Bitcoin rate is growing and breaking its own records. And you are a person who had not previously thought about cryptocurrencies, on the wave of general interest, you decided to try to acquire a cryptocurrency, but you are not sure if this is a successful investment. What if it's a financial bubble that is about to burst? You don't want to risk it, but you are seriously interested in this topic. You think that it is not necessary to lose your head and buy Bitcoin (the price of which has long been above $ 40,000), because there are altcoins, cryptocurrencies that appeared after Bitcoin. For example, one of these, Dogecoin, has climbed into the top 10 cryptocurrencies by capitalization on the back of the latest news.
Dogecoin
Dogecoin, a cryptocurrency with a Shiba Inu dog logo, was conceived as a joke in 2013. Dogecoin's creators saw it as a fun and relaxed cryptocurrency that would be more attractive outside of the mainstream Bitcoin audience, since it refers to the famous meme dog. The project quickly gained popularity in the cryptocurrency community. Project founder Jackson Palmer left the crypto industry in 2015, citing its toxicity. According to him, instead of innovation and new developments, the industry breeds rogues and fraudsters.
However, despite Palmer's departure, the project did not fall apart and continued to develop. Now it is actively advertised by many celebrities, including Elon Musk, Gene Simmons and rapper Calvin Cordozar Broadus Jr., known under the pseudonym Snoop Dogg (Snoop Dogg).
On February 5, the 71-year-old former lead singer of Kiss tweeted, "I bought Dogecoin ... for six figures" to his 922,000 followers.
On February 6, Snoop Dogg tweeted an image of "Snoop Doge" to his 19.2 million followers.
Later, Elon Musk posted on the same Twitter a picture from The Lion King, in which the head of the Mask is depicted instead of the head of a monkey holding a monkey with the head of Gene Simmons, holding a monkey with the head of Snoop Dogg holding a Shiba Inu dog (symbolizing Dogecoin). Text of a message to his 45.9 million followers: "In the end ... it turned out ..." (he also later tweeted "Dogecoin to the Moooonn".)
A few hours later, Bloomberg reported that Dogecoin was up 46% in the last 24 hours to 7.4 cents. In fact, Dogecoin is now approaching its all-time high with a market value of $ 10 billion, making it the 10th largest cryptocurrency in the world.
Business Insider points out that Dogecoin's profitability from the beginning of the year to the present has been about 1,032.91% (according to CoinDesk calculations).
Mike Novogratz, founder of the cryptobank Galaxy Digital, believes that the DOGE fever will not end well:
“I think it will end badly with DOGE. Much the same thing happened with GME. Greed and gravity did their job. DOGE has no real purpose. Stick to BTC, ETH and defi coins. There are many smarter ways to make money on the crypto rally. ”
Dogecoin has been bubbling at the baseboard level for years, but jumped to a high of almost 2 cents in 2018. It didn't last long - it cost less than 1 cent again during the day - but it established a scheme by which anyone from TikTokker to Musk could raise the price. However, it took a recent rally in stocks to lift the currency to an unprecedented high as commentators pleaded with each other not to sell to keep the price high.
The rise of cryptocurrency quotes began after it was discussed on social networks.
Twitter user WSB Chairman asked his 380,000 followers on January 28 (which had grown to 750,000 by January 29) which coins they hold. Later, he singled out Doge among the assets named by subscribers, which was followed by a sharp increase in the price of the coin. Members of the communities r / CryptoCurrency and r / SatoshiStreetBets on Reddit also began to buy up cryptocurrency. The “warming up” of the asset followed the same logic as the purchase of shares of GameStop, which in recent weeks have risen in price by thousands of percent, as well as some other assets that, as Reddit members believed, were undervalued by the market. Growth was fueled by the fact that you can buy Doge on the RobinHood trading platform, popular in the USA.
Ja'Mal Green, a Black Lives Matter activist and former candidate for mayor of Chicago, said he has thousands of Dogecoins and sees currency as a way for people without big money or financial knowledge to play with hedge funds and billionaires. “I love the way these groups come together to really discuss what it means to play with cryptocurrency or stocks, play the market,” he said. "It's great to see the bottom 99% come together to figure out how they can achieve wealth together and bridge this economic gap a bit."
