What is Dogecoin?
Dogecoin is one of the most popular meme coins with Shiba Inu – a Japanese dog breed – as its logo.¹ The coin was created as a “fun” alternative to traditional cryptos like Bitcoin and has similar functionalities as the leading cryptos.²
The evolution of Dogecoin
Dogecoin began as a joke in 2013 and experienced 3100% growth³ in 2021 during the crypto rally. It was especially popular among Reddit users⁴ who used these coins to tip Reddit authors.
Unlike Bitcoin, there’s no cap on the number of Dogecoins that can be mined. The volume of these coins mined is enormous, and the count keeps increasing by the day. Dogecoin offers a fun way to look at blockchain and has caught the attention of celebrities like Elon Musk and Mark Cuban.⁵ Many retail outlets have even accepted cryptos for payment. Due to its low price, Doge remains a highly volatile crypto, making it a speculative investment.
The volume of Dogecoin in circulation may be a significant deterrent for investors as it may limit the appreciation in price. Dogecoin has a different approach to supply, opting for allowing an unlimited amount. This is in contrast to Bitcoin’s cap of 21 million coins to be mined. It is possible that the unlimited supply could be an argument against using Dogecoin as an inflation hedge, whereas some pundits have pegged Bitcoin as exactly that.⁶
Example
Tesla is one of the companies that accept Dogecoin for merch payment. The company offers this facility for a few products, namely belt buckles, and children’s ATVs.⁷ While price volatility may constrain sellers to accept the crypto, one could expect more outlets to receive cryptos once the prices become more stable.
Sources
1. Dogecoin
2. Dogecoin (DOGE). Investopedia.
3. Dogecoin (DOGE) Price Prediction 2022. Yahoo! Finance.
4. Reddit frenzy pumps up Dogecoin, a cryptocurrency started as a joke. CNBC.
5. Mark Cuban and Elon Musk Agree on the Merits of Dogecoin. Crypto Experts Have a Different Opinion. Money.
6. Bitcoin as an inflation hedge. JP Morgan.
7. Tesla starts accepting once-joke cryptocurrency Dogecoin. BBC.
Please note that this article is for educational and informational purposes only. The example is for illustrative purposes only.
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