Should You Buy Dogecoin in 2022? Explore the 5 Pros and Cons
Dogecoin has been the talk of the town since its inception due to its comical nature.
Dogecoin, aka DOGE, is one of the most lucrative cryptocurrencies that are present in the crypto market. It was founded in 2013 by Billy Marker and Jackson Palmer. Its creation was funny since it was formed as a part of a joke from a meme that featured the Japanese dog breed Shiba Inu. DOGE later gained popularity and started having real value crypto traders as a long-term investment. According to coinmarketcap, its current market cap is standing at US$23.37 billion and is the 11th largest cryptocurrency in the market. The popularity of this meme-inspired and somewhat satirical cryptocurrency boils down to the mass appeal. Among the thousands of crypto coins and tokens, DOGE seems less intimidating and more accessible. Dogecoin is among the best speculative cryptocurrency out there that is recently making headlines. But these headlines have led to outperformance in recent years. What will become of the value of Dogecoin in 2022 is still unsure. So, we have listed 5 Dogecoin pros and cons so that the readers can analyse their investment strategies for DOGE.
A growing community of holders: One of the major advantages of dogecoin is that it has a growing community of holders and supporters. Cuban and Mark once stated that its growing community of users makes it a suitable medium for exchange. One of the primary reasons for its rising community support is that its investors use it as an absolute value. These investors are also very active on social media platforms and share memes based on the crypto as a part of its promotion.
Decentralized exchange compatibility: DOGE can be transacted and traded on decentralized exchanges. Especially, the Ren project has enabled it to work on the Ethereum blockchain platform, and also access the decentralized finance network. This indicates that DOGE is compatible with the emerging decentralized finance movement within the crypto market.
Easy transaction: Dogecoin shares several similarities with BTC, which means it provides certain benefits that are similar to Bitcoin. The crypto’s coding is also quite similar to Bitcoin, which makes it secure and easier to transact. Also, there are no mining limits to Dogecoin. This provides the investors with the unlimited opportunity to trade Dogecoin, be it a short-term or long-term investment.
DOGE’s listing in the stock exchange: Since its inception, some of the best stock and crypto exchange platforms have listed Dogecoin, including eToro, which is one of the biggest multinational crypto brokerages. It is listing in eToro has substantially increased the clients’ demands to trade Dogecoin. The platform has also attributed to more traffic from clients who want to trade DOGE.
Dogecoin’s unique market positioning: DOGE’s inflationary status, its unique mining feature, and ties to Litecoin are considered unique by several investors. But because it was an early crypto entrant, Dogecoin’s mining model is based on the proof-of-work, which means complex computational problems must be solved to validate transactions across the blockchain.
Possesses no supply capitalization: The lack of a supply cap is one of the biggest disadvantages of Dogecoin. It is because cryptocurrencies with no supply cap are unideal assets to hedge against inflation. Furthermore, DOGE’s infinite mining will eventually require more expansive blockchain mining activities. And since it uses the proof-of-work mechanism, it will further expand its pool of miners and the number of computers to support the ever-growing increase in transactions.
It’s fun nature might contradict real innovation: DOGE was initially developed to poke jokes at existing coins like Bitcoin and Litecoin. This nature obstructs DOGE from integrations and adoption as a digital asset.
Poor technical support: Dogecoin has relatively poor technical support despite its growing community of users and supporters. DOGE’s development team is not as big as Bitcoin, Ethereum, and Cardano. Also, there have been no technological updates and changes from DOGE since 2015. It is also important to highlight the fact that it does not offer any unique selling proposition in terms of technology.
Association with pump and dump schemes: Pump and dump schemes have been in existence for a long time. Though it is prohibited on regulated crypto exchanges, it still has its influence on certain cryptos. Pumping is where a group of people purchase a large number of coins, which increases the price of the asset substantially. Once the coin reaches a higher value than what they were bought for, they release the assets to other buyers and take back a huge return. This manipulation is quite common with DOGE.
It is not the best transactional currency: Unlike other currencies such as Tronic and Ether, which functions as a transactional currency, Dogecoin can only be used as a digital currency. Cryptos like Bitcoin, Litecoin, Dash, and Bitcoin Cash have more transactional significance in the market than DOGE.
DOGE introduced crypto millionaires and billionaires to the future of technology that they did not know would exist. But despite its achievements, investors should always test the waters before trading on currencies like Dogecoin.
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