Forget Dogecoin: Buy This Tech Stock Instead
Dogecoin (CRYPTO:DOGE) has been on fire lately. The price of a single token has skyrocketed by more than 3,000% in the last year, and it’s up by 25,000% over the last five years. Most assets never see those kinds of gains, but that doesn’t make Dogecoin a smart investment.
Cryptocurrencies in general come with great risk and volatility, and even among them, Dogecoin skews toward the riskier side of the spectrum. Rather than putting money into such a highly unstable asset, investors looking to cash in on the cryptocurrency craze should consider buying PayPal (NASDAQ:PYPL) instead.
Dogecoin: Tulip-mania
Despite its recent massive gains, there are several problems with Dogecoin. One, in particular, should give investors pause.
The potential supply of Dogecoin is infinite. Unlike Bitcoin, which will be limited to 21 million tokens total, there is no upper bound on the number of Dogecoin tokens that can be mined. As long as miners keep building the blockchain, more will be created. In fact, there are already 129 billion tokens in existence.
That’s a problem because eventually, the supply will exceed the demand. At that point, economic theory suggests prices will fall. To put that in context, precious metals like gold and platinum have high values because they are scarce. But what if gold and platinum were everywhere? They wouldn’t be worth much.
During one of the most famous market bubbles of all time, tulip bulb prices skyrocketed in Holland in the 1630s. Fueled by the overwhelming popularity of the flowers, at one point, a single bulb sold for as much as $750,000 in today’s money. Obviously, that didn’t last, and the so-called tulip-mania bubble burst after a few years.
The point is this: Just because the price people are trading Dogecoin at has increased by a factor of 30 in the course of a year, that doesn’t mean it’s actually worth anything like that much. Sometimes, people get carried away.
PayPal: A better buy
PayPal—unlike Dogecoin—offers a clear-cut investment thesis: Digital payments are becoming more popular with people and businesses around the world, and this fintech company provides the tools that consumers and merchants need to participate in the digital economy. As that trend continues to evolve, PayPal and its shareholders will be well-positioned to prosper.
Moreover, the company’s global network gives it a significant advantage over its rivals (another thing Dogecoin conspicuously lacks). As more merchants join its network, it becomes more valuable for all consumers, because they can spend the money in their PayPal accounts in more places. The same is true in reverse: As more consumers set up accounts on the network, it becomes more valuable for all merchants.
This network effect has driven significant growth for PayPal in several important financial metrics.
Metric 2017 2020 CAGR Active Accounts 229 million 377 million 18% Revenue $13.1 billion $21.5 billion 18% Free Cash Flow $1.9 billion $5.0 billion 39%
PayPal is also establishing itself as a key player in the cryptocurrency economy. Last year, the company announced that users would be able to buy, sell, and hold cryptocurrencies like Bitcoin directly from the PayPal and Venmo apps.
More recently, PayPal launched its Checkout with Crypto service, enabling consumers to fund their purchases with cryptocurrency. And eventually, it plans to bring this functionality to all of its 29 million merchants. That makes it the first major payment processor to directly power cryptocurrency transactions.
If cryptocurrencies truly become mainstream, PayPal should benefit in a big way. But even if they recede into a small niche market or disappear completely, it will still have a thriving business. In other words, this fintech company is a safer investment than Dogecoin, yet it still offers the potential for big gains. That’s why investors should consider adding PayPal to their portfolios.
Tesla Motors (TSLA) - Opinion: The Doge Days Are Over. You Invested in Dogecoin, Now What?
This column does not necessarily reflect the opinion of the editorial board of Benzinga.
Everybody familiar with traditional investing knows that penny stocks are rife with fraud and scams.
Still, with the recent attention on cryptocurrencies because of the tremendous growth of Bitcoin and the social-media interest in Dogecoin, it is worth a quick lesson on how we can define the value of cryptocurrencies.
Doge and Bitcoin are easy ways to come into cryptoland but don’t expect these assets to not move under your feet like a massive earthquake as the entire industry is still in its early days.
I am a Founder and CEO of a crypto company that helps Crypto users HODL their assets, earn interest and take out loans.
