In a crypto market dominated by meme coins in 2021, Dogecoin (DOGE) was the top dog. The popular token, created as a light-hearted prank of Bitcoin (BTC), jumped from the beginning of 2021 by almost 12,000% to its peak price of $0.73 on May 7, 2021.
Since then, however, dogecoin has experienced dog days, losing more than 70% of its value.
Many see this as a great opportunity to buy some cheap DOGE, which is the name of this native dog-inspired cryptocurrency token. Is Dogecoin, now the 10th most valuable cryptocurrency with a market capitalization of $10.6 billion, a good investment this year? We’ll find out.
Dogecoin has limited acceptance
Like bitcoin, the Dogecoin blockchain is built only as a payment network. It uses a proof-of-work consensus mechanism that requires miners to solve complex mathematical problems with expensive, high-performance computers in order to gain the right to verify transactions. The advantage of Dogecoin over Bitcoin is cheaper and faster transaction processing.
Yet dogecoin is almost useless. According to the Cryptwerk website, 1,900 companies accept them as payment. Data Statista tells us that there are more than 213 million companies worldwide. This only shows the lack of legitimacy that Dogecoin brought as a means of payment.
Perhaps the most well-known organization that accepts dogecoins is the Dallas Mavericks of the National Basketball Association. Fans can buy tickets and merchandise with tokens. This should come as no surprise, as Mavericks team owner billionaire Mark Cuban is a big fan of dogecoin and cryptocurrencies in general.
AMC Entertainment Holdings, has already adopted dogecoin accepted payment for tickets or concessions. And Tesla CEO Elon Musk recently tweeted that consumers can buy specific company products for electric cars with dogecoin. So far, the response has been muted. In other words, thousands of people aren’t rushing to spend dogecoin on anything. As a result, these moves don’t look like anything other than advertising tricks.
With the number of coins uncapped (more than 130 billion DOGE tokens in circulation, another 10,000 being issued per minute), it will require enormous demand to overcome the rapid growth in supply for coin prices, which will increase over time. But apart from the fact that dogecoin is accepted as a payment method just for fun, there are not many uses.
This inevitably limits its utility and user benefits.
The fact that there doesn’t appear to be much active development on the Dogecoin network is cause of concern as well. Its founders Billy Markus and Jackson Palmer, who started Dogecoin, stopped working on Dogecoin development in 2015.
Final thoughts
As a general rule, investors should take a long-term approach with a time horizon of five years or more. Yet, today many cryptocurrency investors are seeking to make 100x gains in months-not years.
For each cryptocurrency, the potential for use in the real world is important. And as mentioned above, Dogecoin is really missing in this regard. Perhaps investors should avoid Dogecoin in 2022. At the end of the day, do your own research, study the Dogecoin project and their strong community on social media then make your best decision.
I write about blockchain, crypto, NFTs and other disruptive technologies and innovations.
