Should you buy Dogecoin? | Dogecoin Explained

In this video, I break down what the deal is with Dogecoin and whether or not it may be worth your time to take a closer look at. Thanks to Matt, Will, and Rachel for chatting with me about it!

One of my highest percent returns while investing and trading also happens to be a favorite of the world’s richest man, so in this video I’m going to talk about the ridiculousness surrounding Dogecoin and whether or not it’s something you should consider.

Now I’ll be the first to admit that I’m not really big into crypto. I bought Ethereum at the top like a chump back in 2017 at like $800 and it took me years to break even on that – but it’s currently over $2,300, so it has paid off. Other than a few bitcoin trades here and there, that’s about the extent of my foray into crypto. That’s my limited crypto background, so now let’s talk about Dogecoin.

The History of Dogecoin

This was created in 2013 as a joke by two software engineers from IBM and Adobe. Using this Shiba Inu pup as its mascot along with this super serious website, it’s pretty easy to dismiss Dogecoin altogether.

But pretty quickly it gained traction thanks to the Reddit community and within a week after launching, it became the second most popular form of tipping people online. And then in January of 2018, it hit a $2 billion market cap.

Elon Musk has dubbed it “The People’s Crypto” and for a good reason: Dogecoin touts its low barrier to entry, ease-of-use, and friendly community as its advantages over other crypto currencies. It’s relatively fast and the transaction fees are low.

There has also been a lot of talk about how Dogecoin has an unlimited supply. Right now there are about 120 billion Dogecoins in circulation and each year 5 billion new coins are added to the supply. So as this twitter user mentioned, it’s an infinite supply ONLY over infinite time.

But since you have a lot of supply and a low price, it’s become a liquid, free-flowing peer-to-peer digital currency and treated less as an investment like Bitcoin or Ethereum.

So let’s say you want to send $10 in crypto to someone. With Bitcoin, you’d send about 0.0001643143 Bitcoin, you could just send about 40 Dogecoins. While it’s a simple psychological distinction, it does add to the usability of Doge.

And while you have other forms of crypto that accomplishes some of this – Dogecoin has the memes, the community, and Elon Musk leading the entire Dogearmy.

How High Will DOGE Go?

At the time of filming, Dogecoin is currently up to 34 cents, with a lot of hype surrounding it in the media. It hit a high of 45 cents on April 16th before cooling off over the weekend and is up 6,554% year-to-date which is insane. So if you feel like you missed out on Doge and wondering if it’s too late to get in, let’s talk about it.

First, let’s compare it to something like a Fiat currency – meaning any established money often regulated by a government. If you have $100 in USD and you toss it in your piggy bank and leave it there for 20 years, in the year 2041, that $100 won’t have as much buying power as it has today. That makes the currency inflationary, and you’ll likely feel incentivized to spend or invest that money today so it doesn’t lose value over time.

So what about something like Bitcoin? Bitcoin is considered by many to be deflationary, which essentially means its buying power increases over time. If you bought 1 bitcoin in March of 2011 for $1, well today, that same bitcoin is worth about $55,000. So your incentive here would be to not spend your bitcoin, but rather hold onto it, hoping that in a few years it’ll be worth much more.

So in this case, Bitcoin is more of a store of value and less of a currency. Like the guy who bought two pizzas for 10,000 bitcoins in 2010. Today, that would be worth over half a billion dollars.

Now back to Dogecoin. For it to really take off as a cryptocurrency, people need to be able to spend it. Mark Cuban has been an early adopter with this by allowing people to buy Dallas Mavericks tickets and merch using Dogecoin.

Another thing that could help is Coinbase bringing Dogecoin to their platform. They are the largest crypto exchange in the US and they just went public, but as of yet, they have yet to allow buying and selling of Dogecoin. When they do however, I would expect the price to rise in value.

And of course, next time Musk tweets about it, we could see it spike again as more and more people don’t want to be left out.

Should you buy it?

My view with this is the same as it was with Gamestop and other meme stocks. Once something has grabbed hold of the public’s attention and rocketed up in price, I would be very cautious entering a new position, especially something like Dogecoin where it’s not really designed to increase dramatically in valuation and has limited potential by design.

With this, I take the approach of invest only what you’re willing to lose. If you want to join in on the fun and maybe even see turn into a profitable play, that’s totally fine. But also be okay if it drops back down to a penny.

When I saw it trending on twitter back in January, I looked it up on Robinhood and thought – okay, it’s a little over one cent, I can buy 210 coins for less than a coffee at Starbucks. So I did. Right now, that $2.50 is worth $69. So for me, it’s close to 0 risk to be part of the fun. And in hindsight, it would’ve been cool to drop my entire savings and ride off into retirement, but oh well.

Tomorrow is 4/20, which tying in with the meme culture surrounding Dogecoin, could be just a goofy enough – I don’t know, I’m not sure catalyst is the right word – but we just may see a bump in price with fans calling it DogeDay420.

And you even have SlimJim embracing Dogecoin and the meme culture – which is likely just clever marketing, but still brings some legitimacy to the coin.

The whole thing is pretty light-hearted and silly, but that could very well be what makes it successful. It’s immune to jokes and ridicule, because it itself started that way. But at some point, the majority of the people who hopped into Doge who weren’t already in the crypto space will probably get bored and sell or be left holding the bag.

For the counter-point, all of this attention around Dogecoin could be what propels it to become adopted for quick and cheap peer-to-peer transactions and the price will likely stabilize. The big question is in what range does it stabilize? Remember, markets are based on supply and demand and there is quite a bit of supply with over 129 billion coins.

Now when am I going to sell? I’m not entirely sure. I’d like to see Coinbase add it to their platform and see how the price reacts. This is very low stakes for me, so I’m happy with whatever happens. But I did want to get some other perspectives, so I’m going to call a few friends and see if they bought Dogecoin and when they’re looking to sell it.

Buying Dogecoin

So if you want to get your paws on some Dogecoin, let’s talk about how you can do that. The simplest way, may just be buying it through Robinhood. But Robinhood does have some reliability issues – like when they recently had to halt crypto trading – and of course their whole ethical fiascos of late. Even though it’s what I used to buy Doge, it’s not really what I would recommend. The other consideration is when you buy crypto through Robinhood, you don’t actually own it. Really, it’s Robinhood’s crypto that they’re crediting to your account. You can’t buy crypto on Robinhood and then send it to another party. It’s just for buying and selling the coin itself inside the app. They are working on developing a crypto wallet where you will be able to send and receive crypto, but that’s not currently the case.

Since you can’t yet buy it on Coinbase, other platforms like Kraken, Voyager, or Binance may be an option for you to consider, but of course, do your research on each platform before using real money.

Final Thoughts

So while I do think putting your money into Dogecoin is risky, I think it does have potential to be adopted into the mainstream, but as always if you choose to buy, use money that you’re okay with losing. Between Elon’s tweets, Reddit, meat sticks, and all of the attention brought to this cryptocurrency, who knows… after all of the meme dust settles, many early adopters may end up as Dogecoin millionaires.