How to invest in Dogecoin with a Dogecoin IRA

What is Dogecoin?

Dogecoin (DOGE) is a decentralized cryptocurrency that has the distinction of being the first meme coin. Created as a joke in 2013 by software engineers Billy Markus and Jackson Palmer, Dogecoin is based on an internet meme of a Shiba Inu, a Japanese breed of dog, that was making the rounds on Reddit. The Doge meme is famous for two-word phrases, including “Much Wow” and “Very Doge.”

As an open-source peer-to-peer cryptocurrency, Dogecoin was designed to provide a more lighthearted alternative to Bitcoin (BTC), and to this day it is still compared to its larger peer. Incidentally, both Markus and Palmer have since left the project due to differences of opinion with the Dogecoin community over the direction the project was headed. Dogecoin’s motto is Do Only Good Everyday (DOGE).

Dogecoin based on Shiba Inu dog | Source: Fractional Art.

Dogecoin was thrust into the spotlight after billionaire, entrepreneur Elon Musk revealed he was a fan. In May 2021, Musk tweeted that he was working with Dogecoin developers “to improve system transaction efficiency.” Since then, there has been no shortage of Dogecoin news. Musk’s endorsement of Dogecoin catapulted the cryptocurrency to stardom.

If you’re like most investors, then you may want to know how high the Dogecoin price can go, or how many Dogecoins there are. This article will explore these questions as well as the coin, itself. In a nutshell, Dogecoin was trading for less than one cent in early 2021 and by May of the same year reached a record high of $0.74. While the Dogecoin price has since retreated from those levels, it remains one of the leading cryptocurrencies based on market capitalization.

An advantage that Dogecoin has over some other cryptos, such as Bitcoin and Ethereum, is its lower price point. If you’re looking to add Dogecoin to your other retirement investments within your Bitcoin IRA, your money could essentially go further in that you may be able to buy more Dogecoins than you would a higher priced coin.

The Basics of Dogecoin

Dogecoin’s main use case is as a medium of exchange. It’s meant to be used as a payment method. Initially, it was used for tips back when Dogecoin tipping became a common way that Reddit members rewarded one another. Tipping has stood the test of time and remains a feature of Dogecoin after all these years.

Despite being a crowd favorite, it has not been all smooth sailing for Dogecoin. In 2013, the year the cryptocurrency launched, it suffered a security breach in which hackers escaped with 11 million DOGE worth $16,000 from the online wallet DogeWallet. The Dogecoin community rallied behind the project, donating to the wallet platform as a sign of confidence.

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As for the mechanics, Dogecoin payments are known for being simple, whether a user is sending $0.10 or $10.00. Doge is sent over the internet from one digital wallet to another, and transactions are completed in a matter of seconds. Merchants are increasingly accepting Dogecoin as a payment method, the most high profile of which include the NBA’s Dallas Mavericks, AMC Entertainment, and Tesla, though only for merchandise at the EV maker to start.

Dallas Mavericks owner Mark Cuban has summed up the use case for Dogecoin pretty well. Cuban believes that DOGE is the better cryptocurrency as a medium of exchange. He explained that while the Mavericks support both Dogecoin and Bitcoin for ticket and merchandise sales, fans tend to prefer to pay with DOGE and hold onto their Bitcoin, the latter of which they treat more like a store-of-value asset that will appreciate in value.

Musk agrees that Dogecoin is better for payments vs. Bitcoin. One of the reasons the Tesla chief gives is that Bitcoin’s transaction costs are higher than Dogecoin’s. Both Musk and Cuban are known for making Dogecoin news. Both Cuban and Musk have revealed that they own Dogecoin personally, so any investors looking to add the meme coin to their Bitcoin IRA may be in good company.

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.

Dogecoin vs. Bitcoin

While there are plenty of meme coins to go around, Dogecoin has also morphed into a rival of the very cryptocurrency it was created to emulate — Bitcoin. In fact, as Dogecoin made its way up the leaderboard in 2021 as cryptocurrencies continue to jockey for position, market participants began entertaining the possibility of Dogecoin overtaking Bitcoin as the biggest cryptocurrency.

Dogecoin and Bitcoin have some features in common. Both the Dogecoin and the Bitcoin blockchain use the PoW consensus algorithm, which is how the network is secured and new coins are created. But there are also key differences, like energy consumption required for the mining process.

As an example, Tesla previously accepted Bitcoin as a payment method. In May 2021, however, Musk pulled the plug on Bitcoin payments at Tesla after expressing concerns about the use of fossil fuels in Bitcoin mining. While Dogecoin similarly relies on mining to secure the blockchain and create more DOGE, it’s known to be less energy-intensive vs. Bitcoin.

On the other hand, Dogecoin’s very reputation is wrapped up in it being an internet meme coin, while Bitcoin has history on its side as the first and largest cryptocurrency per Market Cap. Investors who are on the fence about which coin to invest in, particularly large institutions, might prefer the tried and true option.

When it comes to supply, Bitcoin tends to shine due to the cap of 21 million coins ever being mined, making it more scarce and potentially valuable. Bitcoin’s finite supply is attractive from an inflationary standpoint, while Dogecoin’s unlimited supply is viewed as an inflationary risk by some. Mark Cuban has defended Dogecoin’s infinite supply, arguing that it “doesn’t diminish it.”

Source: Twitter

Where Dogecoin shines is on the speed of transactions, which is what makes it such a good choice for payments. The Dogecoin blockchain can handle approximately 33 transactions per second (TPS), compared to just seven for bitcoin.

Whether you prefer Bitcoin or Dogecoin, you could be gaining exposure to two of the cryptocurrencies that investors have the highest hopes for in the industry.