Want to Buy Dogecoin? What to Know Before You Purchase

For years, dogecoin (pronounced dowzh·koyn) existed on the fringes as a joke cryptocurrency that traded for lower than a penny. However by spring 2021, the shiba inu-themed coin discovered its stride — and its place on main cryptocurrency buying and selling platforms.

Of the cryptocurrency platforms reviewed by NerdWallet, seven at the moment provide dogecoin: Gemini, SoFi Lively Investing, Webull, Robinhood, eToro, Coinbase and Binance.US. These platforms made it simpler than ever to commerce the coin, and in Could 2021, dogecoin had reached a worth of greater than 70 cents and a market capitalization of $88.8 billion.

To place that in context, at dogecoin’s Could peak, it could have ranked among the many 100 largest corporations within the S&P 500 when it comes to market cap. Its worth has since slid considerably, but it surely’s nonetheless among the many 10 largest cryptocurrencies by market cap.

However do not simply purchase into the hype. Earlier than you add dogecoin to your portfolio, ensure you know what you are entering into. Listed here are three issues to think about earlier than shopping for dogecoin.

To know what provides any cryptocurrency worth, it’s vital to know the fundamentals of blockchain expertise, and what led to the formation of altcoins like dogecoin.

For context, traders may even see worth in bitcoin as a result of it was created to be a brand new, higher solution to report monetary transactions. Ethereum traders typically focus on the community’s capacity to run good contracts — agreements that execute routinely if sure situations are met — as its major worth driver. The scores of different cryptocurrencies and tokens which have been developed sometimes search to enhance upon an current coin, or present a brand new, blockchain-based answer to an current drawback.

So why was dogecoin created, and what provides it worth?

Billy Markus, co-founder of dogecoin, has written that he began dogecoin as a joke to carry some lightheartedness, kindness and generosity to the crypto world. Dogecoin devotees typically use social media to hark again to among the coin’s guiding ideas, together with charity, fundraising, help of each other, cryptocurrency advocacy and making memes. And the dogecoin crowd has walked the stroll: In 2014, the Dogecoin Basis raised greater than $50,000 in dogecoin to assist the Kenyan consuming water disaster, and that very same 12 months, a gaggle of dogecoin holders raised $25,000 in dogecoin to assist ship the Jamaican bobsled staff to the 2014 Olympics.

However maybe the undertaking’s main message is summed up greatest by a typical dogecoin Reddit rallying cry, which notably types an acronym of DOGE: “Do Solely Good On a regular basis.”

So, dogecoin doesn’t have any actual supposed function past being a driver of excellent on the planet, and it wasn’t created with the intention of enriching any individual or enterprise. With out a true solution to worth the forex in any conventional sense, its worth — when it comes to U.S. {dollars} — relies upon fully available on the market. In different phrases, dogecoin will probably be value no matter another person is keen to pay for it at any given second. Whereas that is one element of nearly any safety traded on the secondary market, dogecoin’s lack of any conventional worth means its worth is solely depending on these market forces.

Given their volatility, rising standing and low regulation, all cryptocurrencies are nonetheless thought-about various investments, which funding guidelines of thumb say ought to make up the smallest portion of your funding portfolio. The normal recommendation says it is best to attempt to contribute to tax-advantaged retirement accounts, resembling an IRA or, if obtainable, a office 401(ok). Should you’re already contributing to or maxing out both of those accounts, you could possibly contemplate opening a supplemental taxable brokerage account, as effectively.

And what are you able to put money into with these accounts? place to begin could also be utilizing these accounts to put money into extremely diversified, low-cost index funds. They is probably not as thrilling as dogecoin — don’t count on any 13,000% good points right here — however they’re rather a lot much less risky and, in the long run, returns are extra constant. Over the previous a number of many years, the S&P 500’s annualized common comes out to about 10%.

Should you’ve already constructed a diversified portfolio of low-cost index funds by way of tax-advantaged accounts or taxable brokerage accounts — and have a plan to recurrently contribute to those accounts — you might be in a spot so as to add various investments like cryptocurrencies to your portfolio, however be certain you totally perceive the dangers concerned.

To find out how a lot to put money into dogecoin, ask your self this: Should you misplaced your whole funding tomorrow, would you continue to be financially sound? Certain, you’d be bummed, however would you continue to have your core portfolio of diversified, long-term investments and sufficient money readily available to pay the payments?

If the reply is not any, you then’re in all probability investing greater than you may afford to lose. Usually talking, it’s smart to earmark cash for various investments provided that you’ve paid off high-interest debt, constructed up wholesome money financial savings and already created a diversified portfolio.

You’ll discover dogecoin on a variety of cryptocurrency exchanges, however of the crypto brokers and exchanges reviewed by NerdWallet, the next provide dogecoin. As with all cryptocurrency, make sure to examine if the platform permits you to entry your personal digital pockets, which suggests you may ship and obtain dogecoin. Some brokers solely allow you to purchase and promote dogecoin with USD.