Hello, friends! You already know about the rupee coin and Bitcoin. But there's a new coin that's globally famous now. It's called Dogecoin. The value of our rupee is based on our currency. Bitcoin is based on Blockchain that promises to revolutionize the monetary systems around the world. But this Dogecoin is based on a meme. Literally! This coin was made in jest.
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| Bitcoin vs Dogecoin |
Someone took the Doge meme, this meme of the dog was quite famous at some point and made a coin out of it. Cryptocurrency is so decentralised that any person can develop their own coin. They'd need basic coding knowledge to do that. But the thing is that this Dogecoin became so famous that people like Elon Musk started buying it and promoting it. Why did it happen? Come let's find out in today's post on Dogecoin.
Disadvantages of Bitcoin
After the popularity of Bitcoin, several people brought up its disadvantages. Like, the long transaction time of Bitcoin. Or that the whole process of Bitcoin consumes a lot of energy. That's not good for the environment. That's why some people considered making their own coins. These coins are known as Alt-Coins. i.e. Alternative Coins. Because they're the alternative to Bitcoin. And they try to counter the disadvantages of Bitcoin. By some method or the other. Like Ethereum, Litecoin. But after Alt-Coins had been developed, people realized that anyone can create their own coins. So some people started creating their own coins for fun. There were no advantages in their coins as compared to Bitcoins. They simply changed the name and created a new coin.
Some scammers made their own coins as well. And fooled people to invest in their coins to drive the value of the coin. After which the scammer would take back his investment and the people would suffer heavy losses while the scammer would walk away with a significant profit. This is known as a Pump and Dump scheme. So many people created their coins for fun. Some for scamming people others for absolutely no reason. It was only meant as a joke. These coins which were created for no reason are often known as Shitcoins. Because they do not add any value to the world. They aren't bringing about any improvement in the process. So they're Shitcoins. Some people believe that Dogecoin is also a Shitcoin. The only difference is that the purpose of creating Dogecoin wasn't to scam people, it was only to prank people. It was only a joke.
Birth of Dogecoin
This Doge meme was at the peak of its popularity in 2013. Jackson Palmer, an Australian marketer and Billy Markus, a software developer at IBM developed this Dogecoin then. Palmer says that he thought up this idea as a joke. to combine the two most popular trending topics on the internet. Cryptocurrency and the Doge meme. The code of Dogecoin is based on Litecoin. Litecoin is an Alt-Coin that does have a few advantages over Bitcoin. Like lesser processing time and lower transaction fees. But it is truly surprising that the market valuation of Dogecoin has already surpassed that of Litecoin. If you look at the largest cryptocurrencies of the world. Dogecoin coin has become the fourth-largest cryptocurrency. After Bitcoin, Ethereum and Binance. The biggest question here is how is it possible? How did a coin made as a joke gain such popularity? Why are people buying it?
Why Dogecoin is so Popular
The first reason is the Reddit website. People on Reddit started using it as a joke initially. Whenever someone liked a post or comment on Reddit, people would award some Dogecoins to the offer as a tip. It was known as the DogeBot tip. Usually, this was a tip of 5 Dogecoins. And at the time the value of Dogecoin was 0.0002 cents. It was a very small amount. But using Dogecoin as a tip started gaining popularity on Reddit. This expanded over the years. Dogecoins were used so much and exchanged so many times that their value started increasing rapidly. In September 2018, the CEO of Tesla, Elon Musk noticed it. Elon Musk met Jackson Palmer on the issue of Twitter scambots. The fake Twitter accounts that scam people using the guise of cryptocurrency.
Elon Musk wanted to take them down because his name was being used to run these scams. So he asked for Jackson Palmer's help on this. That was when Elon Musk came to know about Dogecoin. After 7 months he tweeted "Dogecoin might be my favourite cryptocurrency." In March 2020 he tweeted "Dogs rock. They are the best coins." So in the coming months and years he tweeted about Dogecoin several times which were indirectly or directly promoting Dogecoin. Because Elon Musk is so famous, perhaps the most renowned and liked billionaire in the world, every time he tweeted, it sent up the value of Dogecoin by 25% - 50%. Eventually, 2021 followed 2020. At its peak, Dogecoin had almost touched the valuation of $80 billion. Though its price has fallen a bit in the last couple of days, the supporters of Dogecoin aim to drive its value up to 1 dollar. It means that the value of 1 Dogecoin would be equal to 1 dollar. Currently, it is around 50-60 cents. What is the process to buy Dogecoin?
Also Read, What is Bitcoin? Why Bitcoin is So Popular? How Bitcoin Works?
How to Buy Dogecoin?
It's the same as buying any other cryptocurrency. You'd need to use a Cryptocurrency Exchange Platform. Talking about the real-life use of Dogecoin, the community of Dogecoin have donated to several charitable causes. Their first donation was to a Jamaican Bobsleigh team of $30,000 in Dogecoins so that the team could participate in the 2014 Russian Winter Olympics. After this, for some water conversation projects in Kenya and for helping some special needs children, the community of Dogecoin donated money. Who is the community of Dogecoin? What do I mean by this? Basically, there is a subreddit on Dogecoin where the users who buy and promote Dogecoins come together and make such donations.
But overall, I'd say that Dogecoin has become a cultural trend now. It does not have a value of its own. It isn't bringing in any significant technological advancement nor is it unique. Only because of its circumstances Dogecoin has become so popular now. And this needs to be understood by those people who think that if they invest in Dogecoin now, they would get 10x, 100x, 1000x returns. That Dogecoin is a good investment. You need to understand that cultural trends grow exponentially. And die down after their peak. There is a very high possibility that this may happen.
Also Read, What is Mutual Funds? Mutual Funds for Beginners.
Should You Buy Dogecoin?
I'm not giving you any investment advice here. You can buy Dogecoin if you want to. I'm just saying to be cautious of the huge risk. But higher the risk in investment, there are more chances of high returns as well. It is possible that after a few years, Dogecoin may be valued at $100 instead of a paltry $1. But it is equally possible that its value may become 0 instead of the 0.90 cents now. All your investment may vanish. Because predicting cultural trends on the internet is next to impossible.
You'd basically be trying to predict how the world would think collectively. I believe that the same thing applies to Bitcoin as well. You should invest only that much in Bitcoin that you can afford to lose. If Bitcoin crashes to 0 tomorrow, you would not suffer much even after all your investment vanishes. Dogecoin is even riskier than Bitcoin. So this is even more valid for Dogecoin than it is for Bitcoin. At least Bitcoin has some value of its own. Because it presents a revolutionary technology. It presents an alternative monetary system. But it is not so with Dogecoin.
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