Cryptocurrencies have been the talk of the town a long time before the pandemic hit the globe. With Bitcoin slowly using its steam there have been many cryptocurrencies that are becoming famous for being faster and smooth in terms of their function. Ethereum and Litecoin have gained pace in terms of usage. However, Dogecoin has become a prominent name that has been on everyone’s mind for a long time.
In the world of cryptocurrencies, dogecoin has become a prominent name that has been on everyone’s mind for a long time. Ever since Elon Musk started promoting the Shiba Inu meme, people have started taking the dog meme coin very seriously. Many have made their fortune by trading dogecoin and at the same time lost their wealth in chasing short-term gains. Now let’s understand about & will dogecoin ever be capped or not?
What is Dogecoin?
If you are one of those investors who has heard about Dogecoin but does not understand it in detail, this might help you. Dogecoin is a cryptocurrency that is represented by the prominent Shiba Inu meme ‘doge’ created by software engineers Jackson Palmer and Billy Markus. The founders decided to create dogecoin as a joke on the payment system that was addressing the speculations of the cryptocurrency world. One of the distinctive features of dogecoin is that it does not have a cap in comparison to other crypto tokens.
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Why is there no cap on Dogecoin?
Most of the cryptocurrencies such as Bitcoin or Binance Coin have a supply cap that restricts them from doing additional mining of the tokens. But Dogecoin is one such cryptocurrency token that has no supply cap to restrict its mining process. The Dogecoin network has the potential to add 10,000 coins every minute which sums up to 5.26 Billion coins every year. The founders of dogecoin never intended to keep a supply cap since its inception. The following are the reasons why there is no cap on dogecoin:
Prevent Crypto Hoarding
After the 200 sub-prime crisis, Bitcoin was introduced as a symbol for a decentralized financial system that is free of banking or financial regulations. The fiat currency is inflationary due to the quantitative easing that is the government printing the currency every year. Bitcoin has a cap of 21 Million tokens having a limited supply. Many people consider Bitcoin to be a good investment and as a result, start hoarding the crypto tokens to gain profits on the upside. So, to prevent people from hoarding the cryptocurrency, dogecoin does not have any supply cap that can lead to inflation.
Replacing Lost Coins
Blockchain technology enables complete security of the crypto tokens that do not allow any third-party access. The best thing about this is that no one can hack into your account and steal your coins. The only way you can lose your crypto token is through a computer crash or in worst cases losing your smartphone. Bitcoin is one token that can easily be lost and approximately 20% of the overall Bitcoin has been reported to be lost forever. The no cap limit on dogecoin allows you to replace your lost coins in the wallet.
Miners are Rewarded
Every crypto miner gets a block reward for successfully mining a block of the currency. For example, Ethereum rewards its miners with 2 Ether tokens for every new block. In Bitcoin, the block rewards have fallen substantially and beyond a point, the rewards will stop once it reaches the supply cap. With no cap on the Dogecoin, miners get an additional 10,000 doge tokens as a reward every minute. Such an incentive encourages the miners to keep the network in operational mode with high security.
Transaction Fees are Low
Blockchain mining will enable its users to earn rewards in the form of transaction fees as well. However, higher transaction fees mean lower demand as people prefer owning a token at a reasonable cost. Bitcoin has already put a strain on its block rewards and with fewer transactions, miners may earn only a meager incentive that is not at all encouraging. Doge, on the other hand, not only rewards the miners handsomely but also has lower transaction fees that attract more people.
Dogecoin as a whole is aiming to become a digital currency that can be used for transactions and seldom for collections. As a result, not having a supply cap on Dogecoin can be quite rewarding.
Will Dogecoin Ever Be Capped?
Dogecoin creators have been against the introduction of the supply cap on the meme coin. Many people have been suggesting that the meme token must be capped, however, the dogecoin developers are against the idea as they believe it will create a negative impact. There are two main reasons why dogecoin may never get capped in the future:
If a crypto token is of a deflationary nature, it will have an inverse impact on its transaction fees that will start increasing over time. High transaction fees prevent people from buying the token that in turn impacts the incentive that miners receive. When miners will receive fewer incentives they will leave the blockchain network that makes it vulnerable to cyber-attacks. To avoid this from impacting the token’s operations, the developers may never cap the Dogecoin mining.
Low Transfer Fee
The USA has two types of bank transfers consisting of Wire Transfers and Automatic Clearing House (ACH) transfers. Now the ACH transfer takes at least 2 business days but it is provided free of cost. However, wire transfer is instant and yet charges you up to $20-$30. Hence, people prefer using ACH over wire transfer. Similarly, cryptocurrencies have transfer fees. Bitcoin has an average transfer fee of $23 whereas Ethereum has an average transfer fee of $10. Dogecoin on the other hand has the lowest transaction fee of $0.24. Dogecoin’s inflationary nature enables it to have a lower transaction fee that benefits its buyers as well as the miners.
In short, Dogecoin is not the next Bitcoin. The lack of a cap on the Doge token is more of a boon than a bane. If in the future, there is a cap implemented on the Doge token it could negatively impact the cryptocurrency. The lack of a cap enables Dogecoin to enjoy its position as a transactional currency, unlike Bitcoin or Ethereum.
Frequently Asked Questions
How to do Dogecoin mining?
You can start mining Dogecoin using a PC or a Laptop. Since Dogecoin does not have a very complicated process, beginners can mine Doge tokens and earn gains.
Will Dogecoin go up to $10?
Dogecoin is capable of going up to $1 in the medium term and $10 in the long term.
Will mining a Dogecoin lead me to profits?
After the recent upsurge in prices, mining the Dogecoin seems more profitable than ever before.
Can I use Robinhood to buy Dogecoin?
Yes, you can buy Dogecoin on Robinhood. It is safe to buy Doge tokens via Robinhood, however, due to lack of access, you won’t be able to spend Robinhood Dogecoin.
Which is the best platform to buy Dogecoin?
The best platform to buy Doge tokens is Binance which is prominent for its peer-to-peer trading.