Is Dogecoin (DOGE) Safe?
As is the case with any investment, Dogecoin is not free of risk. But the debate on whether Dogecoin really is a safe investment has gained global attention due DOGE’s maddening price rally and celebrity endorsements has endeared it to more crypto investors and traders. On the flip side, it has also attracted the attention of cybercriminals whose activity in the crypto space is speedily gaining traction.
Crypto Head, an online crypto news outlet, for instance, reports that crypto-related scams have increased from 1044 (reported in UK, Australia, and the US in 2016) to close to 160,000 in 2020. During this time, the Federal Trade Commission (FTC) also reports that the amount of money lost to these criminals has also increased tremendously. Between October 2020 and May 2021, for instance, the FTC reported that digital currencies worth more than $80 million had been stolen, with the median loss being $1900 per investor.
Looking at these gory statistics and Dogecoin’s untamed volatility owing to its unprecedented, one can’t help but wonder if the coin really is a safe investment.
In answering this question, we will look at the risks Dogecoin investors are exposed to, the measures that you can take to keep your DOGE safe, and everything you need to know before investing in Dogecoins.
What To Consider Before Buying Dogecoin (DOGE)
First, you need to understand that Dogecoin ranks highly on the list of the most volatile crypto investments. Your investment in Dogecoin is, therefore, not safe as they are constantly exposed to impermanent loss due to the constantly fluctuating Doge prices.
You also need to understand that, unlike most conventional investment products that have a reserve value or cryptocurrencies that draw value from the applicability of their Blockchain technologies, Dogecoin derives much of its value from pure speculation and celebrity endorsements.
You also need to consider the fact that Dogecoin doesn’t have an absolute maximum token supply. It is actively mined to date, with more than 135 Billion coins being added to its already bursting supply. Crypto experts, however, argue that while the ease of mining makes it possible for more Doge enthusiasts to earn free coins, it has the negative effect of keeping Dogecoin’s prices at a minimum.
While casting doubts over Dogecoin’s ability to ever reach $1, several crypto experts have argued that the constant addition of coins creates a demand/supply imbalance, which inhibits meaningful value growth.
Read Also: Best Methods On How to Earn Dogecoin Fast
What Are The Risks Associated With Dogecoin (DOGE)?
The biggest threat to your Dogecoin investments today is the possibility of losing it all to hackers. The alarm has already been raised about the number of individuals who are turning to hacking as a career. Initially, hacks would be perpetrated by lone individuals, and their impact was also minimal.
Today, however, professionals are grouping (some allegedly backed by governments/state actors) and combining efforts to execute large-scale digital currency heists against investors, crypto exchanges, and digital wallets.
In addition to the hacking threats, Dogecoin investors also have to contend with its higher than average volatility. Even though it operates in the crypto industry, where price volatility has been accepted as the norm, some crypto experts have gone ahead and described it as the exception. By investing in or trading the altcoin, therefore, you risk losing the investment to its wildly fluctuating prices.
There is also the risk that the cryptocurrency may at one time become obsolete, seeing that it has no intrinsic value. Unlike most other cryptocurrencies that derive value and sustainability from their blockchain technologies, Dogecoin is a meme currency that seeks to solve no real-world problem other than add “fun” to Bitcoin trading. The Motley Fool writes that while its “price may be surging, that doesn’t mean it’s a good investment.” Multiple other crypto experts and crypto investors like Shark Tank’s Kevin O’Leary have also cautioned against Doge investments saying that he doesn’t consider Dogecoin to be an investment.
Other scams to look out for
Pump and dump/price manipulation schemes
In a typical pump and dump scheme, an investor or group of investors join hands to create an artificial price rally by buying a lot of Doge coins. This triggers a buying spree that sends the cryptocurrency’s prices skyrocketing. As soon as the price hits a peak, the investors liquidate their holdings and exit the market leaving everyone else holding the bag.
When one doesn’t have enough cash to inspire a pump and dump scheme, they present themselves as an expert in Dogecoin affairs in order to gain investor confidence. They will then buy as many coins as possible at relatively low prices, issue misleading information aimed at triggering a price jump, and dump their holdings at peak prices. Dogecoin is susceptible to pump and dump as well as price manipulation schemes.
Both the Federal Trade Commission (FTC-US) and the Financial Conduct Authority (FCA-UK) have highlighted fake website/app/DeFi protocol scams as one of the leading ways of losing money when investing in cryptocurrencies like Dogecoin. In this case, scammers create websites and apps that replicate the appearance and feel of leading crypto exchanges.
They then send these links to crypto investors alongside alarming messages that prompt them to either key in their logins or attempt to change passwords. Instead of connecting them to the exchange or wallet, however, these sites collect their login credentials and use them to steal their digital assets.
Check Out: Pros and Cons of Investing in Dogecoin
How To Keep Dogecoin (DOGE) Safe?
There are a few steps that every Dogecoin investor can take to secure their crypto investment from the different risks and scams.
For starters, you need to learn how to choose a crypto exchange/brokerage. Whitemark, the URLs for genuine crypto websites and wallets, avoid clicking on suspicious and unsolicited links and learn how to spot fake websites and apps.
Additionally, deter crypto hackers by activating all the security features provided by the crypto exchanges and wallets. Activate multi-factor authentication for logins and crypto transfers, enable multi-signature functionality where possible, and use strong and unique passwords.
If you must engage Dogecoins, most crypto experts advise that you trade the meme currency and not look at it as a long-term investment. George Chrysochou, the Global Marketing Manager at Financer.com, for instance, said, “without a proper team, technological development, and roadmap, Dogecoin will most likely not be a reliable investment.” Further affirming Kevin O’Leary’s advice for long-term investors to keep off the joke currency.
Dogecoin (DOGE) Security Vs Privacy
Keeping your Dogecoin assets safe should start by understanding the difference between crypto security and privacy and the power you have in guarding either.
Dogecoin security here refers to the art of protecting your Doge digital assets from loss via hacks, malware, and scams. A Dogecoin security discussion, therefore, involves identifying the different risks facing your digital assets and exploring ways in which you either avoid them or minimize the impact of loss if they do occur.
Dogecoin privacy, on the other hand, relates to how your personal and transaction data is handled on the dogecoin network as well as on exchanges and crypto wallets that support Dogecoins. It involves identifying individuals and entities with access to your personal information and dogecoin transaction data, looking at the ways in which they interact with it, and measures are taken to protect it from prying eyes.
Bottom Line: Is Dogecoin A Safe Investment?
No, the majority of crypto analysts and investment gurus will tell you that Dogecoin is not a safe investment. Some of the reasons most people don’t consider it a good investment include the fact that it doesn’t have a roadmap, its blockchain is a Bitcoin duplicate with no real-world use, the fact that it doesn’t have a maximum supply limit, and that it has no intrinsic value.
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Virtual currencies are highly volatile. Your capital is at risk.