Dogecoin, a cryptocurrency based on a viral internet meme of a Shiba Inu dog, which started as a joke in 2013, rose its market capitalization dramatically above $88 billion in May this year, and now has placed on top 10 digital coins.
However, according to experts, Dogecoin is not a viable long-term investment and is not good for the crypto market. Here are reasons for this statement:
Increase Inflation Rate
While bitcoin is limited, Dogecoin is always abundant that making itself an inflationary dynamic.
The more coins in circulation, the less each is worth. Dogecoin’s dilution makes it inappropriate for a long-term investment. That feature could also encourage people to spend more coins instead of saving them.
There are currently 132 billion units in Dogecoin circulation, according to data from CoinMarketCap.com. And that number will expand by 5 billion annually to maybe – forever.
Ripple CEO Brad Garlinghouse said: “We’re seeing inflation that we haven’t seen in decades”. With an inflation rate up to 3.8%, Dogecoin is technically outperforming the U.S. dollar, which could hit an inflation rate of 4.2% in 2021 according to the Federal Reserve.
An Investment Channel Not For The Faint Of Heart
Dogecoin has such incredible growth predominantly based on community supports. However, that’s success has some upside.
Experts have warned that any investment in cryptocurrency can lead investors to lose everything, especially altcoins like Dogecoin.
While Dogecoin has the advantage of community strength, this advantage is also a weakness because it depends too much on that strength. Dogecoin is still lacking in technological development and has no supply cap.
Because of the volatility and risk, Dogecoin is not a viable option for the faint of heart.
Of course, no one can predict what will happen to Dogecoin in the future. But at present, we only see fluctuation and bad effects of this cryptocurrency.
Hopefully, this topic provided you with more points of view about Dogecoin.
Check out our predictions and analyses for more informations about the crypto market.