You’d be forgiven if you hadn’t heard of Dogecoin a few years ago. But now this shiba inu-themed cryptocurrency has become one of the most popular digital currencies in the world.
But do you know how this crypto actually works? And what if you wanted to buy DOGE yourself?
In this guide, you’ll learn how to buy Dogecoin, how it’s different from Bitcoin, and whether it’s a smart investment choice for you. This will help you understand more about the technology behind Dogecoin and if this cryptocurrency is the right fit for your personal finance goals.
What is Dogecoin?
Dogecoin, or DOGE, is a form of cryptocurrency that was created by founders Billy Markus and Jackson Palmer in 2013. It was originally created as a joke that capitalized two trending pop culture elements at the time: Bitcoin and the Shiba Inu dog meme, also known as the doge meme.
The doge meme typically features a Shiba Inu breed of dog and assorted text in Comic Sans font that reveals the dog’s inner monologue. The Shiba Inu in the meme became the official symbol of Dogecoin and can be seen on social networks and message boards all around the internet.
Dogecoin’s recent rise in popularity is largely due to celebrity backers and support, including numerous tweets from Tesla CEO, Elon Musk (since not only do people want to know how to invest in Tesla, but also what Musk himself invests in).
DOGE itself is a peer-to-peer, open-source cryptocurrency that runs on blockchain technology. Peer-to-peer means Dogecoin can be sold and traded between individuals, without the need for a bank or other centralized middleman. This is what enables Dogecoin users to freely tip each other and pay for goods and services online using DOGE.
Other cryptocurrencies like Ethereum (ETH) and Bitcoin (BTC) also use blockchain technology to securely store digital currency transactions. These transactions are secured using cryptography, which is a study of hidden or secure communication. The blockchain itself is a ledger that’s shared between cryptocurrency holders. Every transaction made with the cryptocurrency is verified and stored on the blockchain and can’t be tampered with.
Keep in mind that digital currency is not the same as fiat currency. Fiat money, such as the U.S. dollar, is backed and controlled by a government and typically stored in banks. Cryptocurrencies aren’t controlled by the government and they function on decentralized blockchains. So you don’t need to go through a bank to use them, but they do tend to be more volatile in their value.
How Dogecoin differs from Bitcoin
Bitcoin was created in 2009 and was the first cryptocurrency to exist. Today, it’s the most popular and most valuable digital currency available (as of June 8, 2021). It also has a few important differences from Dogecoin.
One of the biggest differences is that Bitcoin has a built-in limit. This means once 21 million Bitcoins have been mined, there will not be any more new Bitcoin. The goal behind this limit is to keep the value of Bitcoin more stable. So if you’re investing money in Bitcoin, know that there’s a finite amount of this cryptocurrency available.
Dogecoin is considered an altcoin or alternative to Bitcoin, and there’s no limit to how much Dogecoin can be available. If you think about what would happen if a government continued printing as much money as they wanted without ever stopping, that money would likely lose value over time because there would be too much of it.
For blockchain miners, the average block times between both currencies are also different. For DOGE, it’s one minute, but for BTC, it’s about 10 minutes. This affects how quickly you can mine each cryptocurrency.
In addition, Dogecoin was created as a joke while Bitcoin had more serious intentions in mind. This has likely affected the support and backing of each cryptocurrency to a certain extent. You can see this reflected in the valuations of each over time and how many trading platforms allow you to buy and sell each cryptocurrency.
Bitcoin has existed for over a decade and was worth an all-time high of over $60,000 per Bitcoin at one point. Dogecoin has also seen gains in its eight-year tenure but has yet to cross the one dollar threshold (as of June 8, 2021). If you’re interested in getting some BTC, learn more in our guide on how to buy Bitcoin.
Should you invest in Dogecoin?
It’s inherently risky to invest in anything because you never know what might happen. When it comes to cryptocurrency for beginners, the general rule of thumb is that these coins are often considered especially risky. This is because they’re relatively new, and some have seen both huge gains and losses in short amounts of time.
However, they could still be a good fit for you, depending on how you like to invest. Like many volatile investments, cryptocurrencies or other digital assets could play a part in a diversified portfolio. It can make sense to have a few riskier investments in your portfolio that could pay off ($500 worth of BTC over a decade ago would be worth millions of dollars today), but you might also want to have safer investments to fall back on in case there’s a big crash.
To help with your thought process, consider some of the pros and cons of investing in Dogecoin:
- Celebrity support: It seems strange and might not be sustainable, but tweets from famous people, such as Elon Musk and Snoop Dogg, are helping support Dogecoin’s rise in value.
