2021 was the year of cryptocurrency, with popular coins like Bitcoin and Ethereum growing to all-time highs. Of course, Bitcoin and Ethereum are somewhat “established” in the world of crypto, and hence their rise shouldn't have been too big of a surprise. However, when it comes to investing in cryptocurrencies, there's one coin that has honestly shocked the world: Dogecoin.
Dogecoin rose more than 7,000% in the first half of 2021 and has garnered the support of big names in the investing / leadership space, including Elon Musk and Mark Cuban. Initially, nothing more than a virtual meme currency, Dogecoin has attracted the attention of Gen Zs, Millenials, and celebrities alike, propelling it onto the mainstream crypto market.
With so much movement and chatter about Dogecoin, it's completely understandable to want to keep up with the Joneses and know how to buy Dogecoin. (If you had tossed in $1000 at the beginning of the year and sold it in December, you would have increased your money 30-fold at least). This post will run through everything you need to know before buying Dogecoin and give you the steps to buy Dogecoin. Ready to learn more about this Shiba Inu-inspired coin? Let's get right into it.
What is Dogecoin?
When it comes to currencies like Dogecoin, it's essential to understand the basics before diving right in.
Dogecoin is a cryptocurrency created in 2013 by software engineers Billy Markus and Jackson Palmer as a joke. They decided to name the coin after a popular meme of “doge” (featuring a Shiba Inu dog).
For many years the value of the coin remained relatively flat, and there was no significant growth. However, in 2021, Dogecoin gained a considerable following and its market cap shot up to $36 billion. How? Through the support of the coin by high-profile celebrities and business people like Elon Musk, Mark Cuban, and even Snoop Dogg. Today, the digital currency has a huge community, and the general market sentiment towards Dogecoin is becoming more and more favorable.
Should You Even Buy Dogecoin?
With its solid performance in 2021 (and lots of media hype), Dogecoin may seem like a desirable option for investors looking to gain exposure to the cryptocurrency market and build wealth.
That being said, it's important to remember that to invest in Dogecoin is the same as investing in any other vehicle: you need to do your research and set up realistic expectations.
Unlike stocks (and the USD), the cryptocurrency market is decentralized and completely peer to peer, meaning that traders have the potential to realize some serious gains, but also that there is little protection if you get scammed and lose everything.
Furthermore, Dogecoin IS at a very high value (as of this writing). It does not have the revenue of stocks supporting its market capitalization (in other words, Dogecoin is fueled purely by investor sentiment). Most of its movement is based on more prominent cryptocurrencies (like the Bitcoin price) and how often Dogecoin is being brought up in the media.
That being said, the future for Dogecoin does remain quite optimistic as it continues getting added to different trading platforms as mainstream digital currencies like Bitcoin continue rising in value.
How To Buy Dogecoin: Step by Step
So you've done your research and decided that you want to purchase Dogecoin, whether to enter the digital coin market or acquire some virtual money or add to your coin wallet and earn some interest. You'll probably be wondering how to buy Dogecoin exactly. Here's how to do so, step by step.
Decide on an Amount
Before diving into Dogecoin, make sure you decide on a reasonable amount that you're going to purchase. When thinking about this question, try to consider a few of the following factors:
- How much do you know about cryptocurrency (what a ledger is? what about a mining pool or bitcoin exchange?)
- What purpose does Dogecoin serve in your portfolio?
- How much volatility are you willing to withstand (since most virtual currencies are known to be highly volatile)
- What is your risk tolerance?
Experts recommend that you don't invest more than you can afford to lose regarding cryptocurrencies. If you're looking for inspiration when it comes to investing, check out these interesting investing quotes.
Pick a Cryptocurrency Exchange
To buy Dogecoin, you'll need to open an account on a cryptocurrency exchange. This exchange is an online place where buyers and sellers meet to buy-and-sell cryptocurrencies. Some popular exchanges include Coinbase, Binance, and Kraken.
