Bitcoin

3 Reasons Dogecoin Could Head to the Moon – Someday | The Motley Fool

Scorned by many pundits as a joke digital currency with no real path to stable value, but strongly advocated by its legion of fanatical retail investors, dogecoin (doge -1.27%) has followed the current -roller coaster pattern of massive price increases and dizzying drops in recent months. the coin with his mascot shiba inu image, however, has slowly gained some traction as a medium of exchange. Recently, Jenny Ta, founder of crypto trading site Coinlinked, claimed that its market capitalization could reach $1 trillion, indicating that Dogecoin could eventually trade between $7 and $8.

Indeed, there are some positive signs for the dog-themed cryptocurrency that has been dormant for a long time, but the risk level for its buyers remains high.

Reading: Will dogecoin go up like bitcoin

how did dogecoin get there

after its launch in late 2013, dogecoin’s value remained in fractions of a penny for the next seven years, while bitcoin (btc 0.91%) grew to dominate the market of cryptocurrencies. In 2021, however, Dogecoin has gained explosively in price with gains that included a jump of over 500% in one day in January. 29.

Its rise was sparked by a group of crypto enthusiasts on reddit who were looking to replicate in the field of digital currencies what the wallstreetbets subreddit did with the gamestop share price. those stock traders started a short crunch in which some small investors benefited by increasing the value of gamestop, forcing institutional short sellers to increase it further while hedging and closing their losing short positions.

According to many stakeholders, a sizeable number of reddit users viewed the behavior of short sellers as artificially depressing the share prices of gamestop and other companies with strong short positions well below their objectively reasonable valuations. their desire to punish what they perceived to be an example of “vulture capitalism” gave them additional motivation to buy and hold the stock.

dogecoin’s rise was aided by tweets from space pioneer and maverick electric vehicle CEO elon musk, with his enthusiasts calling it “the people’s currency” or “the people’s crypto”. this sparked the rapid growth of the r/dogecoin subreddit, which reached 1.9 million members on May 20. the big holders also played a major role in the currency’s rise, as well as its subsequent declines as those “whales” pumped and dumped the currency.

where does doge go from here?

The cryptocurrency market in general remains extremely volatile with widely held views on both sides of the argument about the true value of such assets. Powerful and unpredictable price movements mean that long-term investments in a well-chosen portfolio of traditional stocks are likely to deliver better returns for many investors, based on standard analytical view.

See also: Bitcoin inventor Craig Wright aims at a trillion transactions per second on BSV – CoinGeek

however, in the process of buying and exchanging, dogecoin has acquired value and characteristics absent from its original “meme coin” incarnation. here are some potential signs of this meme shift from low value to medium trade potential:

1. is retaining value despite crypto rollercoaster

Cryptocurrencies in general have taken a beating in recent weeks, and dogecoin has not been immune to that trend. its value often moved independently of bitcoin or even the crypto market as a whole during its ascent, and its price has hovered in the $0.30-$0.40 range for nearly a week. This stability has occurred despite the fact that the average size of operations and the total volume of operations have fallen drastically. the average transaction value, which shot up from mid-April, peaked at $1.16 million on May 23 and then fell back to below $240,000 on May 26, according to data provided by bitinfocharts .

the fact that dogecoin continues to trade well above its early 2021 price range of $0.02 and below suggests that market forces have established a “floor” at current levels, at least for the time being . the value of the coin never dropped below $0.30 over the past month, despite pressure from China to ban cryptocurrency mining. That decision dealt a blow to bitcoin miners in particular, as 65% of them are believed to be operating in China, but the decision put downward pressure on the entire crypto market.

2. has some everyday advantages over bitcoin

Among the younger demographic that makes up the majority of cryptocurrency enthusiasts, preserving the environment is often seen as a high priority.

In light of that, the much lower amount of electricity required to mine and use dogecoin compared to bitcoin could add to its appeal as a crypto alternative. dogecoin uses just 0.12 kilowatt-hours of electricity per transaction, compared to 707 kilowatt-hours for bitcoin.

