The value of Bitcoin has skyrocketed so much in recent years that it has made many people consider investing in cryptocurrencies, and now with its plunge, there are traders who think it is better to switch their investments to other more stable currencies.
One in particular has caught the attention of investors, and that is Dogecoin: a cryptocurrency that started out as a joke coin, but has been gaining traction over the last year. So, is Dogecoin a good investment in 2021?
OK but… What is Dogecoin?
Dogecoin is a cryptocurrency that was originally designed as a “meme coin” by Jackson Palmer, a programmer from Calgary, Albert, who wanted to make fun of the cryptocurrency revolution. In December 2013, he launched the coin with the image of a Shiba Inu dog named Doge.
Most of the cryptocurrency is mined through proof-of-work mining. To mine a cryptocurrency, calculations must be performed to validate transactions. When a user uses a cryptocurrency to purchase goods or services with his or her funds, he or she also validates the transactions. In this process, users and miners compete to validate transactions by solving a mathematical problem. The more work a user or miner does, the more likely they are to win the mining process.
Dogecoin as an investment
The most compelling reason to consider investing in Dogecoin is that it is a “benevolent open source project”. That means that Dogecoin has no central authority overseeing its development. Instead, it relies on the community to make decisions and update the software to ensure it continues to function. Moreover, as the community grows, so does the value of the cryptocurrency. In fact, last year Dogecoin went from $0.0055 per coin to over $0.70 per coin in less than two weeks. It even briefly surpassed Bitcoin to become the fifth most valuable cryptocurrency in the world. But despite the huge price rise, Dogecoin’s value has not returned to its 2021 peak, after which it has suffered a big plunge. Today, it is worth around $0.29 per coin.
Is Dogecoin a good investment in 2021?
Dogecoin is also an interesting coin because anyone can participate as a miner – a process of making blocks of transactions in a Bitcoin transaction. Bitcoin is by far the most popular cryptocurrency, but only 1 in 10 people have Bitcoin wallets. Against: Dogecoin is not widely used. For example, according to the Dogecoin subreddit, there are almost 100,000 coins in existence. It is not even clear whether Dogecoin can be held for more than a year or two. The value of the coin can swing wildly and seems to go up and down even faster.
How to invest in Dogecoin?
We want to warn you that investing in cryptocurrencies should not be taken lightly. The value of cryptocurrencies is very volatile and subject to large price swings. This is because the cryptocurrency market is made up of several highly liquid and tradable digital currencies.
Another interesting strategy is to consider trading cryptocurrencies by using Social Trading with NAGA. This is a form of trading where an application can be used to automatically follow and copy the trades of experienced cryptocurrency traders. In a market with so much volatility it can be a strategy to help you navigate all the complexity.
In the short term, owning Bitcoin or other cryptocurrencies could be a quick way to make money. In the long term, owning a small percentage of cryptocurrencies and paying fees to manage transactions could be a better way to generate wealth. We will keep an eye on Dogecoin as its value is subject to the comings and goings of the reddit community, something very new in these markets.