Dogecoin (DOGE) is a popular cryptocurrency based on the once-viral Doge meme featuring a Japanese Shiba Inu dog. DOGE is one of the first Altcoins to launch in the crypto space. Over the last two years, it had reached global fame after a series of tweets made by Elon Musk – who heavily advertised the project and jokingly named himself the CEO of Dogecoin.
Dogecoin stands as the most popular meme cryptocurrency. The project mostly has speculative value, but due to the work of its developers, it has also managed to gain fundamental value as well. And as of February 2023, DOGE ranks ninth place on CoinMarketCap’s crypto leaderboard.
Is Dogecoin a good investment? Today’s article explores 5 reasons for why you should buy DOGE and what makes the project so attractive to the crypto community. But before we start, let’s first take a deep dive into Dogecoin and its origins.
What Is Dogecoin?
Dogecoin is a decentralized, peer-to-peer digital currency that was created in December 2013 as a lighthearted take on the then-growing trend of cryptocurrency. It is based on the popular "Doge" Internet meme, which features a Shiba Inu dog and comic sans text captions. Dogecoin is one of the first altcoins to launch in the crypto space.
Dogecoin was originally intended as a joke, but its fast and low-cost transactions quickly gained popularity among online communities. Certain online forums, including Reddit, integrated Dogecoin as a tipping system at one point. Most recently, Dogecoin saw popularity due to being heavily advertised by Elon Musk.
Dogecoin operates on the same basic principles as Bitcoin and other cryptocurrencies. Transactions are recorded on a public ledger called a blockchain, and new DOGE tokens are created through a process called mining. Dogecoin has a fast block time of only 1 minute and a low transaction fee, making it a popular choice for small transactions and micropayments.
Despite its origins as a joke, Dogecoin has developed a dedicated following and has been used for various charitable causes and online tipping. While it has faced criticism for its lack of a clear use case and a less secure network compared to other cryptocurrencies, Dogecoin remains one of the most well-known and widely used cryptocurrencies in the world.
5 Reasons to Buy DOGE
Although DOGE is seen more of a meme than a serious cryptocurrency investment, there are still a few reasons why you might want to make Dogecoin a part of your portfolio. The following sections feature the top 5 reasons why you should buy DOGE.
1. High Growth Potential
During the last crypto bull run there was one meme that united all Dogecoin investors: “Doge to $1!” Dogecoin is a project with an incredibly high circulating supply and a low price. As a matter of fact, DOGE was only worth a small fraction of a dollar before its explosive rise in 2020. And even now, DOGE costs only $0.09.
The reason why many believed in the DOGE to $1 meme is that the project had an incredibly low price to begin with. With little to no investing activity, it was quite easy to push the price simply by attracting new investors. And all it took to push DOGE to an all-time-high of $0.73 was a few mainstream news headlines and TikToks.
Due to its fame and status, Dogecoin is as popular as Bitcoin and Ethereum. During the last bull run, many non-crypto natives who joined the market sought to buy DOGE solely due to its low price. So paradoxically, a low price point is what drives investors to push DOGE’s value up.
Dogecoin currently ranks as the ninth largest cryptocurrency by market capitalization. If the crypto market were to reach new all-time-highs, DOGE would surely have ATHs of its own. And according to some in the community, the token has the chance to reach $3 if not more.
2. OG Meme Token
Dogecoin enjoys the status of being crypto’s most well-known meme cryptocurrency. After all, the project started out as a joke. Still to this day, many see it as a light-hearted cryptocurrency that may or may not eventually see high price growth.
There is really no logic behind buying Dogecoin. Some believe that the only reason to purchase DOGE is the project’s potential for attracting speculative value. DOGE’s speculative value was pushed by not only crypto investors themselves, but also by some highly influential people such as Elon Musk – who spent most of 2020 tweeting about Dogecoin.
