In the context of the current economic instability, both casino games with the hope of getting a fabulous jackpot using the first deposit bonus in Australia, and investing has become a basic human need and is practically equated with survival. We all remember well the spring quarantine in 2020, the “forced rest” and have already enjoyed the lockdowns.
The consequences of such measures have been disastrous for some people and companies without a financial cushion.
At such moments, the value of investing is especially acutely realized and the question already arises not “yes or no”, but “how and in what”.
In this article, we will consider two popular directions for investing in cryptocurrency, and also outline their main advantages.
Bitcoin or Dogecoin?
As you know, last year the value of bitcoin jumped by more than 600%. In turn, Dogecoin has grown by an incredible 2,400%. In other words, the $ 40,000 invested in Dogecoin a year ago would have increased to $ 1 million by now.
But these impressive achievements are a thing of the past, so the question arises: which of the two currencies is better to buy right now?
Bitcoin and Dogecoin have one big thing in common: both currencies are based on blockchain technology, an ingenious peer-to-peer system designed to be highly transparent and secure. To understand why this is important, let’s take a look at how cryptocurrency mining works.
In simple words, all transactions that take place on the Bitcoin (or Dogecoin) network are combined into blocks. Miners use powerful computers to solve complex mathematical problems.
As soon as the problem is solved, the miner earns cryptocurrency, and the block is added to the blockchain (that is, all previous transactions are permanently recorded).
This is why Bitcoin and Dogecoin are decentralized currencies. Miners earn tokens for solving blocks, and after all other nodes (computers) on the network have verified the solution, the block is added to the blockchain. In other words, no central bank is required to issue or track the currency.
The network will take care of this on its own. Unlike fiat currencies such as the US dollar, where the central bank plays the role of issuer and registrar.
Moreover, since all nodes are interconnected, it is almost impossible to attack the blockchain network or falsify information. In fact, this would require a person to control 51% of the processing power on the network, which sounds incredible.
Despite the similarities, Bitcoin and Dogecoin have several key differences. And these differences are very important for their long-term prospects.
Firstly, Dogecoin mining is currently not limited in any way. This means that miners can continue to solve blocks and earn new Dogecoins all the time. By comparison, Bitcoin is capped at 21 million tokens, of which 18.7 million already exist.
After the formation of every 210 thousand blocks, the reward is halved. In other words, at some point in the future, the reward will be virtually zero. And after that, bitcoin miners will only be able to receive transaction fees.
Like gold and other precious metals, this scarcity should make Bitcoin more valuable than Dogecoin. But bitcoin has another advantage – it is the most widespread and most valuable cryptocurrency. This fact may seem trivial, but it is very important.
As of January, there were over 4 thousand different cryptocurrencies. And whether you consider any of them to be smart investments or not, it’s hard to deny the fact that such a significant amount of cryptocurrency poses a lot of difficulties.
In other words, most of the value will eventually be consolidated into just a few of these tokens. And Bitcoin’s huge advantage practically guarantees that it will be able to bypass Dogecoin.
What is the Bottom Line?
Investors should remember that both Bitcoin and Dogecoin are highly volatile investments. For example, bitcoin lost more than 80% of its value from December 2017 to May 2018. Therefore, if you do decide to invest, take wild volatility into account.
Investors should also be aware that there are very smart people among both proponents and opponents of cryptocurrency.
For example, Katie Wood (CEO of Ark Invest) and Jack Dorsey (CEO of Square) are big fans of Bitcoin, while organizations like Goldman Sachs express skepticism, and famed economist Nouriel Rubini called Bitcoin “the mother of all scammers”.