Dogecoin was a sleeper for years. However, things changed in 2020 when the developers made technical improvements to it, and Elon Musk expressed his support for such cryptocurrency.
As of today, it has built a passionate following and a market value of more than $1.1 billion.
If you’re interested in Dogecoin and wondering if it’s still a wise investment in 2022, it’s worth knowing if it will ever be capped. Read on to know the answers below.
But before that, here’s an overview of what Dogecoin is:
What is Dogecoin (DOGE)?
Dogecoin (DOGE) is an open-source cryptocurrency launched in December 2013 and is known for its unique logo – an image of a Japanese dog breed Shiba Inu. As of today, it is worth more than $1.1 billion.
Software engineers Jackson Palmer and Billy Markus, the men behind this cryptocurrency, shared that they started Doge to poke fun at Bitcoin. They even deliberately misspelled the word dog to “doge” as a form of a meme. But after receiving interest and positive feedback on social media, Palmer bought the domain dogecoin.com.
Soon, Dogecoin gained a following, and by late 2017, it was already participating in the cryptocurrency bubble. While it lost much of its value in 2018, it continued to have a core of supporters to use and trade it for content on Reddit and Twitter.
By May 2021, Dogecoin prices rose 14% higher after Tesla CEO Elon Musk said it was his favorite cryptocurrency. It was also that time when the American snack brand Slim Jim made Dogecoin central to its social media and marketing efforts.
By mid-2021, it became among the top five cryptocurrencies by total market cap. But how does Dogecoin work, anyway?
How Does Dogecoin Work?
Dogecoin runs its dedicated blockchain. It constantly updates its digital ledger with new transactions, and its network uses cryptography to keep all cryptocurrency transactions secure.
You can spend this cryptocurrency with any merchant that accepts it. Several businesses accept this cryptocurrency, including the Dallas Mavericks and Elon Musk’s SpaceX. Some DOGE holders even use their crypto coins to tip content creators on social media platforms.
You can purchase DOGE by creating an account with one of the cryptocurrency exchanges, such as Coinbase, Kraken, and Binance.
What Is a Cap in Crypto, and Why Is It Important?
For a cryptocurrency, a supply cap refers to the upper limit of new cryptocurrency coins or tokens that will ever be created.
Additionally, once it reaches the maximum supply of a cryptocurrency is reached, there won’t be any new coins produced, minted, or mined in any other way. The protocol will stop issuing block rewards once miners reach a certain number of coins, and it will only collect transaction fees.
Bitcoin, for instance, is estimated to reach its cap by about 2140. No new Bitcoins will be released once it reaches the 21 million coin limit.
Another way to think about a supply cap or market capitalization is to have a rough estimate of how stable an asset is going to be. Like how you assess that bigger ships can navigate more safely in heavy weather than smaller ones, a cryptocurrency with a large market cap is more likely to be a stable investment than those with a smaller market cap.
Digital currencies with a small market cap are susceptible to market whims. They can see dramatic losses or huge gains. Bitcoin and Ethereum are two cryptocurrencies with a large cap.
So, Will Dogecoin Ever Be Capped?
It is not clear if Dogecoin will ever be capped. Since it existed, no cap has been on the Dogecoins because the developers prefer an unlimited supply of the coin in the market.
But it is also because of such that the price of Dogecoin may fall. Let me explain why
As the price of Dogecoin increases, more people will have an incentive to mine such cryptocurrency. They can then move their mined Dogecoins to their Ledger wallet. It is expected that more and more miners will eventually go online and sell their coins into the market, causing the DOGE’s price to fall.
How Much Dogecoin is Left?
Dogecoin has unlimited Dogecoin supply, meaning you can mine such a cryptocurrency as you want. There’s also no limit on the creation of it.
Moreover, statistics similarly share that about 10,000 new Dogecoins mined daily. That’s why the number of coins circulating in the cryptocurrency market keeps increasing.
There are different theories as to why Dodgecoin doesn’t have a cap. Some experts believe it was an international move by the developers because they wanted a currency that would motivate people to spend.
The Pros of Dogecoin Investment: Should I Invest?
Dogecoin is a decentralized cryptocurrency. It means that there’s no single point of failure. It likewise has a unique market position, a factor that’s critical to success. It has built a community as the first and biggest meme count.
The third benefit of Dogecoin is that it’s a convenient cryptocurrency for daily transactions. And as you know, the key to a cryptocurrency’s long-term growth is adoption. You can expect that with Dogecoin. This cryptocurrency’s transactions are relatively fast and can last only a few minutes.
I find Dogecoin a good cryptocurrency investment even this year because of all the benefits I mentioned. Some would disagree, saying that it doesn’t derive value from another asset or doesn’t add value to the financial system as Ethereum does.
Still, it is a cryptocurrency that’s not just highly hyped. Instead, it has proven its capacity to survive since it became a thing in 2009.
In addition, the low amount of electricity needed to mine and use Dogecoin, unlike Bitcoin, can also boost its attractiveness as a promising cryptocurrency alternative among the younger demographics. This group of people makes up the majority of cryptocurrency enthusiasts. Moreover, Dogecoin only uses 0.12 kilowatt-hours of electricity for every transaction vs. Bitcoin’s 707 kilowatt-hours.
I hope I was able to answer your question. For now, the developers behind Dogecoin emphasized that they don’t intend to put a cap on it. Some fans in the cryptocurrency community are hopeful, though, that there will be upgrades on it in the coming future.
Want to know more about crypto investments? Check out our other cryptocurrency guides at FoxyTrades.com.