Still, even as much as we like the attention and growth that these moments bring, we also need to be careful to educate new users on assets' risks with little to no value or utility.
See also: How to Buy Dogecoin (DOGE)
Instead, if you are reading this because Dogecoin got you interested in digital assets' investment potential, let me help you understand how to determine value through use cases, teams, and more.
Trust me. There are coins in this industry that are just a meme-worthy as Doge, without the same risk.
Why is Dogecoin so popular?
The simplest answer is it has been around since 2014 and went MOON thanks to Elon Musk.
The Tesla CEO has taken a liking of the coin for no particular reason.
It all began on January 28, when he tweeted a cover of “Dogue” magazine. Ever since he has been consistently provoking investors of all types to rush into the coin, this coincided with the events of the Reddit group Wall Street Bets' monumental Gamestop (GME) surge.
People were more tuned in than ever before to running with an investment trend straight from the internet.
Dogecoin is no stranger to being the benefactor of a trend, as it had just been the subject of a TikTok challenge in July 2020.
Why shouldn’t we invest?
I cannot give anyone investment advice, but what I can say is that there are over 15,000 projects in crypto, so one should do some homework before selecting what’s worth big followings time is, money, and effort to invest into that having a coin like Doge be the third most talked about asset in our industry feels too similar to the problems we had with illegitimate projects in 2017.
Jackson Palmer and Billy Markus created Dogecoin at the end of 2013 as a fork (copy) of Litecoin (itself a copy of Bitcoin) and an insider joke.
As an industry, there is no need to hype up a meme for attention anymore– we have real value that nobody can rival.
Don’t worry; there are memes worth investing in!
I get that one of the appeals of crypto is the punk-rock attitude mixed with the culture of trolling and memes.
I’ve been at the receiving end of some great ones myself. If the appeal of holding onto a currency that not only makes you money but fits your sense of humor is something you prioritize, I’ve split these groups up into Memes, Low Cost, and Fun projects.
Meme-worthiness: I assure you that the Decentralized Finance (“DeFi”) segment of crypto is in no short supply of quality projects that have solid fundamentals, great teams, and real use cases behind them and can offer you the same level of meme value as Doge. Projects like UniSwap, Compound, and AAVE all offer value that extends beyond great branding.
Low-cost coins: Dogecoin pumping from fractions to a whole dollar is an appealing concept, and, for many, it feels a lot more possible to invest into with some real weight compared to a Bitcoin that is currently above $50,000.
However, the idea of a crypto project growing 100x is not exclusive to Doge (which has over 128 billion coins in circulation, that is 16 Dogecoin for every human on the planet), nor is it that rare.
Cardano, Algorand, Polkadot, Binance Coin, and CEL tokens have all seen huge profits for investors in just the last year.
New projects are developing right now with real potential to pump from nothing to a dollar and then to the moon.
Fun: If your intention is to have fun and explore the exciting sub-plots in the larger world of crypto, then there are so many projects that can give you that experience while also giving you the value add of usefulness and resource.
Projects like my company that offer high yield on your cryptocurrencies paid out weekly, NFTs like NBA Top Shot that let you own the great moments in basketball, and apps like MyEtherWallet you access hundreds of fun projects right from your mobile phone.
Crypto has come a long way since the early days of useless coins that can be pumped and dumped on unsuspecting newcomers.
The doge days come and go, and there are real horses (nay, unicorns) running through the crypto landscape of 2021.
Today, it is a place of exciting, vibrant projects that offer new financial independence and ownership to the investors themselves.
It is a place that believes in accountability, anonymity, and the occasional asinine project name.
But ultimately, if you have found yourself interested in cryptocurrency because of Dogecoin, I urge you to keep going because beyond the hype, there is a real revolution happening, and we’d love for you to be a part of it all.
By Alex Mashinsky, CEO and Founder of Celsius Network
© 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
DOGE on Coinbase? Dogecoin Investors Bark for Inclusion Ahead of Coinbase IPO
DOGE on Coinbase? Dogecoin Investors Bark for Inclusion Ahead of Coinbase IPO