What’s Behind the Dogecoin Craze? Your Top 8 Questions Answered
If you’d invested just over $18,000 in Dogecoin at the beginning of 2021, you’d be a Dogecoin millionaire as of this writing on Monday, April 19. Woof.
The bark of the Dogecoin pack has been heard throughout the world. In fact, enthusiasts have declared April 20 as #DogeDay.
So what exactly is Dogecoin? How do you even pronounce it? Can you actually buy anything with it? If you and your dog aren’t sure what to make of this canine-themed cryptocurrency, read on.
How Does Dogecoin Work? 8 Questions Answered
1. What is Dogecoin?
Dogecoin is a cryptocurrency created by software engineers Billy Markus and Jackson Palmer in 2013. A cryptocurrency is a virtual form of money that you can also buy and sell as an investment. Like other cryptocurrencies, it runs on blockchain technology, which is basically a giant public record of transactions.
Markus and Palmer created Dogecoin as a joke, combining the Bitcoin craze with the then-popular Doge meme featuring a Shiba Inu dog. Both ended their involvement with Dogecoin in 2015. In fact, Markus recently wrote on Reddit that he sold his coins for about enough to buy a used Honda Civic.
2. Why am I suddenly hearing about it?
Dogecoin’s prices have rallied in 2021 for several reasons, including Reddit user activity, surging cryptocurrency prices and tweets from celebrities, particularly Tesla CEO Elon Musk. In February, after Musk tweeted “Doge” and “Dogecoin is the people’s crypto,” the price surged by 50%. On April 1, Musk tweeted — in what many believe was an April Fools’ Day joke — that his SpaceX company “is going to put a literal Dogecoin on the literal moon.”
Brands like Slim Jim, Snickers and Milky Way have jumped on the bandwagon with Dogecoin-related tweets.
3. How do you pronounce it?
4. What’s the point of #DogeDay?
Dogecoin enthusiasts are hoping to push the price of coins over $1. For most of the cryptocurrency’s history, they’ve been worth about half a cent. As of April 20, Dogecoins were trading for about 37 cents, down from last week’s high of 41 cents. The 4/20 date is, of course, celebrated by marijuana lovers and is said to be Elon Musk’s favorite holiday.
5. Is there a limit on the supply of Dogecoins?
No. That’s an important distinction between Dogecoin and Bitcoin. Bitcoin’s creators capped the amount of coins that can be mined at 21 million. Proponents of Bitcoin argue that the limited supply makes the cryptocurrency an effective store of value.
But no such limit exists with Dogecoin. As with Bitcoin, new coins are unlocked through a process called mining by solving complex mathematical problems with computers. But Dogecoin is much easier to mine compared to Bitcoin. Millions of Dogecoins are mined every day. Currently, more than 129 billion Dogecoins are in circulation.
6. What can I buy with Dogecoin?
Not much. Dallas Mavericks owner Mark Cuban announced in March that the team would accept the cryptocurrency as a form of payment. Reportedly, the Mavericks have generated $122,000 worth of merchandise revenue through Dogecoin sales. Latvian airline airBaltic, electronics retailer Newegg, and luxury resort group the Kessler Collection are among those that accept Dogecoin payments. But overall, usage is pretty limited.
7. What’s the total value of Dogecoins?
As of Tuesday, April 20, aka #DogeDay 2021, about $50 billion. That makes Dogecoin worth more than Walgreens, Ford or Roku, all of which have market capitalizations just shy of $50 billion.
8. Should I invest in Dogecoin?
If you want to put a few extra bucks into Dogecoin just for fun, that’s your call. But you should only do so if you don’t have high-interest debt, your emergency fund is healthy, and you regularly contribute to a retirement account, like a 401(k) or Roth IRA.
You could make some cash on Dogecoin, but you could just as easily see the bulk of your money disappear. If Dogecoin buys you entertainment, great. But only invest if you can afford to lose.
Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. She writes the Dear Penny personal finance advice column. Send your tricky money questions to [email protected]