Is it worth investing in Dogecoin? The question has intrigued many ever since it has witnessed a huge jump in valuation following the supporting tweets by Elon Musk and social media hype.
According to coinmarketcap.com, Dogecoin is currently ranked within the top 10 cryptocurrencies by market capitalization. It is one of the most liquid cryptocurrencies in the market.
To know whether it is worth investing in Dogecoin or not, you need to understand its utility and coin economics.
Dogecoin Use Cases
Dogecoin was officially launched in December 2013. It is a hard fork of Bitcoin with some little improvements in the protocol.
However, the creators of Dogecoin had no serious intention with the cryptocurrency and its success. It was just intended for fun and a satirical homage to Bitcoin.
Therefore, unlike other cryptocurrencies like Bitcoin, Ethereum, Ripple, Dogecoin has no real-world use case. And, there are very faint chances of adoption by institutions and serious investors.
Read Here, Why Bitcoin is Termed as Digital Gold?
Coin Economics of Dogecoin
Unlike Bitcoin, which has a supply limit of 21 million coins and has a defined monetary policy that helps it to drive its value higher, Dogecoin has none.
There is no supply cap on Dogecoin and being a proof-of-work cryptocurrency, for every block discovered on the Dogecoin chain, miners are rewarded with 10,000 DOGE, which gets added to the total circulation.
With new blocks discovered every minute on the Dogecoin blockchain, daily approximately 14.4 million coins are added to circulation. Annual inflation of 5 billion coins. Therefore, with an unlimited supply of Dogecoin, its value will continue to depreciate in the long term.
Final Words- Is Dogecoin a Good Investment?
For any cryptocurrency to grow, it needs to have both real-world use cases and superior tokenomics, which Dogecoin lacks.
Why is Dogecoin going up?
Meme coins like Dogecoin are highly susceptible to pump and dump schemes and are driven purely by investor sentiments. And, the recent up move in Dogecoin price was due to both factors.
Such hypes are short term in nature, and as the hype dies down, the coins witness a huge drop in prices, as is the case with Dogecoin.
Will Dogecoin hit $1?
There are faint chances, Dogecoin will hit $1 or $10 in the near term due to its coin economics.
The circulating supply of Dogecoin in the market is 130.5 billion coins and every year, 5 billion coins are added to the total circulation. Let’s assume Dogecoin hits the $10 level in the next two years, then the resultant market cap will be $1.4 trillion, which is not sustainable and is illogical too for a cryptocurrency that has no use-case.
Dogecoin doesn’t offer a good long term growth potential. In the absence of any real-world use case, Dogecoin will primarily be a trading coin, attracting speculators and short term traders.