Every successful crypto project needs a community, and suffice to say, Dogecoin has the most fervorous community of them all. Although interest in DOGE has massively dropped since the start of the bear market, the community still believes that there is a lot of potential for DOGE’s growth once crypto recovers.
Meme tokens are part of every veteran’s crypto portfolio. They’re silly assets that people invest a small part of money into either for the memes, or in hopes of profiting a lot from a small investment. Whatever it may be, it’s enough to say that Dogecoin enjoys the reputation of being crypto’s most popular meme token.
3. Use Cases
Although most of DOGE’s value is purely speculative, there are still a few factors that add to the project’s fundamental value.
Dogecoin’s early use case was rewarding people online for contributing with good content by tipping them with DOGE. The project’s use cases have evolved since then, and today, Dogecoin is primarily a medium of exchange.
During the height of the Dogecoin mania, Elon Musk made it possible for people to buy Tesla merchandise with DOGE. Other smaller companies and vendors have followed suit and integrated DOGE as a payment method as well.
Dogecoin has also been used to make donations. For example, the internet used Dogecoin to donate to the Jamaican bobsled team and help them make it to the Sochi Winter Olympics in 2014. This event was one of Dogecoin’s earliest real use cases.
The Dogecoin blockchain is a Proof of Work network that uses mining to verify transactions. The developers have made the blockchain extremely fast, allowing investors to send money to each other all while paying cheap fees for some of the fastest transactions in crypto. Doge’s value might grow if more vendors integrate it as a payment method.
4. Faces Growth Despite Large Supply
Dogecoin has an incredibly large supply. In fact, the blockchain features 137 billion Dogecoins. Over a million new tokens are minted each day, and there are little to no mechanisms for reducing the project’s supply – which makes sense given that DOGE is supposed to be a currency and medium of exchange.
A large supply normally devalues any cryptocurrency, and it surely has an impact on DOGE’s price. However, it’s worth noting that people keep buying into the project despite its high circulating supply. Most investors completely ignore the supply and buy for speculative reasons alone.
If speculative value is enough to crush the supply and incentivize investors to accumulate more DOGE, a 137 billion token supply isn’t actually that bad. In fact, it contributes to the project’s value by keeping the price low and creating cycles of extreme expansion during which hype alone can push the project’s price up.
5. Fast and Cheap Transactions
Dogecoin has its own blockchain network based on the Proof of Work consensus mechanism. Dogecoin produces a new transaction block every minute, while Bitcoin does so every 10 minutes. Moreover, Dogecoin’s transaction throughput is currently around 40 transactions per second.
The project’s blockchain also features very low transaction fees. It takes mere cents to send a transaction over the Dogecoin blockchain. Low fees make Dogecoin a viable payment option for the internet and gives it more credibility as a means of exchange.
Combining fast and cheap transactions you get the result of a very attractive cryptocurrency – one that can actually serve as a currency. If more online stores, vendors, and companies were to integrate Dogecoin as a payments option, it would highly aid the project’s fundamental value.
Is Dogecoin a Good Investment? Should You Buy DOGE?
Dogecoin is a highly speculative cryptocurrency. The project derives most of its value from speculative value due to DOGE’s status as a meme token. The cryptocurrency faced explosive growth in both 2020 and 2021 due to a series of events – mostly Elon Musk Tweets, news headlines, and Dogecoin TikToks.
Is Dogecoin a good investment? Some might oppose the project due to its extremely high inflation. However, you can make a good argument – based on historical price action – that speculative value is good enough to crush any inefficiencies with DOGE’s tokenomics.
Many keep Dogecoin in their portfolio, but only invest a small portion of their capital. DOGE is a play that can help you profit a lot from a small investment. However, it has a lot of down-side risk and can crush your portfolio if the crypto market ever has another major crash.
Should you buy DOGE? That depends on your appetite for risk. But no matter how much you decide to allocate – if at all – make sure to not invest more than you can afford to lose. And if anything, at least keep a few tokens for the culture.
Want to learn more about Dogecoin and crypto in general? I recommend reading the following articles: