Every dog has its day. In the world of cryptocurrency, Dogecoin has been the most fortunate dog in recent times. Everybody, from Mark Cuban to Elon Musk, has expressed their excitement for the original meme cryptocurrency. It saw a rapid rise of over 7,000% in the first half of 2021.
Although its price fluctuated wildly, with a huge drop in mid-2021 from its peak of just over 70c per coin, Dogecoin remains a popular cryptocurrency option. Here’s how you can buy Dogecoin.
How to Buy Dogecoin in 5 Steps
1. Think about how much you want to invest in Dogecoin
There are many stories about people who have invested small amounts in DOGE and become millionaires. However, it is important to be cautious. Cryptocurrencies can be very risky investments. Dogecoin is unique and volatile due to its unlimited supply.
This is how it works: Investors must buy more Dogecoins in order for the price to rise or remain stable. The DOGE supply will increase rapidly, reducing the value of all coins in circulation. To discourage long-term holding on to Dogecoins, one of its creators removed the limit on how many Dogecoins could be issued. This is in sharp contrast to other major cryptocurrency like Bitcoin which has caps on the number of coins that can be issued. This creates scarcity which keeps coins’ value.
Consider your financial situation, investment portfolio, and tolerance for risk when deciding how much you want to invest. Experts recommend that you don’t invest more than what you can lose with cryptocurrency in general.
2. Choose a Cryptocurrency Exchange
You will need to create an account on a cryptocurrency trading platform to purchase Dogecoin. This is where buyers and sellers can exchange cryptocurrency for dollars. Binance.US , Kraken are all popular exchanges. These platforms have lower fees and offer more advanced trading options with lower fees.
Robinhood is a beginner-friendly investment app that allows you to purchase crypto. However, these apps may not allow you to transfer your coins out of the app. To protect their crypto from hackers, some investors prefer to keep their coins separate in separate crypto wallets. Robinhood is a brokerage app that allows you to move your crypto to separate wallets. You would need to first sell your coins, then repurchase them on an exchange to transfer them to a separate wallet . This defeats the purpose for buying them through an investment app. This is all to say that if you think you might want your coins to be moved to a separate wallet you are probably better off using an exchange.
Important note: Although Dogecoin is becoming more popular in recent years, it isn’t always available on all cryptocurrency exchanges. If you want to purchase DOGE, ensure that any exchange you are considering has it available for purchase.
3. Choose a payment option
You must first deposit money into your brokerage or exchange account before you can trade cryptocurrencies. Most exchanges allow you to deposit money from your savings or checking account. Some allow wire transfers or PayPal transfers.
You typically have instant access to some of the funds from your deposit for trading. You may need to wait for the transfer to clear if you have deposited large amounts of money (typically over $1,000) before you can access the full deposit.
Not all exchanges allow you to use your credit card to purchase Dogecoin or other cryptocurrencies. Be aware that your credit card company may consider your purchase of crypto to be a cash advance. They will also charge additional fees and a higher interest rate. This can make crypto investing more expensive and more risky. Experts recommend that people avoid investing in crypto this way.
4. Place Your Order for Dogecoin
You can buy Dogecoin once your money has been deposited into your account. Search for Dogecoin on the exchange’s purchase or trading platform. Next, choose your trade type. You can either enter the dollar amount or specify how many Dogecoins to purchase.
The order should be processed immediately after you have placed it. Dogecoin, like other cryptocurrency, is not limited to trading hours. You can buy or sell Dogecoin any time of the day, seven days a semaine.
5. Take into account your storage options
Dogecoin is by default stored in the crypto wallet of your brokerage or exchange when you purchase it. These wallets are usually connected to the internet so some investors prefer to withdraw crypto from their brokerage or exchange and keep it in a different wallet.
You have the option to keep your Dogecoins in either a hot wallet, or outside of your exchange. Hot wallets can be connected to the internet and are digital, while cold wallets can be disconnected. This makes them less vulnerable to hacking. However, cold wallets are more costly than hot wallets and there is a higher chance that you will not be able to access your crypto currency.
How to sell dogecoin
The process to sell Dogecoin is simple. The first step is to go to your crypto exchange/brokerage platform and enter the amount that you wish to sell. Your order will then be processed.
You will need to pay capital gain tax if you make a profit from Dogecoin investments. You could face serious penalties if you fail to pay tax on crypto gains. Consult a tax professional if you are unsure how to report your Dogecoin profit.
Do I need to buy dogecoin?
Dogecoin was once a joke. Investors now take it seriously. It’s still a risky investment. Experts recommend that you limit your investment in cryptocurrencies to 3%-10% of your total portfolio.
Your risk tolerance and current financial situation will determine how much you decide to invest in Dogecoin. You should not invest in Dogecoin if your retirement savings are behind and you don’t have an emergency plan. Dogecoin may be a good option if you are financially sound, have enough financial cushion, and can meet.