What is dogecoin?

What is dogecoin?
Photo by Executium on Unsplash

After Bitcoin and Ethereum, new cryptocurrencies continue to enter the world's agenda. One of them is Dogecoin, which gained 20 percent on April 13. Read the article to the end ⬎

  📋 Quick Sections
  1. 12 times increase in the value of dogecoin?
  2. Elon's effect?

Is Dogecoin a bubble that will soon burst? Or is it a virtual currency that will lead the world of cryptocurrencies like Bitcoin?

12× increase in value in four months

Dogecoin, which gained nearly 20 percent value compared to virtual currencies such as Bitcoin and Ethereum on April 13, changes hands at $ 0.072. This price means 12 times the price of $0.0057 on December 31, 2020. During this period, the value gain of the virtual currency in question corresponds to 1163 percent.

Bitcoin has gained 104 percent and Ethereum 193 percent since the beginning of the year.

Both these virtual currencies have increased significantly this year compared to bonds or gold, but they have not been able to equal Dogecoin's performance in terms of ratio.

First of all, Dogecoin has a much smaller market cap than Bitcoin or Ethereum.

On the CoinMarketCap.com cryptocurrency exchange, Dogecoin ranks as the 17th largest virtual currency. Dogecoin has a market cap of $9.2 billion. This figure has reached 1 trillion 122 billion dollars in Bitcoin and 247.27 billion dollars in Ethereum.

It is more difficult for cryptos with large market caps to grow as fast as a small crypto-like Dogecoin. This is also confirmed by the volume of trade. According to data from CoinMarketCap.com, in the last 24 hours (April 13), 4.6 percent of Bitcoin's market value has been traded, while this rate reaches 35 percent in Dogecoin.

Another reason for Dogecoin's rapid appreciation is that not only is demand high, but also supply is different. Dogecoin permanently issues 5 billion cryptocurrencies every year. This means an inflationary supply constraint.

On the other hand, Bitcoin, which is designed not to exceed 21 million Bitcoins, has a deflationary supply structure.

The final reason for Dogecoin's 'super' performance is that most of the virtual currency is in the hands of a group. According to The Wall Street Journal's report on February 17, 28 percent of the total supply of Dogecoin is in the hands of a single person.

Elon Musk's effect

People considering investing in Dogecoin are advised not to just buy this crypto and diversify their portfolios with other virtual currencies.

Because upside volatility is likewise turning into harsh downside risk.

Elon Musk is one of the factors that made the value of Dogecoin skyrocket. Musk occasionally shares dogecoin on his social media account.

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