Should you invest in Dogecoin in 2022? Things to consider
Before deciding to buy Dogecoins, it is important to know some basic details about cryptocurrencies.
They are also known as virtual currencies or virtual coins, which means that there is no physical version of that currency, although many images depicting cryptocurrencies in metal coins are circulating on the Internet.
You have to understand cryptocurrencies as something similar to digital files that we store on a computer or in the cloud. It’s not the same, but just to give you an idea.
Another important difference with traditional currencies is that cryptocurrencies can be transferred over the internet without the need to report the transfer to a bank that regulates or authorizes it, which gives it some appeal because it limits the way in which transfers can be traced, since there is no “ledger” in which a “footprint” of the transfer must be left (something that does happen in all traditional banks).
How are cryptocurrencies obtained?
These cryptocurrencies can be obtained in two different ways; one of them is mining, which is done with a computer and a graphic card capable of solving mathematical calculations to generate units of the cryptocurrency. The miners get to keep what is generated.
In order for you to understand mining, let’s think of a simple analogy: that you yourself obtain the metal, mold it and shape it to keep that coin.
Attention, this does not mean that you have not spent money to obtain that coin unit. The energy cost of generating more coins for exchange falls on the user, and it is not exactly low because you have to take into account the investment in good computer equipment that can solve these calculations, the energy to keep them active (and cooled) 24 hours a day, and a long etcetera.
Mining is not cheap. That is why it is not a path to follow for those who want to own cryptocurrencies but do not know how to adapt a computer to mine efficiently.
What is Dogecoin?
Dogecoin was born as a satire of the cryptocurrency culture, however, in its journey from 2013 to the present, it has gained a significant community of followers, which has led to the relative increase in its value.
To know the most efficient way on how to buy Dogecoin, you need to know more about it to get the most out of it.
Furthermore, as with other types of currencies, its value fluctuates as the market speculates on its future value. This has been demonstrated in the different occasions in which Elon Musk has supported the coin.
Dogecoin uses a Proof-of-work consensus mechanism that requires dedicated mining equipment to mine new coins.
The supply of Dogecoins is unlimited to discourage hoarding, reward miners and keep transaction fees manageable.
However, this means that the coin is inflationary, in the sense that if more coins are needed, they can continue to be mined and there is no fixed (or physical) value backing it.
It is a different scheme from other cryptocurrencies such as Bitcoin of which, once the amount of 21 million has been mined, they can no longer be mined and there will be no more coins available than there are at that moment in the market, even if some users lose their private keys, the maximum limit will remain the same.
How to buy Dogecoin?
Now we already know in a very superficial way what a cryptocurrency is and how they are obtained through the process known as mining.
However, there are other ways to obtain cryptocurrencies, the simplest of which is to buy.
To buy Dogecoin, traditional currencies are almost always used. Usually this transfer is from US dollars (USD) to Dogecoin (DOGE).
The easiest way to get them is as follows:
- First: you need an account in a service that works as your digital wallet.
- Second: you need to add in the data to make a digital purchase.
These purchases can be made with credit cards (both Visa and Mastercard are accepted), this is the easiest way to get Dogecoins so you have to be aware of their value to get the most out of them.
There are some wallets that allow you to obtain cryptocurrencies through services such as PayPal or even directly from a bank transfer.
Something important to consider is that these transfers are final, the payments are irreversible.
What else should you keep in mind?
What you need to keep in mind is that investing in cryptocurrencies is, after all, investing in a financial asset.
If we take into account that it is an investment, it is essential to analyze how much you are going to dedicate to the purchase, since there are services that limit the minimum purchase amount of certain cryptocurrencies.
In addition to this, you must understand as well as possible what you are investing in, how Dogecoin works in this case, and its environment, since this information is essential to be able to make the right investment decisions.
Please note that this website does not provide financial advice. This article is for information purposes only.