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?
- What is Dogecoin?
- Why is there no cap on Dogecoin?
- Will Dogecoin Ever Be Capped?
- Final Thoughts
- Frequently Asked Questions
This may be useful if you are one of those investors who has heard of Dogecoin but does not fully comprehend it. Dogecoin is a cryptocurrency represented by the popular Shiba Inu meme doge, which was invented by software programmers Jackson Palmer and Billy Markus. Dogecoin was created as a joke on the payment method that was addressing the cryptocurrency world’s speculations by the founders. In compared to other crypto tokens, one of the distinguishing qualities of dogecoin is that it does not have a cap.
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Why is there no cap on Dogecoin?
The majority of cryptocurrencies, such as Bitcoin and Binance Coin, have a supply cap that prevents them from mining more tokens. Yet, Dogecoin is one cryptocurrency token that does not have a supply constraint to limit its mining. The Dogecoin network has the capacity to add 10,000 coins each minute, totaling 5.26 billion coins per year. Since its conception, the founders of dogecoin have never intended to keep a supply cap. The following are the reasons why dogecoin has no cap:
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
The crypto coins are completely secure thanks to blockchain technology, which prevents third-party access. The best part is that no one will be able to hack into your account and steal your coins. A computer catastrophe or, in the worst-case scenario, losing your smartphone is the only way to lose your crypto token. Bitcoin is a token that can easily be lost, and it is estimated that 20% of all Bitcoin will be lost permanently. Dogecoin’s no-cap limit allows you to replace lost coins in your wallet.
Miners are Rewarded
By successfully mining a block of cryptocurrency, every crypto miner receives a block reward. Ethereum, for example, pays miners two Ether tokens for each new block. The block incentives in Bitcoin have decreased significantly, and once the supply cap is reached, the rewards will cease. Miners receive an additional 10,000 doge tokens every minute because the Dogecoin has no cap. This type of incentive motivates miners to keep the network up and running while maintaining strong security.
Transaction Fees are Low
Users of blockchain mining will be able to receive incentives in the form of transaction fees. Higher transaction fees, on the other hand, reduce demand because individuals prefer to own a token at a reasonable price. Bitcoin’s block rewards have already been strained, and with fewer transactions, miners may only receive a tiny incentive, which is not encouraging. Doge, on the other hand, not only pays out handsomely to miners but also offers lower transaction costs, attracting more users.
The overall goal of Dogecoin is to become a digital currency that can be used for transactions rather than collections. As a result, Dogecoin’s lack of a supply cap can be highly profitable.
Will Dogecoin Ever Be Capped?
The meme coin’s founders have been opposed to the implementation of a supply cap. Many individuals have suggested capping the meme currency, however the dogecoin creators are opposed to the notion because they believe it will have a detrimental impact. There are two key reasons why dogecoin’s price may never be capped:
If a crypto coin is deflationary, it will have the opposite effect on transaction costs, which will begin to rise over time. High transaction costs discourage users from purchasing the currency, lowering the incentive for miners. Miners will leave the blockchain network if they receive fewer incentives, making it vulnerable to cyber-attacks. The developers may never cap Dogecoin mining to prevent this from affecting the token’s functionality.
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 instead of 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?
A PC or a laptop can be used to start mining Dogecoin. Beginners can mine Doge tokens and earn profits because the process is not overly complicated.
Will Dogecoin go up to $10?
Dogecoin has the potential to reach $1 in the medium term and $10 in the long run.
Will mining a Dogecoin lead me to profits?
Following the latest price increase, mining Dogecoin appears to be more profitable than ever.
Can I use Robinhood to buy Dogecoin?
Yes, Dogecoin may be purchased on Robinhood. Although it is safe to purchase Doge tokens through Robinhood, you will not be able to spend Robinhood Dogecoin due to a lack of access.
Which is the best platform to buy Dogecoin?
Binance, a popular platform for peer-to-peer trading, is the ideal place to buy Doge coins.