In this article, we will take a closer look at Dogecoin, its origins, current situation, and Dogecoin predictions for the future.
Like many other currencies, Dogecoin is based on the open source Litecoin software.
How does Dogecoin work?
Now that we know what Dogecoin is, let’s talk about how it works. Dogecoin is very similar to bitcoin: like bitcoin, dogecoin has its own blockchain, and miners create new dogecoins by solving complex problems on powerful computers.
As is the case with many other cryptocurrencies, people who mine Dogecoin, as well as maintain the network by tracking and logging transactions, are rewarded for their work in the form of a small amount of Dogecoin.
Once you have created or earned the Dogecoin (DOGE) cryptocurrency, you can freely trade on the blockchain.
In addition, unlike Bitcoin, Dogecoin is unlimited. This means that Dogecoin is likely to become an inflationary coin, as it was intended. The value of an individual Dogecoin can (and sometimes does) go down when the availability of the coin increases.
This imposes certain restrictions on the potential value of one dogecoin.
Dogecoin’s highest value was approximately $0.68, which it only reached at the peak of the coin’s popularity. Since then, the price of the coin has dropped significantly, but currently, at the time of writing, it seems to be more stable.
Technically, Dogecoin could reach the value of $1, but many analysts believe this is unlikely and it will be years before the currency reaches this value, if at all. There are many reasons for this:
➤ Firstly, the coin has not yet reached the same level of popularity or the same trading volumes as some other cryptocurrencies.
➤ In addition, Dogecoin was created as an inflationary cryptocurrency. The lack of a cap on the issuance of Dogecoin coins means that the value of an individual Dogecoin is likely to fall even if Dogecoin’s market share and popularity rise significantly.
➤ Dogecoin also does not offer users any special features that would make this currency unique.
Should you buy Dogecoin?
Dogecoin is a risky investment in many ways.
You can mine dogecoin as this currency is easier to create than its more expensive competitors. However, given the volatility of Dogecoin and its propensity for high inflation rates, the value of Dogecoin is likely to remain close to current levels.
What is Dogecoin cryptocurrency used for?
➤ Currently, Dogecoin is mainly used online in crypto communities and on sites such as Reddit and Twitter. It can also be used to pay for purchases, but only at retailers that accept Dogecoin as a means of payment.
Dogecoin is also actively traded in the market, so an experienced crypto trader can make a profit by trading Dogecoin, which we will talk about later.
Just hoping for a favorable price movement is not enough to make a profitable trade in dogecoin.
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Pros and cons of Dogecoin cryptocurrency
Each cryptocurrency has its own advantages and disadvantages.
Let’s look at the main advantages and disadvantages that you should be aware of if you want to start trading Dogecoin.
Growing Community: While Dogecoin has waned in popularity since Elon Musk praised the currency, its community is indeed growing and becoming more diverse. Assuming that demand continues to grow, Dogecoin price stability will continue, and perhaps even increase.
Easier to mine: Since mining Dogecoin is easier and faster than mining bitcoin, it is much easier to earn your own dogecoins. You can earn much more from mining Dogecoin than you can imagine.
One of the first cryptocurrencies: Although Dogecoin is not so different from other currencies now, the release of Dogecoin in 2013 turned it into one of the first major cryptocurrencies, and its innovations have fueled interest from some traders and investors.
No Supply Limit: The lack of a limit on the number of Dogecoins in circulation might be a novelty, but it also represents one of the biggest drawbacks holding back the value of the currency. Its inflationary nature means that investors cannot expect a significant increase in the value of the coin, which in turn limits the opportunities for profit.
Limited Technical Support: Dogecoin has a much smaller team than Ethereum, Bitcoin, and other major cryptocurrencies. In addition, the coin has not been updated or undergone any major changes since 2015.
Pump&Dump Exposure: Many cryptocurrencies are vulnerable to Pump&Dump schemes, and this is far from a new strategy. Unfortunately, the origins of Dogecoin and its association with meme culture have made it a particularly popular target for those pursuing this strategy.