But Eric Budisch, a professor at the University of Chicago who studies cryptocurrencies, warned that altcoins are especially vulnerable to bubbles because they are not tied to fundamentals in the way that a stock price (ideally) reflects a company's earnings. According to him, as long as everyone holds on, the price will indeed rise. The problem is that you can never be sure that you have chosen the right time to cash out. “When people try to sell, the price will drop,” he said. “This means everyone wants to sell first. Nobody wants to sell to the latter, and this is kind of the essence of pumping and dumping ... "
Nelson Morales, a Beach Park, Illinois data center engineer who runs a Facebook group called Cryptocurrency of Greater Chicago, has doubts about the currency. He worries that inexperienced investors will be drawn into roulette, which could end in a catastrophic crash.
However, that didn't stop him from investing $ 50 in Dogecoin. “I just want to get the canary in the tunnel,” he said. “The canary is still alive. I am impressed".
Cryptocurrencies are extremely risky investments and non-professionals should not get involved with them. Experts advise that the share of such assets in a personal investment portfolio should not exceed 5-10%.
An ordinary investor who is poorly versed in cryptocurrencies should invest only in bitcoins.
The rest of the coins are for short-term speculation, and only a person with a trader's mind and understanding of technical analysis can make them.
Mikhail Karkhalev, analyst at Currency.com: “Sane people don't expect thousands of percent growth in all cryptocurrencies. The overwhelming majority of coins will really no longer be profitable. But the most liquid and demanded ones still retain the most powerful potential. An industry is being built around these currencies, which is actively integrating into the traditional financial system. Government regulation is getting stronger and better, and large corporations are launching serious projects. Before entering the market, you should study it, assess the potential and risks, and then make a decision on investing. But this does not mean that you need to spend days researching little-known coins. The variety of cryptoassets is much larger than it might seem. You can invest in a familiar stock market and commodities, only in a tokenized form."
Tokenized assets are digital analogs of traditional ones. They allow you to directly invest cryptocurrency in stocks, bonds, precious metals, index funds.
Viktor Pershikov, a leading analyst at the 8848 Invest investment company, agreed that new "pumps" (ups) could soon occur. The cryptocurrency market is likely to be visited by traders who did not have time to take part in the upsurges in stock quotes that occurred earlier in the stock market.
The next contenders for the "pump" can be tokens Ripple (XRP), Ethereum Classic (ETC), Uniswap (UNI), Sushiswap (SUSHI), Burgerswap (BURGER), Eos (EOS), Tron (TRX), Bittorent (BTT) or OmiseGO (OMG), Pershikov admitted. He explained that what these coins have in common is that they did not react to the market growth at the end of last year or the beginning of this year, so they may be affected by the low base effect. “A cheap coin will be chosen for the pump, possibly one of the listed ones, but at the same time its capitalization will correspond to the level of the first hundred of the crypto market. It is unlikely that an unknown token will be chosen for the pump; rather, on the contrary, it will be a coin with good liquidity available on the largest exchanges, ”Pershikov argues.
Dogecoin is different in terms of mining from Bitcoin's proof-of-work protocol. First of all, thanks to the Scrypt algorithm inherited from Litecoin. This altcoin also boasts a block generation time of 1 minute and no ceiling on the total number of blocks, and therefore no Dogecoin tokens that can be mined.
Dogecoin, like Bitcoin and Litecoin, uses public key hash addressing. Dogecoin addresses are 34 characters (both upper and lower case) and start with the letter D.
You can mine Dogecoin alone or by joining a mining pool. You can mine Doge digital currency on any processor or video card, on Windows, Mac or Linux. In 2014, the mining processes of Litecoin and Dogecoin were merged, and now they can be mined at the same time.
Dogecoin is primarily used as a tip system on Reddit and Twitter to reward quality content creation or distribution. You can earn a tip to Dogecoin, for example, by actively participating in a community that uses digital currency, or even getting Dogecoin just like that. The Dogecoin Faucet website is dedicated to giving away small amounts of Dogecoin to new users for free so they can familiarize themselves with the currency and start interacting with the Dogecoin communities.
Most cryptocurrencies have a predetermined emission limit. Dogecoin has no such limitation. There was originally a limit of 100 billion DOGE. In February 2014, Dogecoin founder Jackson Palmer announced that the cap would be lifted and there would be no cap. At the same time, for the creation of a block there will be a fixed reward of 10 thousand DOGE (previously the amount of reward was random).