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What is Dogecoin? Things to Know Before Investing

What is Dogecoin? Things to Know Before Investing

Did you know that the Dogecoin was created to poke fun at the Bitcoin? Software engineers Jackson Palmer and Billy Marcus came up with this meme crypto in 2013. The misspelled word “doge” was intentional to describe the Shiba Inu dog as its logo. It is only in 2021 that the coin has managed to gain somewhat of a cult status. What started off as a “joke” currency is now being held as a lightweight currency which probably has a greater chance at mainstream adoption compared to the Bitcoin. Like cryptocurrencies, NFTs are also gaining popularity. Many traders are interested in trading NFTs. However, they should find reliable NFT apps to buy and sell cryptocurrencies. Visit the Insidebitcoins site to find the best NFT apps in the market. The crypto’s market cap has increased from $1 billion and more in January to $47 billion recently.

How does Dogecoin work?

Dogecoin is open-source crypto based of forking of Litecoin code. The coin has been steadily climbing by about 7000% in a year, recording an all-time high in May 2021 following positive tweets by Elon Musk. As other cryptos, it runs on the blockchain which secures and stores all transactions verified by a network of computers. Every holder will own a copy of the ledger and this gets updated with every new transaction that happens. Miners will solve complex cryptographic puzzles to verify and validate transactions. Once solved, these are recorded on Dogecoin’s blockchain. As a reward for their work, miners are given Dogecoin that are can either hold or sell in the market.

Things you should know before buying Dogecoins:

  • Dogecoin can be used for making payments or buying things but it has proved to be a store of value as the Bitcoin. This is mainly because there is no limit to the numbers of Dogecoins. It can be mined continuously making it inflationary by design. Miners are rewarded with the coins for their work; this makes it hard for the speculative price rises to remain up for a long time.
  • Dogecoin boasts of one of the biggest and most active crypto communities. This group has supported many charitable efforts and even funded a NASCAR race.
  • Dogecoin that had started off as a meme cryptocurrency started getting a lot of backing from celebrities like Snoop Dogg and Elon Musk. This has helped to escalate its price. With Musk’s tweet, Dogecoin prices rose from $0.062 to $0.078. A reason for this has been the price surge for Ethereum and Bitcoin that propelled its value.
  • You need to understand that it will not help if you think this is a bubble too. In a bubble, the price of a token exceeds its actual value. Those keen to buy Dogecoins know that the only thing backing its high value is the people’s hope that it will continue to gain value. This speculation justifiably fuels a bubble. The normal tendency amongst investors is to buy assets knowing full well that these are overvalued; they are convinced it will keep increasing. So, even if you invest in the Dogecoin, you can consider cashing out just before the bubble bursts. Here at site, you can find the guide on how and where to buy and sell dogecoin securely.
  • If you are someone who suffers from FOMO you can become a victim of what is called “herding” where you follow the crowd. The problem here is that you believe in the same things as the other investors who are also holding onto that belief without much backup.
  • Trying to estimate the Dogecoin’s real value is tricky. With stocks, you can obtain price-to-earnings ratios and this helps you understand whether a firm is overvalued or undervalued. But, with the Dogecoin, you are completely in the dark.

So, consider all these angles before you start buying Dogecoins on cryptoexchanges.