Dogecoin – the latest cryptocurrency

Written by: Invezz Newsdesk
September 19, 2019

In the discipline of alternative investments, one particular investment has recently stood out as an interesting novelty that may just hold vast profit opportunities – cryptocurrencies.

Currently, there exist around one hundred cryptocurrencies that are more or less actively traded on various cryptocurrency exchanges. The most well known of course are Bitcoin and Litecoin, which have been around for a few years and have brought huge profits for their early adopters. There is one other currency that I think will repeat the success of the other two – Dogecoin. What started as a joke is now the most actively traded cryptocurrency out there and there are a number of reasons why this will persist.

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Community

Dogecoin is just two months old, but its community on the social network Reddit (where major issues are discussed) has grown to more than 60,000 people. For comparison, Bitcoin has gained just over 100,000 followers over the five years since its inception. The Dogecoin community differentiates itself by relying on generosity and spreading the wealth rather than hoarding the currency. For the purpose the team of developers has come up with the so called “tipbots” that allow users on social platforms such as Reddit, Twitter, Imgur, etc. to reward creators of original content on the internet. The developers are clearing regulatory issues with Facebook and will soon incorporate this feature on the largest social network. Dogecoin has generated a huge fan base fueled by the appeal of an internet meme that can reach out to social groups that were unreachable for Bitcoin in the past.

Transaction Volume, Market Capitalization, and Economic Psychology

A few weeks back Dogecoin surpassed Bitcoin in number of transactions. This seems to be really important for a currency. The more people transact with a currency, the greater the demand for it. Just yesterday Dogecoin overtook Peercoin for the 3rd place in market capitalization and is now valued at over $90mln. The rate at which this has happened is astounding and underlines the appeal of this new currency. In addition, Dogecoin’s larger coin supply when mined out* (100bln vs. 21mln for Bitcoin) allows Dogecoin to avoid the problem Bitcoin faces with fractional amounts of the currency. Right now one bitcoin is worth around 370,000 dogecoins. In general, people just like owning large quantities of things. Also, the smaller denomination allows people to use the currency more effectively for small retail purchases.

Marketing and Publicity

The fan base of Dogecoin is its greatest asset because of all the media buzz it creates. Two weeks ago, the community came together to raise $30,000 worth of Dogecoin, which enabled the Jamaican national bobsled team to participate in the Sochi Olympics that are going on right now.  This created a lot of media hype and spawned a few new charity projects that are now working towards augmenting Dogecoin’s appeal.

Developers and Technological Superiority

The tech developers are essential for the success of a cryptocurrency. Dogecoin has some of the finest developers in the cryptoworld and they are active day and night coming up with new products and services. In addition, transaction times are 20 times shorter for Dogecoin than for Bitcoin. On February 14th, “the halving” is going to occur. This basically means that the reward for mining Dogecoin will be halved. This limited supply is expected to be outrun by the eventual demand generated by the growing community. This is one of the main reasons why Dogecoin might be a perfect investment opportunity for the risk-tolerant investor.

As a whole, Dogecoin is an ambitious internet project that has gained much traction since its inception two months ago. The ultimate goal to become the universal currency of the Internet does not seem unachievable having in mind the above arguments. The value of Dogecoin has increased tenfold from the price bottom in mid-January. Bitcoin has increased in value by a factor of 300,000 since its inception, which comes to suggest that investing in Dogecoin might be the next wild ride.

 

*The developers decided to introduce 5bln doge/year monetary inflation, when the currency is mined out a year from now.