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Should I Buy Dogecoin?
Despite starting as a joke in 2013, Dogecoin has become one of the hottest cryptocurrencies. This is mostly due to its strong community and name recognition, especially since billionaire Elon Musk proudly endorses it.
With this cryptocurrency’s rise in popularity, you might be wondering if it’s time that you should invest in this popular meme coin. But is that a sound investment decision? Read on to find out if Dogecoin is suitable for your portfolio.
What Gives Dogecoin Value?
Dogecoin’s value today isn’t tied to real-world capital or the desire to make money off of the currency, unlike most of what its other peers are doing. Instead, Dogecoin is a cultural token whose value relies on the strength of its community and the interest of potential customers.
Perhaps this coin’s agenda and value can be better summarized by its that form the acronym DOGE: Do Only Good Everyday.
This is why many people are drawn to this coin; holding Dogecoin becomes a kind of a ticket to an altruistic, fun community.
Nevertheless, this means that the trading value of this coin solely relies on market demand. Without any real-world project or asset to back it up, this coin is only worth exactly how much people are willing to pay for it.
Does Dogecoin Fit Well With Your Existing Portfolio?
The next thing to ask yourself when evaluating Dogecoin is whether or not this investment fits your portfolio and risk appetite.
Generally, cryptocurrencies are considered to be volatile assets by traditional investors. And while it’s true that some cryptocurrencies are stable, most coins around are wildly unpredictable – especially those that are new or those that don’t have any ‘real’ value.
Dogecoin is one such coin.
Although it’s just about as old as Bitcoin, it doesn’t have any appreciable real-world value aside from the market forces that the Dogecoin community generates. Thus, many people would consider investing in Dogecoin a risky venture.
DOGE and Risk Tolerance
That said, that’s not saying that you shouldn’t invest in this cryptocurrency: merely that you have to keep your risk tolerance in mind.
Risk tolerance is how much risk you can bear without feeling stressed. If you have a high-risk tolerance, you’re more appreciative of high-risk/high-reward ventures such as investing in Dogecoin and other alternative cryptocurrencies.
On the other hand, if your risk tolerance is low, you’re better off with low-gain/low-risk investments.
These types of investments include 401(k), IRA, real estate, stocks, bonds, and other more traditional forms of investments. These funds will usually invest in stable, highly-diversified assets with predictable yields.
Thus, when considering if Dogecoin is suitable for you, look at your existing portfolio and examine what kinds of investments you have.
If you choose to invest despite having a low-risk portfolio, make sure you know the risks involved.
What Experts Say
In an interview with CNBC, Adam Zadikoff, COO of BRD, a crypto wallet company, said he doesn’t recommend investing in Dogecoin.
He explained that Dogecoin “was never meant to be a payment system or a store of value.” He continued, “Yes, you can make a quick buck if you time it right, but timing the market is a terrible thing to try to do. It does not work.”
Edul Patel, CEO of Mudrex, a crypto trading platform, had a similar recommendation, explaining that “Doge is literally a meme coin, built out of the intent to mock the concept of bitcoin. Hence it is extremely volatile and susceptible to random market movements.”
Patel continued that he “would not recommend allocating funds here for the long term. On the other hand, a lot of people would just want to bet and be a part of it for fun and get the ‘gamblers rush’ That is completely your choice!”
How Much Dogecoin Can You Afford?
Your current monetary position should also be a strong basis of whether you will invest in Dogecoin or not. This is because Dogecoin is a risky investment, so you shouldn’t ever be investing with more than you can afford.
A good benchmark of financial soundness is to assume the worst-case scenario. In short, ask yourself; what if you lose all of your Dogecoin investments tomorrow?
If your financial health and well-being are directly affected, then you’re probably investing more than what’s suitable for your current situation. As the adage goes, never invest money you can’t afford to lose.
Ultimately, investing in Dogecoin is risky. Thus, don’t invest your bills, mortgage, or debt, because you might never recover from it.
However, if your financial situation is still in the green, even if you lose all of your Dogecoin investments, then you’re good to go.
Just like any other investment, the price of Dogecoin fluctuates over time, depending on market demand. However, unlike most other investments, Dogecoin relies solely on these market forces to establish value.
In other words, Dogecoin can be very volatile if the right market conditions are met. Thus, it’s essential to pay attention to Dogecoin’s price if you plan to invest in this coin.
As of October 1, 2014, one Dogecoin was worth about $0.000236.
As of writing, Dogecoin is worth $0.1667, with a market capitalization of about $22 billion.
Although it might not seem like much, that’s worth more or less a 240,000% increase since it became publicly traded. More than that, this coin’s total market cap is worth more than most companies out there.
The Future of Dogecoin
Even among cryptocurrency investors, many are still not completely sold about Dogecoin. Many say that the future of this cryptocurrency is highly speculative, and to some extent, it’s true.
Without a viable project backing it up, Dogecoin is unlikely to stand the test of time. Nevertheless, this coin has its uses.
It’s a great way to introduce beginners to the world of cryptocurrency because owning 1,000 Dogecoin worth $0.16 provides a better sense of accomplishment than holding 0.000001 in Bitcoin or ETH.
This cryptocurrency also doesn’t take itself too seriously, which must be a breath of fresh air for newbies just figuring out what the crypto world is all about.
Nevertheless, it still has serious potential to make you profit in the short term.
You can simply buy a decent amount of Dogecoin, wait for these price spikes, and sell when you reach what you’re aiming for. It’s incredibly risky, but since you’re not gambling much, you won’t lose much as well.
Perfect for beginners looking to get a taste of the crypto world or veterans looking to gamble.
If you decide to invest in this coin for the long term, be aware of the dangers presented by such a move. Dogecoin doesn’t lend itself to be a cryptocurrency that will stand the test of time – but maybe we’ll be proven wrong one day.
Investing in The People’s Coin
Whether you invest in Dogecoin or not is entirely your choice. As long as you follow sound investing or trading principles, there shouldn’t be any problems buying Dogecoin within your acceptable risk tolerance.
However, before buying this amusing cryptocurrency, make sure you know what it’s about and the risk involved.
After reading this article, we hope that you’re now ready to make your decision.