Amid the ongoing decline in the cryptocurrency market, Dogecoin collapsed at a faster rate than other cryptocurrencies, indicating that the bubble could burst soon. On January 15, 2022, Dogecoin reached an all-time high of $0.18, which was also its highest price in 2022. Since then, Dogecoin showed a downward movement. The coin fell around 50% year to date.
Dogecoin
Dogecoin is a meme-inspired cryptocurrency that became quite popular alongside other cryptocurrencies such as Bitcoin and Ethereum. It is based on the popular “Doge” internet meme and features a dog breed called Shiba Inu on its logo. The open-source digital currency was created by Billy Markus in December 2013 as a light-hearted joke that would have greater appeal beyond the core Bitcoin audience.
Driven by Hype and Trend
While the Dogecoin community is rapidly expanding, most of this development is attributed to hype and trends. Tesla CEO Elon Musk's endorsement of Dogecoin was a major factor in the price rise of this cryptocurrency. Through his social media, the billionaire entrepreneur expressed his admiration for the currency multiple times. According to a recent announcement by Elon Musk, aerospace company SpaceX will soon accept Dogecoin for merchandise. Following the announcement, the price of Dogecoin soared as much as 10%. In 2021, Musk's assertion that Dogecoin could be used to purchase Tesla items boosted the currency prices by up to 33%. Dogecoin received endorsement from hundreds of social media influencers such as rock musician Gene Simmons and rapper SnoopDogg, increasing its appeal among investors.
Dogecoin vs Bitcoin
When compared with Bitcoin, Dogecoin is more efficient for payment processing. On the Bitcoin blockchain, the process of ratifying new blocks takes 10 minutes, whereas on Dogecoin it takes just one minute. Another notable distinction is the lack of a lifetime limit on the number of Dogecoins that could be produced. The maximum number of coins that could be minted in a lifetime is capped at 21 million Bitcoins, while there is no such limit in case of Dogecoin.
Lesser Adoption
Dogecoin could be used for payments and purchases, but it is not a very good store of value because there is no limit on how many Dogecoins could be created through mining, which makes it extremely inflationary. That is why fewer numbers of businesses globally are accepting Dogecoin for payments in comparison to other cryptocurrencies such as Bitcoin and Ethereum.
Even though Dogecoin benefited from the endorsement of Elon Musk and other celebrities, its popularity and admiration might not last long unless something radical is done to support this cryptocurrency.
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