Dogecoin: Bull vs. Bear | The Motley Fool

Dogecoin (DOGE 7.20%) is without doubt one of the largest cryptocurrencies available on the market immediately. On the similar time, its value chart is liable to wild swings, typically impressed by viral posts on social media platforms.

Is Dogecoin a stable funding for the lengthy haul, regardless of its quirky design selections? Learn on to see two Motley Fool contributors analyzing this all-important query in your behalf.

Dogecoin: Is a meme coin comeback potential?

Dominic Basulto (Dogecoin bull): Admittedly, Dogecoin hasn’t carried out a lot since Might 2021, when it hit an all-time excessive of $0.74. That coincided with the earlier meme craze mania within the crypto market, when many buyers thought they might change into millionaires in a single day.

That being stated, Dogecoin stays the most important and hottest meme coin on the earth, with a staggering $15.5 billion market cap. And it boasts one thing that no different cryptocurrency can: the assist and endorsement of billionaire tech mogul Elon Musk.

3 bullish eventualities for Dogecoin

Whereas Musk’s assist of Dogecoin has cooled since these heady days in 2021, when he appeared on NBC’s Saturday Evening Stay as “The Dogefather,” it is not possible to disregard his potential position in pushing Dogecoin larger. In actual fact, nearly any bullish situation includes his assist in a single capability or one other.

Picture supply: Getty Photos.

For instance, Musk may combine Dogecoin into his social media platform X (previously often called Twitter) as a most well-liked type of fee. That’s an concept that has bounced across the web ever since Musk acquired Twitter for $44 billion again in 2022. On this situation, the platform’s 600 million customers would have the ability to use Dogecoin as a type of fee for subscriptions or promoting. That alone may spike the worth of Dogecoin from its present worth of $0.10 to $1, for a 10x return in your funding.

However suppose even larger. What if Musk additionally makes Dogecoin a type of fee at his different corporations, akin to Tesla (NASDAQ: TSLA)? In Might, Musk introduced that he was bringing again Dogecoin as a type of fee for Tesla merchandise (however not Tesla vehicles), and that promptly resulted in a 20% bounce for Dogecoin.

And, lastly, there’s one Elon Musk situation that might ship Dogecoin to the moon. Actually. In discussing his plans for SpaceX, Elon Musk has talked about the potential of paying for future SpaceX missions with Dogecoin. Perhaps on Mars sooner or later, we’ll all be paying with Dogecoin and never {dollars}.

Simply bear in mind: Dogecoin has by no means as soon as damaged the $1 mark, and plenty of hyped eventualities have by no means come to go. However that is what makes meme cash so well-liked: They open up some attention-grabbing “what if” eventualities and make investing extra enjoyable.

Dogecoin is simply too foolish for its personal good

Anders Bylund (Dogecoin bear): I am sorry, however Dogecoin would not make sense in the long term. The meme coin has a historical past of sudden jumps and equally abrupt value drops, however Dogecoin wasn’t constructed for sustained, wealth-building positive factors.

I am speaking a few tweaked model of Bitcoin (BTC 1.86%) right here — and the modifications have been by no means supposed to make Dogecoin extra beneficial or assist its homeowners. Launched as a cryptocurrency-mocking joke in 2013, Dogecoin copied Bitcoin’s blockchain ledger expertise in a roundabout method. The Litecoin (LTC 3.70%) cryptocurrency is a payment-oriented model of Bitcoin, and Dogecoin began out from that code base with a number of extra modifications.

That will not sound too dangerous. Dogecoin grabbed a Bitcoin model with quicker transactions and took it to the following degree. The transaction processing system processes a brand new block of knowledge each minute, whereas Litecoin takes the identical step in 2.5 minutes and Bitcoin drags its digital toes with a 10-minute block processing hole. Dogecoin additionally eliminated the exhausting provide aspect cap, leaving the door open for limitless coin manufacturing. Wrapping that bundle of technical tweaks in a dog-themed advertising and marketing message turned out to be a successful technique. The joke coin attracted a critical developer group and tons of social media hype. What’s mistaken with that?

So I get it. Dogecoin seems to be like a doubtlessly helpful cryptocurrency at first look. However its advantages additionally include critical downsides.

• Its chosen encryption system gives much less safety than Bitcoin’s sturdy platform. Bullish buyers prefer to level out that Dogecoin’s mining algorithm makes use of much less electrical vitality than Bitcoin’s, however the heavy vitality value additionally makes Bitcoin’s platform tougher to hack. Researchers have discovered hackable vulnerabilities in its code, and it’d simply be a query of time earlier than a nasty actor figures out steal Dogecoin belongings.
• There’ll by no means be greater than 21 million Bitcoins or 84 million Litecoins. These limits shield buyers towards inflationary forces. Dogecoin eliminated that perform, letting crypto miners create as many new cash as they need. The Dogecoin provide is rising by about 5 billion cash a yr, including as much as 146 billion cash in circulation immediately. That inflation price may soar at any time.
• The meme-based advertising and marketing has been efficient thus far, nevertheless it additionally makes Dogecoin extra risky. Newer and more energizing meme cash can steal the social media highlight from Dogecoin on the drop of a hat. Shiba Inu (CRYPTO: SHIB) did it in 2021. Floki (CRYPTO: FLOKI) and dogwifhat (CRYPTO: WIF) have undermined Dogecoin’s recognition in 2024. The subsequent dog-themed crypto fad would possibly steal much more Doge fans for the lengthy haul.

I would a lot reasonably maintain Bitcoin in my long-term funding portfolio and maybe use Litecoin as a fee processing medium sometime. There is not any place for Dogecoin’s intentionally flawed platform in the true world, irrespective of how typically the meme coin is promoted by the celebs of social media. This lovely crypto pet is too risky for me.