Much like the 2013 meme, dogecoin started out as a joke. From its inception, its value remained around US$0.0025 and was not meant to contend with the likes of Bitcoin but rather make fun of it. But in early 2021, it started to gain cult-like status on Reddit. Following in similar footsteps to Gamestop whose stock value shot up thanks to WallStreetBets Reddit page. But the value truly took off when Elon Musk started to tweet about it, and it pushed the coins followers to call it “the people’s crypto” with the aim to take it “to the moon”.
Beyond its joke status, it is still a legitimate cryptocurrency born during a time where the creation of Altcoins was popular. Simplified, it uses the same blockchain technology that Bitcoin or Ethereum does. This also means it uses a distributed, secure digital ledger allowing it to be a decentralised currency. Dogecoin uses a proof of work system, so relies on miners to verify transactions.
But unlike Bitcoin and Ethereum, Dogecoin does not have a cap so new coins can be released into the market every day. So it doesn’t work great as a long term holding investment. While it might look appealing in mid-2021, it doesn’t mean it makes a great investment. Its valuation appears to be tied to its hype, and while it might still be trending up, there is no guarantee that it will remain popular.
However, if you were lucky enough to have joined on before its spike, you would be rewarded with a large return on your investment. It is this ideology of “get rich quick” around crypto that makes altcoins like this both popular but volatile. So if you are still looking to invest in Dogecoin, make sure you do your research and only buy as much as you are willing to lose.