How to invest in Dogecoin with a Crypto IRA

What is Dogecoin?

Dogecoin (DOGE) is a decentralized cryptocurrency that holds the distinction of being the first meme coin. It was created as a joke in 2013 by software engineers Billy Markus and Jackson Palmer and is based on the viral Shiba Inu internet meme. Dogecoin features the Shiba Inu breed and is known for phrases like “Much Wow” and “Very Doge.”

Initially introduced as a more lighthearted alternative to Bitcoin (BTC), Dogecoin has developed a robust community. However, both Markus and Palmer distanced themselves from the project due to disagreements over its future direction. Despite this, Dogecoin has continued to grow and maintain relevance. Its motto, “Do Only Good Everyday” (DOGE), reflects the community’s playful yet positive spirit.

Dogecoin experienced a surge in popularity after billionaire entrepreneur Elon Musk began endorsing the currency on social media. In May 2021, Musk tweeted about collaborating with Dogecoin developers to improve its transaction efficiency, which spurred massive media attention and interest from both retail and institutional investors.

Most recently, the Dogecoin Foundation teamed up with popular YouTubers MrBeast and Mark Rober to support the TeamSeas initiative, aiming to raise $30 million to remove 30 million pounds of trash from the world’s oceans. This collaboration reflects Dogecoin’s playful but impactful approach to philanthropy, demonstrating that a cryptocurrency born from humor can drive real-world change. As Dogecoin continues to evolve, its growing presence in charitable initiatives reinforces its unique place in both the crypto world and global community efforts.

The Basics of Dogecoin

Dogecoin’s primary function is as a medium of exchange, designed for easy, fast payments. It initially gained popularity as a tipping currency on Reddit, where users rewarded each other with small amounts of DOGE as tokens of appreciation. Remarkably, this tipping culture remains active, reinforcing Dogecoin’s identity as a fun, community-driven currency.

Although Dogecoin is widely beloved, it has faced challenges. In 2013, the same year it was launched, hackers stole 11 million DOGE (worth about $16,000) from DogeWallet. However, the Dogecoin community quickly rallied, donating funds to cover the loss, a response that highlighted the supportive nature of its user base and boosted confidence in the project.

Dogecoin’s simplicity is one of its biggest advantages. Transactions—whether for $0.10 or $10.00—are processed within seconds as DOGE moves seamlessly between wallets. Over the years, more merchants have begun accepting Dogecoin, including Tesla (for merchandise), AMC Entertainment, and the Dallas Mavericks, further enhancing its utility as a payment method.

Mark Cuban, the owner of the Dallas Mavericks, believes Dogecoin outperforms Bitcoin as a currency for everyday transactions. Cuban explained that while the Mavericks accept both Bitcoin and Dogecoin for tickets and merchandise, fans tend to prefer paying with DOGE, holding onto their Bitcoin as a long-term investment they expect to appreciate over time. This reflects the growing perception of Bitcoin as a store of value, while Dogecoin is viewed as a more practical currency for frequent spending.

Elon Musk, another high-profile supporter, shares Cuban’s view. Musk has pointed out that Bitcoin’s higher transaction costs make it less suitable for everyday payments, whereas Dogecoin’s lower fees give it an edge in practical use. Both Cuban and Musk regularly make headlines related to Dogecoin and have publicly disclosed that they own DOGE themselves. Their endorsement has fueled interest among retail investors, making Dogecoin a potentially strategic addition to Bitcoin IRA portfolios.

Key Concepts of Dogecoin

Dogecoin was created as what’s known as a hard fork, which represents a change in direction of the blockchain code, from a project called Lucky Coin, which itself was a fork of Bitcoin. Dogecoin is a combination of code from three separate blockchains: Bitcoin, Lucky Coin and Litecoin. Here are some of the key concepts:

• Peer-to-Peer: Dogecoin is a peer-to-peer (P2P) cryptocurrency, meaning it can be sent from one person to another over the internet in near real-time without the need for a third-party service provider like a bank.

• Wallets: Dogecoin offers two wallet options — Multidoge and Dogecoin Core. These wallets are designed to support Dogecoin mining. Dogecoin Core is the official Dogecoin wallet. It is a large file that contains the entire blockchain needed to run a node, or mine Doge. If you are not planning to participate in Dogecoin mining, you could go with another software wallet option that is a smaller file and offers support for Doge.

• Supply: One of the key concepts around cryptocurrencies is supply. As stated previously, the question investors want to know is “how many Dogecoins are there”, anyway? Unlike Bitcoin, which has a ceiling on the number of coins that will ever be created, Dogecoin has no cap. The project, however, will issue no more than 5 billion new DOGE coins per year.

• Consensus Mechanism: Dogecoin uses the Proof-of-Work (PoW) consensus algorithm.

How to Buy Dogecoin with BitcoinIRA¹

Purchasing Dogecoin within a tax-advantaged account through BitcoinIRA is a straightforward process: 

1. Open an Account: Begin by opening a BitcoinIRA account. This will require you to provide personal information and complete the necessary documentation to establish your account. 
2. Fund Your Account: You can fund your account by transferring or rolling over funds from an existing IRA or 401(k) or by making a new contribution. Be sure to adhere to IRS guidelines to avoid any potential penalties. 
3. Choose Your Investments: Once your account is funded, you’re ready to start investing. You can choose Dogecoin, along with over 60 other cryptocurrency assets, to diversify your portfolio. 
4. Manage Your Portfolio: Continuously monitor your investments and adjust your portfolio as needed to align with your financial goals and market conditions. Regular rebalancing can help optimize your investment strategy. 

Dogecoin vs. Bitcoin

Both Dogecoin and Bitcoin operate on Proof of Work (PoW) consensus algorithms, securing their networks through mining. However, Dogecoin and Bitcoin diverge significantly when it comes to energy efficiency and other core features.

• Energy Consumption:
  Bitcoin mining is resource-intensive, requiring substantial computational power. Although Dogecoin also relies on mining, it is considered less energy-intensive, making it a more sustainable option.

• Reputation and Market Sentiment:
  Bitcoin holds the status of being the first and largest cryptocurrency, giving it an edge with institutional investors and those seeking stability. Dogecoin, on the other hand, is synonymous with internet meme culture. While Dogecoin’s playful origin attracts younger investors, its reputation as a meme coin can be a hurdle for those seeking long-term, institutional-grade investments.

• Supply: Scarcity vs. Inflation Risk:
  One of Bitcoin’s defining features is its fixed supply—only 21 million BTC will ever exist, making it a scarce asset that appeals to investors concerned about inflation. In contrast, Dogecoin has an unlimited supply, which some view as an inflationary risk. 

• Transaction Speed and Efficiency:
  Dogecoin stands out with faster transaction speeds, processing 33 transactions per second (TPS), compared to Bitcoin’s seven TPS. This makes Dogecoin ideal for micropayments and day-to-day transactions, giving it a practical edge over Bitcoin as a payment currency.