The most recent crypto bull run made insane profits for a lot of people who were early on certain coins, but it should be noted that not only the top tier projects showed outstanding performance, as many “memecoins” emerged and rose over 1000% to unexpected new highs. For this reason, the market cap of these coins grew to big numbers, bringing investors that were trying to find the next gem. That is where people started wondering; Is it really safe to buy Dogecoin?
To answer that question, we must dive into what Dogecoin is and why it has become so popular during the past few years.
What is Dogecoin?
Dogecoin (DOGE) is a cryptocurrency based on the Proof of Work (POW) protocol, where miners use hardware to solve mathematical equations to confirm transactions and get a reward for it, just like Bitcoin. However, they are a lot different.
While Bitcoin is a deflationary asset, Dogecoin’s supply is infinite and started as a joke. In 2013, software engineers Billy Marcus and Jackson Palmer joined forces to create a meme-based coin for the misspelled Doge (Dog) meme.
As time went by, the DOGE cryptocurrency started to gain popularity in multiple forums, where investors and people from the community joked about taking its price $1 and beyond. Exchange companies started listing it in their platform and multiple businesses added it as a payment method.
By then, DOGE’s price was $0.0005 and in 2021 reached a maximum of $0.74, which shocked both investors and critics. Its popularity skyrocketed thanks to Elon Musk’s tweets about the coin and choosing it as his favorite cryptocurrency.
Is it safe to buy Dogecoin? What is the risk?
Considering Dogecoin is purely intended to be a meme and has no limited supply, there are no larger expectations other than to hope its popularity grows over time. The fact that DOGE has no actual cause or actual purpose makes it difficult to see this coin as a long-term reliable investment.
Investing in DOGE or any other memecoin should be done on money you are not afraid to lose and hope something makes it go up, almost like a bet.
Even though many people made crazy gains over this coin, nobody really knows if positive events will transcur for DOGE. Elon Musk has mentioned the possibility that it may be used for payments in Tesla but as of now, that has not happened yet.
The risk is very high, especially if you decide to buy at the end of an unexpected bullish spike.
Is it worth it to buy Dogecoin?
The upside of buying Dogecoin is huge if you ask an early investor. However, panic buyers will not say the same.
If you consider Dogecoin a fun project and think about buying some, the best you can do is wait for the lower prices to grab as many as you are willing to. Hopefully, a Bitcoin bull run can drag DOGE’s price up to its all-time high and give you some juicy profits.
For the moment, there are no safe expectations towards Dogecoin and we encourage traders to be responsible when investing.