Although the concept is currently little more than a rosy prospect, the nonprofit foundation veriblock says it is working on a “proof-of-proof” blockchain technology that would reuse bitcoin’s proof-of-work security to other cryptocurrencies, including dogecoin. If successfully implemented, the technology could greatly reduce bitcoin’s relative environmental costs, while providing enhanced security for other cryptocurrencies, which could help bitcoin and dogecoin develop a kind of symbiosis rather than rivalry. directly, which would benefit the holders of both.

While some are concerned about the fact that there is no limit on the total amount of dogecoin that could eventually be mined, unlike bitcoin which has a hard cap, a maximum of 5.26 billion dogecoin tokens can be mined additional. by year. With over 129 billion coins already in circulation, this capped mining fee ensures that Dogecoin’s inflation rate steadily decreases over time, while also providing an incentive to continue mining it.

See also: 5 Best Crypto Payment Gateways for Small Businesses in 2022

the total amount of dogecoin in circulation will increase by 4.1% in 2021, but only 3.9% in 2022. dogecoin inflation will be 3.5% in 2025, 3.0% by 2030, 2.3% by 2040 and 1.9% by 2048. given the wear and tear on lost dogecoin wallets, a factor in the supply of all cryptocurrencies, the currency could theoretically become deflationary at some point if those losses outweigh inflation increasingly reduced provided through mining.

In short, while dogecoin is theoretically “infinitely inflationary”, its mathematically unavoidable and predictably decreasing rate of inflation potentially gives it a more stable value than national currencies.

3. it is gradually gaining more acceptance

Like any currency, dogecoin gains value as it becomes more widely accepted as a medium of exchange. while dozens of small businesses now accept dogecoin as a form of payment, its economic impact is effectively zero. however, some larger entities also accept doge, including the nba’s dallas mavericks, who will allow customers to use it to purchase tickets and merchandise through bitpay.

as team owner mark cuban stated: “mavericks have decided to accept dogecoin as payment for mavs tickets and merchandise for a very important and momentous reason, because we can!” the team’s press release offered some more practical reasons for the decision, noting that “the ability to accept cryptocurrencies expands a company’s sales opportunity in international markets where accepting credit cards is impractical, while reducing high fees and increases the transparency and efficiency of payments. Houston Rockets also accepts Dogecoin, among other cryptocurrencies.

It is now also possible to buy the hardest hard assets, precious metals, using dogecoin. largest in usa uu. Silver and gold e-commerce site JM Bullion has added it to the list of seven cryptocurrencies it accepts as payment. Under JM Bullion’s policy, shoppers using crypto receive a 3% discount on their transactions compared to credit card purchases, close to the 4% discount offered to shoppers paying by personal check.

Rumors also continue to circulate that the so-called “father doge” elon musk could start accepting cryptocurrency for the purchase of tesla vehicles. The electric car maker has stopped accepting bitcoin payments due to the currency’s adverse environmental impact, but Musk continues to offer verbal support for Dogecoin. However, with Musk now indicating that he would be willing to reverse his rejection of Bitcoin if miners commit to “going green,” Tesla’s future stance on Dogecoin remains murky.

choosing a ‘diamond hands’ or ‘paper hands’ strategy

Although born as a “joke coin”, dogecoin now enjoys a number of potentially bullish factors, making it less easy to write it off as an asset. the risk to investors remains high, as with all altcoins, but dogecoin’s low energy costs, the potential for a shared security protocol with bitcoin, the willingness of some larger companies to accept it for purchases ( and the possibility that more will join them), and a measure of price stability are generally positive signs. While not directly measurable, Dogecoin can also benefit from the considerable goodwill of its strong “fan base” of two million retail investors.

fools who invest in cryptocurrencies should not put money in dogecoin that they are not willing to lose. those who already have positions in it may want to get out if they don’t feel comfortable with high-risk, volatile investments — being “paper hands” in Reddit’s retail investor parlance. But if you’re prepared to hold cryptocurrencies through dips and fluctuations, adopting the unflinching “diamond hands” strategy, then in the medium to long term, the dogecoin “joke” coin has at least some potential to leave you laughing all day long. on the way to the bank.

See also: Bitcoin Price Drops because of Chinese New Year?

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