Dogecoin is a cryptocurrency aimed to be easily accessible and fun to use. Since the GameStop short squeeze Twitter, Reddit, Discord and other communities have been pushing for people to invest in this crypto-currency with the aim to push it to $1, a massive increase on its original value.
If you invested $10 in DogeCoin at $0.05 and it’s value increased to $1.00 you now would have $200 worth of DogeCoin – a big windfall. However if instead it plummeted to $0.005 you would only have $1 worth of DogeCoin. Your losses are someone else’s gain, and your gains are someone else’s losses.
I believe there is no longevity in the value this crypto-currency holds. Unless DogeCoin became a mainstream currency – used to pay for services and products online, it’s value is merely in a bubble and it is likely to plummet (since the only value it would hold is through the demand for it).
It seems the only reason many people are buying DogeCoin, is to make money. Once they have made this money they will sell – and at this point the value will fall off a cliff.
There is a tiny possibility that if enough of the community decided to hold onto their DogeCoin that it could plateau at a reasonable value, but the most likely outcome is that the gains you make will be lost and if you have more money invested, it will also be lost. The only people who will make profit are those who sell at the top of the bubble. If you buy at the top, you are going to make large losses. Timing the market correctly is only possible for a minority either with hidden knowledge or great deals of luck.
Should you put your money in?
I am not suggesting that you shouldn’t buy DogeCoin. I am suggesting that you have to be aware that there is no real intrinsic value in DogeCoin except the value given by demand and a slight amount in the value of the ‘meme culture’. When people stop buying and start selling the value it holds will disappear very fast. Unlike a currency which is backed by the economy of the country of origin, DogeCoin is not backed by anything. There is extreme risk in this, so be careful, and make sure any money you put into this you are WILLING to LOSE.
The future?
I think in the future cryptocurrency will definitely be an important aspect to life. However for it to have long term value, it needs to be used. I think there needs to be a focus on making paying for things directly in cryptocurrency easier. There also will have to be wide scale adoption rather then in the select crypto loving communities.
Will DogeCoin reach $1?
Not in the near future. There is no way that the market cap will reach that.
Note on 07/05/2021: If Elon Musk pushes it far enough, there is a small possibility of this type of market cap. If it did reach $1, I’m not sure how long it would last – I cannot see Dogecoin as lasting long into the future.