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Dogecoin (DOGE) is the cryptocurrency that never ceases to amaze. From its humble beginnings as a parody coin worth a fraction of a cent, it is currently the sixth largest crypto by market cap, according to CoinMarketCap.
A lot of people argue that it’s time to start taking it seriously. Many popular cryptocurrency exchanges now list Dogecoin. And its fame and popularity is making people wonder if it could still find use as a digital currency.
The price of Dogecoin has risen over 6,000% since the start of this year, compared to Bitcoin’s 37% rise. It’s an amazing leap. But if it’s a choice 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 by looking at the argument that Doge could become a functional cryptocurrency.
It could very well work better than Bitcoin. Transactions are faster, greener and cheaper. But it’s an extremely crowded space, and I would hesitate to invest in anything that is just a form of payment.
Here are some players:
Other Alternative Coins: Dogecoin is one of the many types of alternative coins that enhance Bitcoin’s payment capabilities. The problem is, all of them are volatile. If you were running a restaurant, would you want to accept payment for a meal, only to see its value halved in a matter of days? It would wreak havoc on your cash flow. Stablecoins: Stablecoins solve the problem of volatility. These cryptocurrencies are tied to a fixed asset, such as dollars or gold, so the price doesn’t fluctuate dramatically from day to day. GovCoins: the other potential player in the arena digital payments are coins of government, such as the digital dollar. The Fed recently said it was considering its own coin and that China is already piloting a digital yuan. Since these would be both stable and government backed, they could blow the alt coins out of the water.
We don’t yet know how this will play out, but one thing is clear: Doge has competition in all directions if he is to become a digital currency. Bitcoin, on the other hand, is leading a different race. Some see it as a store of digital value, like gold. Others see it more as a solid and secure foundation from which other cryptocurrencies will operate.
2. Bitcoin has a great team behind it
The Bitcoin Foundation and other organizations pay for a large team of developers to keep Bitcoin bug-free and up-to-date. Bitcoin may be slow, but the developers are considering layering new technology on top of its platform. In addition, technicians schedule updates to make transactions easier and cheaper.
Dogecoin recently announced that it will be launching its first upgrade in years soon. Dogecoin has four part-time developers who say Doge 1.21 is not far off. This is great news for Doge, but it’s a drop in the ocean. Doge doesn’t have full-time developers, so what if the platform gets hacked or there’s a tech glitch in the middle of the night?
3. One person owns almost a third of Doge
The Wall Street Journal reported earlier this year that one person owns 28% of all existing Dogecoin. And that’s not all. Almost 70% of the coins are kept in just 100 wallets.
Now, Bitcoin also has its share of whales. These are people who own large amounts of cryptocurrency and can have a disproportionate influence on the price. But, since Bitcoin is the largest cryptocurrency in the world, their influence is somewhat diluted. Glassnode classifies Bitcoin whales among those with more than 1,000 BTC. He estimates that there are around 2,200 whale accounts that control just over 30% of the world’s Bitcoin.
4. Bitcoin is a better option in the long run
Ascent’s parent company, The Motley Fool, owns Bitcoin because it believes in the long-term future of the currency. He is not looking for short term gains; he is willing to hold Bitcoin on the basis that it will perform well over a long period of time.
Is Dogecoin a good long term investment? It could continue to surprise us all. But the coin was created as a joke with no fundamental purpose, and its market capitalization is now larger than that of several well-known companies. I wouldn’t invest in a business 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 about how it might play out. But Dogecoin looks riskier than most. It has outperformed massively, and I hope for the Dogecoin community that it will continue to do so. But it’s just too risky for me.
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