Does Dogecoin have the potential to end Bitcoin?
Will Bitcoin bite the dust?
Cryptocurrencies have seen large volatility in the last few weeks. Inflation expectations skyrocketed, the ten-year treasury shot through the roof, but at the same time, bitcoin started falling. This is where it gets unbelievable because bitcoin prices are usually aligned with the ten-year treasury. Also, the reason most people buy bitcoin is because of its rising value, compared to currency, which can be affected by inflation.
Now, most people would tend to blame Elon Musk in this situation, as he has the power to move asset prices. This was proved countless times before, and yet again on the 13th of May when he tweeted about bitcoin.
“Tesla has suspended vehicle purchases using Bitcoin. We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel.
Cryptocurrency is a good idea on many levels and we believe that it has a promising future, but this cannot come at great cost to the environment.
Tesla will not be selling any Bitcoin and we intend to use it for transactions as soon as mining transitions to more sustainable energy. We are also looking at other cryptocurrencies that use <1% of Bitcoin’s energy/transaction.”
– Elon Musk
As the enthusiasts already know, the market immediately responded to this by immediately selling off, causing bitcoin’s value to tumble. However, the value of Bitcoin was already tumbling before Elon’s tweet. If anything, Elon only helped accelerate the falling of Bitcoin and raised another problem concerning Bitcoin’s energy usage. Bitcoin is a blockchain, and it takes a certain amount of energy to complete a transaction. In fact, the popular crypto uses so much energy that Musk had to put out another tweet that shows the exact number of electricity used for Bitcoin transactions. Along with Elon, even other successful billionaires are raising alarms about its impact on the environment.
Berkshire Hathaway Co-founder, Charlie Munger said:
“Bitcoin is worthless, artificial gold,” and even went as far to mention “The fact that it’s clever computer science doesn’t mean it should be widely used, and that respectable people should encourage other people to speculate on it,”
This is making investors consider the other cryptocurrencies available to trade in the market.
Will Dogecoin emerge victorious?
Bitcoin is not the only crypto out there. In fact, there are around 4000 cryptocurrencies on the planet, but there is one that is getting some special attention. The one and only Dogecoin hovers around the value of 50 cents in the present. This is minuscule compared to Bitcoin, which is flying way above $40,000 in the present. However, is $DOGE worth the hype? And does it have all to emerge victorious in this crypto war?
If there is one bold feature of Dogecoin, it is that it was made as a joke. But how is this an advantage over Bitcoin? The point here is that Dogecoin revolves around the hype and one who follows this hype-space religiously, a major advantage over a regular investor.
Alongside the hype shaping Dogecoin’s value, it actually has its own unique features.
Doge has “deterministic inflation” meaning the amount of inflation is defined. There is no uncertainty as to the amount created and it’s inflation percentage. Which could allow it to grow as a valid payment mechanism. The unknown is whether enough people will use it this way.
This means that dogecoin has a defined inflation percentage, which makes it a reliable currency. After all, that is exactly what people want; a currency to hold onto for the long term. Many people think of dogecoin as an inflationary currency.
This is incorrect, as there are 50 billion Dogecoins being mined each decade; which is equal to 5 billion in a year. Hence proving that eventually, it will be a currency that will stop inflating at a point in time. Investorplace.com better describes it in their article:
“By 2040, there will be no more Bitcoins able to be mined. As a result, this will encourage excessive hoarding of the supply of Bitcoins. This will push up the Bitcoin price, but reduce the actual trading volume of the Bitcoins (i.e., deflating the float available).
On the other hand, by allowing five billion Dogecoins per year to increase the supply of Dogecoins for infinity, the supply will grow, but eventually, reach a practical limit. Therefore, we can calculate the inflation rate of the currency over time.”
There is also a chart posted on their website. From this chart, we can conclude that dogecoin will stop inflating after some 120 years:
Surprisingly Dogecoin has another feature
Mining is comparatively more efficient, as it takes machines lesser time and electricity to complete and record transactions. The Gary DeWaal, Chair of Katten’s Financial Markets and Regulation group said:
“Where it takes 10 minutes for the process to ratify new blocks on the Bitcoin blockchain, it takes only one minute on the Dogecoin blockchain,”
We have a long way to go before jumping to any conclusions. However, one thing is for certain: We are headed towards the moon!
What are the major drawbacks of bitcoin?
a) Bitcoin is a blockchain, and it takes a certain amount of energy to complete a transaction. In fact, the popular crypto uses so much energy that Musk had to put out a tweet that shows the exact number of electricity used for Bitcoin transactions.b) Bitcoin is also highly unpredictable, compared to other cryptocurrencies. One of the only ways to predict it is by using the 10-year treasury.c) Due to the complex mathematical equations involved, it takes more energy and time for transactions.
What are the unique features of dogecoin?
a) Dogecoin has a defined inflation percentage, which makes it a reliable currency. After all, that is exactly what people want; a currency to hold onto for the long term.b) Mining is comparatively more efficient, as it takes machines lesser time and electricity to complete and record transactions.c) Dogecoin revolves around the hype and one who follows this hype-space religiously, a major advantage over a regular investor.
What is the value of dogecoin, compared to bitcoin at the moment?
Dogecoin hovers around the value of 50 cents in the present This is minuscule compared to Bitcoin, which is flying way above $40,000 in the present.