Dogecoin (DOGE) is the cryptocurrency that never ceases to amaze. From humble beginnings as a fraction of a cent parody coin, it is currently the sixth largest crypto by market cap according to CoinMarketCap.
Many people argue that it is time to take it seriously. Many popular cryptocurrency exchanges are now listing Dogecoin. And its fame and popularity make people wonder if it could still be useful as a digital currency.
Dogecoin price has increased over 6,000% since the beginning of this year, compared to Bitcoin’s 37% increase. That’s an amazing leap. But if the choice is between Dogecoin and Bitcoin (BTC), I would take Bitcoin every time. Here’s why.
1. Bitcoin is more than a payment system
Let’s start with the argument that Doge could become a working cryptocurrency.
It could work very well as Bitcoin. Transactions are faster, greener and cheaper. But it’s an extremely crowded room and I would hesitate to invest in something that is just a form of payment.
Here are some of the players:
- Other alternative coins: Dogecoin is one of the many types of alternative coins that improve Bitcoin’s ability to pay. The problem is that they are all volatile. If you run a restaurant, do you want to accept payment for a meal only to cut the value in half within a few days? It would wreak havoc on your cash flow.
- Stablecoins: Stablecoins solve the volatility problem. These cryptocurrencies are tied to a fixed asset such as dollars or gold so that the price does not fluctuate significantly from one day to the next.
- GovCoins: The other potential player in digital payments space is government coins like the digital dollar. The Fed recently said it is considering its own coin and China is already testing a digital yuan. Since these would be both stable and supported by the state, they could blow the Alt-Coins out of the water.
We don’t yet know how that will play out, but one thing is clear: Doge has competition from all directions if it wants to make it as a digital currency. Bitcoin, on the other hand, is running a different race. Some see it as a digital store of value like gold. Others see it more as a solid, secure foundation on which other cryptocurrencies run.
2. There is a big team behind Bitcoin
The Bitcoin Foundation and other organizations pay for a large development team to keep Bitcoin bug free and up to date. Bitcoin may be slow, but developers are considering adding new technology to its platform. In addition, the technicians are planning updates to make transactions easier and cheaper.
Dogecoin recently announced that it will soon be rolling out its first upgrade in years. Dogecoin has four part-time developers who say Doge 1.21 isn’t far off. This is great news for Doge, but it’s a drop in the ocean. Doge doesn’t have a full-time developer. So what happens if the platform is hacked or a technical problem occurs in the middle of the night?
3. A person owns almost a third of the doge
The Wall Street Journal reported earlier this year that one person owns 28% of all Dogecoins in existence. And that’s not all. Almost 70% of the coins are stored in just 100 wallets.
Now Bitcoin has its stake in whales too. These are people who own large amounts of a cryptocurrency and can have an oversized impact on the price. However, since Bitcoin is the largest cryptocurrency in the world, its influence is being watered down a bit. Glassnode classifies Bitcoin whales as those who own over 1,000 BTC. It estimates that there are around 2,200 whale accounts that control just over 30% of the world’s bitcoin.
4. Bitcoin is a better long-term option
Ascent’s parent company, The Motley Fool, owns Bitcoin because it believes in the currency’s long-term future. It is not looking for short term gains; it is ready to hold bitcoin on the basis that it will do well over the long term.
Is Dogecoin a Good Long Term Investment? It can continue to surprise us all. But the coin was created as a hoax with no basic purpose, and its market cap is now larger than that of several well-known companies. I wouldn’t invest in a company that doesn’t have a business plan, no matter how popular it is on the internet.
Ultimately, all cryptocurrencies are risky investments. There is so much that we don’t know how to unfold. But Dogecoin seems riskier than most of the others. It has massively outperformed itself and I hope for the Dogecoin community that it will continue to do so. But it’s just too much of a gimmick for me.