Cryptocurrencies
Why You Should Buy Dogecoin
It’s likely to become a currency to buy things rather than hoard like Bitcoin
There is a real difference between Dogecoin and Bitcoin and most other cryptocurrencies. It has a slightly inflationary supply structure, rather than a deflationary supply.
Here is what that means. Every year Dogecoin allows 5 billion Dogecoins to be mined. This lasts forever.
By contrast, Bitcoin and most other cryptocurrencies have a declining supply. In fact, by 2040 no more Bitcoin will be mined.
There are now 128 billion Dogecoin in circulation. As a result of its structure, we can map out its future performance, at least in terms of supply.
People Won’t Hoard DogeCoin Like They Do Bitcoin
For all intents and purposes, a major reason that Bitcoin rises is due to people buying and hoarding the supply. They know that there is a limited supply.
This means the currency, although it will rise in value, will have little utility as a common means of payment.
However, given that Dogecoin’s supply is likely to rise consistently at a steady rate, it can be used to pay for goods and services.
Moreover, looking at the chart below, you can see that over time the supply actually slowly grows at a slower pace.
In other words, the rate of inflation in the supply slowly falls. Over the next thirty years or so, it will tend to match the actual growth of the real-world economy.
That is another reason why people will tend to not hoard the supply. Its growth rate will provide sufficient liquidity for transactions, or what economists call the velocity of money.
Dogecoin Will Still Rise
By the way, this does not mean the value of the cryptocurrency won’t rise.
Remember. price is always a function of demand vs. supply. As more and more people demand the currency for transaction purposes, and with limited supply growth, the price will tend to rise.
In fact, over the next 200 years, Dogecoin’s growth rate will fall to a limit, as defined in calculus, of about 5% per decade. That will average less than 0.5% per year. You can see this in the chart below.
It Started As a Joke But Is Likely To Last a Long Time
Everyone knows that Dogecoin started as a joke between two programmers. However, it has been designed in such a way as to allow itself to be used as a real currency with steady-state supply growth characteristics.
So, if you are a contrarian, and want to buy a crypto that is below 10 cents per coin right now, Dogecoin could be your real choice.
Mark Hake writes articles on InvestorPlace.com on stocks and also runs the Total Yield Value Guide which you can review here.
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