If you’re bored with index funds and you’re ready to roll the dice on one of those sexy and mysterious new alternative investments, you have plenty of options. One of those options involves a Japanese dog, Elon Musk and what appears to be fake money from a toy cash register.
That’s Dogecoin (DOGE), and it’s here to rescue anyone who couldn’t bear to wait one second longer for the latest next-big-thing cryptocurrency that promises to out-Bitcoin Bitcoin.
What Is Dogecoin?
Dogecoin is a joke — or at least it started out as one. Two software engineers — IBM’s Billy Markus and Adobe’s Jackson Palmer — created Dogecoin in 2013 to lampoon all the altcoin wannabes that popped up after Bitcoin rose to blockchain fame. As a logo, they chose a Shiba Inu from a meme called Doge, which went viral that same year.
Like Bitcoin and all cryptocurrency, Dogecoin is:
Decentralized — it’s not issued or backed by a government or bank
“Mined” independently and recorded on a blockchain
Anonymous — privacy is part of the reason crypto is so popular
Unlike Bitcoin and other “deflationary” cryptocurrencies that exist in limited quantities, there is no cap on “inflationary” Dogecoin.
It started as tech-geek satire, but Palmer and Markus were skilled, experienced and imaginative professionals. Their blockchain, proof-of-work process and minting procedures were stable, efficient and secure. Crypto wonks recognized its potential and the fake currency began amassing a very real following.
More Economy Explained: What Is Inflation and What Does It Mean When It Goes Up or Down?
It already had achieved cult status by the time Tesla CEO Elon Musk started tweeting about Dogecoin in 2021. The props from Musk made Dogecoin a household name and sent its value soaring. It’s now one of the most-used altcoins, particularly for tipping on social media.
How Much Is Dogecoin Worth?
Investors who are put off by the $59,000 asking price of a single Bitcoin will be happy to know that comparatively, Dogecoin trades at a bargain. As of March 19, Dogecoin was trading at $0.0585 per coin. A single Bitcoin would have bought you almost exactly 1 million Dogecoins. But as of May 4, the price was up to $0.53, according to CoinDesk — a huge increase for people who had already bought in.
Is Dogecoin a Good Investment?
If you’re reading a basic primer like this, you’re probably better off sticking with your ETF until you learn the ropes. Investing in crypto is not like buying shares of Walmart or UPS. First, it’s incredibly volatile. Wild price swings that would make the common investor queasy are par for the course.
The way that cryptocurrency is generated, distributed, validated and accounted for is completely foreign even to most tech-savvy investors. It’s not backed by any bank, government or corporation, and despite the fact that it feels like everyone’s talking about it, crypto is still a highly experimental niche concept that the vast majority of people know almost nothing about and are nowhere near adopting.
There’s a steep learning curve to investing in cryptocurrency. It requires immersion. If you’re just hearing about Dogecoin now, it’s probably best to invest time in research before you invest a single dollar in an imaginary coin adorned with a picture of a smiling dog.
This article is part of GOBankingRates’ ‘Economy Explained’ series to help readers navigate the complexities of our financial system.
More From GOBankingRates
Last updated: May 4, 2021
This article originally appeared on GOBankingRates.com: Dogecoin’s Major Price Increase: Is It Still Worth an Investment?