high risk and is difficult to predict using fundamental analysis. Traders should therefore chance only a very small proportion of their capital on Dogecoin.
Is Dogecoin Trading Halal?
The general consensus is that storing Dogecoin and using it for payments is Halal.
If attempting to trade Doge without any analysis, this could be classed as gambling which is Haram. However, scholars have different views on whether crypto trading is Halal so consult your religious leader first.
How Can I Start Buying Dogecoin?
Is Dogecoin Going Up?
While Doge continues to maintain a strong online community presence, it’s likely that the price will remain high. However, its strong dependence on high profile influencers makes even the 2023 Dogecoin forecast extremely difficult to predict.