If you don't want to go through the trouble of opening an account, you can also consider using the investment platforms that you already have. For example, some brokerages like Robinhood allow you to buy cryptocurrency directly from their platform.
Just make sure that whatever exchange platform (coin exchange) you choose offers Dogecoin. Though Dogecoin has gained tons of popularity, it's not on all exchanges yet.
Choose a Payment Option
Before buying any crypto-currency or making trades, you'll need to deposit some money in your account. Most exchanges will let you deposit money directly from a chequing or savings account. Some will accept wire transfers or PayPal transfers.
Usually, your money will be available immediately once you do a bank transfer. Still, in some cases (especially if you deposit more than $1000), you might need to wait a few days for your transfer to clear before buying digital coins.
Place a Dogecoin Order
Once your money has gone through and is sitting in your account, you can place an order for Dogecoin. You can search for Dogecoin via its name or by typing in its ticker: DOGE. Then, specify how many Dogecoins you want to buy (or what dollar amount you wish to pay), and your anonymous purchase of Dogecoin should go through.
Most systems work on an instant exchange meaning that you'll receive the coins when you place the order. Like other assets that aren't centralized, you can buy Dogecoin 24/7 (making cryptocurrency trading and cryptocurrency mining all the more exciting).
Consider Storing Your Dogecoin
When you buy Dogecoin, it is typically stored directly on the exchange where you made the purchase. However, some people prefer to keep their coins in a cryptocurrency wallet (or blockchain wallet). These are designed to prevent thieves (hackers) from stealing your digital money like genuine wallets.
When considering wallet software, you can choose either a hot wallet or a cold wallet. A hot wallet is an online wallet in that it's still connected to the internet. In contrast, a cold wallet (or cold storage) is typically a piece of physical hardware you can disconnect (making it less susceptible to getting hacked). However, a cold wallet generally is more expensive than a web wallet, and you run the risk of forgetting the password you need to access the wallet.
How To Sell Dogecoin
Though it does indeed take several steps to buy Dogecoin, the process for selling Dogecoin is quite simple. All you have to do is go to your exchange website (the currency market), enter the amount you'd like to sell, click confirm, and your order will be sent through and processed.
Though Dogecoin is not a fiat currency (and blockchain IS considered “untraceable” with anonymity), you'll likely need to pay capital gains tax if you make money online when selling it. Virtual coins can still make you money, and any money you make is subject to all of the same tax rules as your regular income. If you're not sure how to report gains made on your Dogecoin trades, be sure to consult a tax professional.
Recap: How To Buy Dogecoin
With the value of Bitcoin and Ethereum on the rise, many investors have been looking for an alternative way to break into the cryptocurrency market. After all, who doesn't want the potential to take $100 and turn it into $10,000?
Though Dogecoin initially started as a joke, it has garnered tons of support and built a strong community around itself over the past year. Because of this (as well as the ripple effect of having many high-profile celebrities supporting it), Dogecoin's price has skyrocketed and earned money people a hefty profit.
Still, it is a precarious investment, and experts caution that you should only invest as much as you're willing to lose. Beginners in the crypto market with no experience and low-risk tolerance will probably allocate a different percentage of their portfolio than young crypto veterans who can withstand tons of volatility.
If you DO decide to purchase Dogecoin, this post has hopefully helped to clear up any of your confusion. As a quick recap, here are the five steps you should follow to make a Dogecoin investment:
- Decide on the amount of money you're willing to invest into Dogecoin.
- Pick out a cryptocurrency exchange or brokerage (that has Dogecoin listed).
- Choose a payment option and load up money into your account.
- Make an order or Dogecoin!
- Consider storing your Dogecoin on a wallet for more security (and also to earn interest on it potentially).
So there you have it: how to buy Dogecoin, step by step. As always, be sure to do your research before making any financial decisions. That being said, once you've decided on an appropriate amount to invest, don't be afraid to dive in. Who knows, maybe Dogecoin will rise another 5000% in 2022!
This post originally appeared on Wealth of Geeks.