If you’ve been following all of the excitement around the amazing stock run and collapse of GameStop (GME), you’ve probably seen some related media coverage coming from Elon Musk.
But Musk didn’t have just an interest in GME. He’s also interested in Dogecoin (DOGE). And thanks in large part to Musk's tweets, Dogecoin has recently been enjoying a massive run-up of its own.
But what exactly is Dogecoin? And will it flame out just like GME? In this article, we attempt to break down what Dogecoin is all about.
What Is Dogecoin?
Dogecoin (pronounced dOj-coin) is a cryptocurrency that was started as a joke in 2013. Its name comes from a Shiba Inu dog meme from back in 2012/2013.
During the summer of 2020, a viral TicToc video tried to hype up DOGE. The video author said if everyone deposited $25, Dogecoin would reach $1, making each $25 investment worth $10,000.
The video was a classic pump and dump. Dogecoin hasn't gotten anywhere near $1. If it did, DOGE would have had a market cap worth more than Bitcoin.
So, where is Dogecoin's price now? According to CoinGecko.com, it's currently worth about $.07 and has a market cap of $10,383,370,714. In comparison, Bitcoin has a market cap of $832,167,825,180, or over 80X that of DOGE.
Dogecoin hit a high of $0.0175 in January 2018. It then fell below $0.01, where it remained until January 27, 2021, when it started its massive rise to $0.07 the next day. It went on to hit $0.08 on February 8.
Where Can I Buy Dogecoin?
Unfortunately, Dogecoin isn't as widely available as other coins such as Bitcoin, Litecoin, or Ethereum. Traders may be disappointed to find that many popular cryptocurrency exchanges such as Coinbase, Gemini, and BlockFi don't currently support DOGE.
A few exchanges do offer Dogecoin, though, such as Robinhood, Kraken, and Crypto.com. If you don't already have a crypto wallet, you might want to get that first. A wallet allows you to store your crypto securely and get it off of an exchange. Exchanges are prime hacking targets, so there is good reason to store your crypto yourself. You also have full control over your crypto when it's in your wallet.
Crypto wallets typically integrate into browsers or mobile apps. Wallets also come with a password which you'll want to keep in a safe place and not forget. Hardware wallets, which cost between $70-$100, are also an option. But unless you're buying lots of crypto, you probably don't need one yet.
How Do I Buy It?
Once you’re logged into an exchange, you'll most likely have three payment methods for buying Dogecoin (or any other cryptocurrency):
- 1Credit card — This is the easiest and fastest method for buying crypto but also the most expensive. Fees can range from just under 2% up to 3%, plus a flat fee.
- 2Bank transfer — This is the slowest method and can take 2-3 days to complete. — Most exchanges offer direct access to the exchange.
- 3Cryptocurrency — With this option, you trade cryptocurrency that you own with another crypto trader who owns DOGE. Fees are typically lower when you go this route, often coming in at less than 1%. However, direct trading can be a bit more complex and may be intimidating for beginners.
Once you've purchased Dogecoin, you'll move it from the exchange to your wallet. Simply supply your wallet address to get your coins out of the exchange.
What’s The Future Of Dogecoin?
There's still a lot of news hype around Dogecoin, which is helping to drive up its price. Elon Musk has been getting in on the action as well. He started tweeting about Dogecoin at the end of last year and hasn't stopped.
Dogecoin has been in a consistent uptrend. But, given that the coin doesn’t seem to have any practical use, it’s hard to envision it having a lasting future. Unlike some other cryptocurrencies, there’s no cap on Dogecoin. Currently, there are 128 billion Dogecoins in circulation.
Musk has tweeted his support for the coin again, again, and again. And as long as he keeps doing so, people are likely to keep buying it. But while following social media hype can be a smart short-term trading strategy, it doesn't necessarily mean that DOGE will be a successful coin over the long-term.
Like most cryptocurrencies, Dogecoin is extremely volatile. DOGE is for those that are willing to take a gamble that the hype will keep driving the price higher, at least in the short-term. But, at this point, we wouldn’t really call it an investment as it could come crashing back down any day.
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him on the About Page, or on his personal site RobertFarrington.com.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.