- Fun community: Early supporters of Dogecoin are quick to point out that DOGE doesn’t have to grow in price to be valuable. Rather, it was created for and mainly used for fun before its rapid rise in popularity. This goes to show that not all Dogecoin holders are only about the money, though making money can be fun, too.
- Actual growth: The Dogecoin community is growing as its popularity spreads. This has affected DOGE in positive ways overall.
- No limit: The potential amount of available Dogecoin is infinite since there’s no cap. This is a warning sign because you tend to lose value if you have too many of something.
- Less secure: Bitcoin is the original cryptocurrency and has much more recognition and support. As an altcoin, the value of DOGE is not as reliable.
- Less accepted: Since Bitcoin has been around longer and is more recognized, it’s also typically more accepted as payment than Dogecoin. Though, DOGE is growing increasingly popular as a form of payment.
How to invest in Dogecoin
There are two primary ways to invest in Dogecoin, investing apps and cryptocurrency exchanges. Here’s what you need to know about each.
Robinhood and Webull are two popular investing apps that allow you to buy and sell certain cryptocurrencies. Robinhood doesn’t charge any commission fees for cryptocurrency trading, but you also only have seven digital currencies to choose from. However, this includes both Dogecoin and Bitcoin, as well as Litecoin and Ethereum.
For more information, check out our Robinhood review.
Webull also doesn’t charge commission fees for cryptocurrency trading and offers seven cryptocurrencies to choose from, including Bitcoin and Dogecoin.
For more information, check out our Webull review.
Overall, the two apps are similar if you want to use them for cryptocurrency trading. You can see how they line up in our Webull vs. Robinhood comparison.
The best cryptocurrency exchanges typically allow you more options for your digital currencies than brokers like Robinhood and Webull. You may be able to buy and sell cryptocurrency on Robinhood and Webull, but you’re actually buying an IOU for the crypto, and that means you can’t withdraw the actual cryptocurrency funds.
But with a crypto exchange, once you create an account and deposit fiat money (such as USD or EUR), you’re able to apply your understanding of how to buy cryptocurrency of your choice and also withdraw it.
Keep in mind, it’s common for exchanges to charge fees for different types of transactions, whether it’s per trade or for orders over a certain dollar amount. To see a breakdown of fees associated with three popular cryptocurrency exchanges that allow you to purchase DOGE, read our guide on Kraken vs. Coinbase vs. Gemini.
Of these three exchanges, Kraken has over 70 cryptocurrencies available while Gemini has over 40 and Coinbase offers over 60. All three exchanges offer Dogecoin trading. Other popular exchanges include Binance and eToro.
A note about digital wallets
If you want to help secure your digital assets, including cryptocurrencies, you’ll want to get a digital crypto wallet. These wallets don’t physically hold your cryptocurrency funds, but they allow you to access your funds through a private key.
Since only you would have the key, nobody else should be able to access your funds. However, this also means if you lose your private key, you won’t be able to access your funds either. (For a real horror story, check out the guy who accidentally put 7,500 bitcoin in a landfill in our list of surprising facts about crypto.)
Cryptocurrency wallets typically come in the form of hardware wallets, such as a USB drive that you can disconnect from the internet, or online wallets, which may be offered from a cryptocurrency exchange like Coinbase or Gemini. DOGE also offers digital wallet options. Dogecoin wallets are available in the form of Multidoge and Dogecoin Core, which each have different features.
Or you could simply write your private key down and store it somewhere safe, though this may not be the most secure option. Consider the option that would work best for you. You might lose a hardware wallet or an online wallet could be hacked. Each choice has its pros and cons when it comes to buying Dogecoin and then safely storing it.
Just remember that if you want to cash out your crypto from your wallet for fiat money, you typically have to first move your crypto to an exchange where you can sell it. This will give you fiat money in your exchange account, and then you can do a bank transfer to a linked account.
Is Dogecoin a good investment?
Dogecoin could be a good investment if it continues to grow in popularity and gains more support. But like any investment, it comes with risk. And as a cryptocurrency, it can be an especially volatile investment. Crypto could be helpful if you’re buying it in small amounts and looking for how to diversify your portfolio.
Can you buy Dogecoin stock?
Can I buy Dogecoin on Robinhood?
Is Dogecoin available on Coinbase?
There have been plenty of ups and downs when it comes to Dogecoin price and value over the years, so it’s best to approach a DOGE investment with care and after having done your due diligence. This includes researching which platform would be best for your cryptocurrency needs and how investing in a cryptocurrency can fit into your portfolio.
Overall, investing is risky and requires plenty of preparation and forethought. Online brokers and exchanges can help inform you of certain risks and teach you investing tips. Yet, at the end of the day, it’s up to you to decide what makes sense for your situation.