Dogecoin is inflationary, worse crypto as a store of value, no institutional investment support, no staking reward, has limited functionality, and is not better than USD. Thus, investors are actively avoiding this crypto. It’s why the Dogecoin price is not going up.
Each of the points discussed below is the reason investors are avoiding Dogecoin. Without enough money flowing into this crypto, its price will not rise.
Inflationary But No Staking Reward:
A Crypto that has no supply cap does not mean it’s bad crypto. Ethereum (Ether), Polkadot (DOT) are also inflationary coins. However, the critical difference is that Polkadot and Ethereum is a proof-of-stake blockchain, whereas Dogecoin is a proof-of-work blockchain. You can invest your cryptos in the proof-of-stake blockchain and earn 3% to 13% as a staking reward. Whereas, Dogecoin has no such mechanism.
An investor’s primary goal is to maximize profit. If I have money and my options are Dogecoin, Bitcoin, Ethereum, I will choose Bitcoin, Ethereum, and Polkadot over Dogecoin. Bitcoin is now considered digital gold, and Ethereum has a versatile use case and the second most popular crypto. Moreover, Polkadot and Ethereum will allow us to earn staking rewards.
No Coin Burn:
Bitcoin is deflationary. Even though Ethereum and Polkadot are inflationary, these networks burn coins on various occasions, reducing the number of cryptos on the blockchain.
Moreover, miners (validators on Polkadot) put millions of cryptos as collateral to become active miners on these networks, reducing the number of circulating tokens. Thus, high demand, low supply drive up the price.
On the contrary, Dogecoin does not burn coins.
Bitcoin miners can’t mine Ethereum or vice-versa with the same hardware. But, Doge is merged with Litecoin. It’s primarily to encourage Litecoin miners to support Doge blockchain.
To keep these miners, Doge rewards 10,000 coins per minute. At this rate, each day, 14.4 million Doge is added to the blockchain. We found that most of the miners don’t hold this crypto. They convert their newly minted coins into Bitcoin, Ethereum, or other cryptos.
To keep the Dogecoin price steady, 14.4 million x (Doge current price) US dollar has to flow into this blockchain; or more money; otherwise, its price would never go up. For this reason, a lot of investors are avoiding this coin.
Bitcoin is deflationary and considered digital gold. Ethereum has smart contracts and various other uses. Bitcoin and Ethereum are the most widely accepted cryptos in the industry. Polkadot allows different blockchain to communicate with each other.
On the contrary, Dogecoin has no smart contract; it’s inflationary, and a handful of businesses accept it.
We have two options:
- Buy Bitcoin, Ethereum and see our investment rise, or
- Buy Dogecoin and hold, hoping that its price would rise when many businesses start accepting this coin.
For an investor, choice “1” is much safer than “2.”
We are not Elon Musk. Elon Musk can buy millions of Dogecoins and hold them for 10 to 15 years. He is the wealthiest person in the world, but we are not.
Limited Buying Options:
Every crypto exchange in the world supports Bitcoin and Ethereum trading. We can even use Paypal to purchase them.
However, Dogecoin purchasing options are minimal, especially in the US. Except for a few, most of the exchanges don’t carry this coin. For example, Coinbase doesn’t support Doge. Thus, even if many people want to invest in Dogecoin, they can’t.
No Institutional Support:
Dogecoin’s price will never go up unless institutional money flows into it. Most of the big banks, hedge funds, and companies only buy Bitcoin. Tesla bought Bitcoin even though Elon Musk is the biggest proponent of Dogecoin.
According to the Federal Reserve, the top 10% rich in this country controls 70% of the wealth. In contrast, the bottom 50% of people hold only 2% of the USA’s wealth. Without the top 10%, Dogecoin’s price would go nowhere.
Everyone knows that Billy Markus and Jackson Palmer started Dogecoin as a joke. They started this coin to mock Bitcoin, Litecoin, and other cryptos. They believed that cryptocurrency is absurd and no one should take it seriously. Billy Markus and Jackson Palmer created Dogecoin to make fun of cryptos.
As a result, the central crypto community always hated Dogecoin and avoided this coin. They say that Dogecoin was created as a joke and should be treated as such. This mentality may change in the future, but until then, no one would take Doge seriously.
Not Store of Value:
We have forex and stocks. Forex is best for scalping, whereas stocks are best for holding long term.
Those who want to invest in cryptocurrency prefer Bitcoin because it is a store of value. Whereas, Dogecoin is the worst crypto as a store of value.
Emotional investment decisions always bring sorrow. Thus we found that pragmatic investors avoid Doge but buy Ethereum or Bitcoin.
USD Better Than Doge:
Dogecoins’ only use case is that we can use it to purchase something. However, this crypto does not provide us any benefit over the US dollar. Here is a table that compares the US dollar vs. Dogecoin.
|Everyone accepts the US dollar||A handful of merchants accepts Doge|
|A payment transaction takes less than 1 second||A payment transaction takes 1 minute|
|Right now, it has a lower inflation rate||Right now, it has a higher inflation rate|
|Inter-bank, inter-account ACH transfer is free||Every transfer has an associated fee|
|A fraudulent transfer is reversible, trackable, and punishable by law||Fraudulent Dogecoin transfer due to hacking can’t be reversed or tracked. It’s lost forever|
|Easy to understand||Technologically too complicated for most people|
|1 USD = 1 USD||Dogecoin is pegged against USD. If you sell Dogecoin at a profit, you have to pay IRS tax|
Dogecoin does not solve anything. It has no benefit over the US dollar. So, why would people replace their US dollar with Dogecoin? Dogecoin is a currency, but it’s not better than USD in any way.
In short, other than being a cryptocurrency, Dogecoin has no utility. It’s why investors are avoiding this, and as a result, its price is going nowhere.