Let’s understand why Dogecoin is so hyped!

What is Dogecoin?

Dogecoin began as a joke in 2013 by software engineers Billy Markus and Jackson Palmer. It can be found on the Bitcoin blockchain. This coin’s emblem is a popular meme of a Shiba Inu dog, combined with intensifying modifiers like “much,” “very,” “such,” and incorrect grammar.
Even though experts have pointed out Dogecoin’s technical instability, this cryptocurrency has become the “people’s coin” in a tweet. As its proof of work, Dogecoin employs development methods similar to Litecoin, including a reduced script key generation mechanism. One block of DOGE can be mined every minute.

Behavioural Finance and Doge

Behavioral Finance, as the name implies, is the study of financial behavior. The market dynamics of Dogecoin is an excellent illustration of behavioral finance. DOGE’s largest investment is presently worth $25 billion. One Reddit member claims to have raised $460 million on a $180,000 DOGE investment.
DOGE has increased 14,000% since the beginning of the year and 48,900% since its creation, thanks to Elon Musk’s self-proclaimed Dogefathership and endorsement of this currency on Twitter.

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There are four biases in behavioral finance and this is how they show in DOGE :-

1. Confirmation Bias — It is a tendency in behavioral finance to pay particular attention to occurrences that confirm the investor’s opinion and disregard those that contradict it. In the case of DOGE, this entails just paying attention to news regarding DOGE growth and ignoring unfavorable news.
2. The Narrative Error — We’re all enthusiasts for a good narrative. Also, a funny joke. What could be better than a cryptocurrency dedicated to a meme that will make you billions overnight? However, in their pursuit of a compelling narrative, some investors overlook safety precautions.
3. Bias in Representation — This bias happens when an investor believes that two similar occurrences will result in the same conclusion. It might be due to people’s preconceived notions that Dogecoin is similar to Bitcoin. So, one might argue that Elon Musk will impact DOGE pricing and acceptance in the same manner that he influenced Bitcoin price and adoption, even though BTC and DOGE are very different.
4. The Herd Mentality — This principle in behavioral finance refers to the tendency of many investors to perform the same actions as the crowd. It’s all about social influence and emotion in this one. Amateur investors are more likely to believe Elon Musk’s Twitter than a reasonable examination of the issue.

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Dogecoin Pros and Cons of Doge

Pros :-

1. From rags to riches — DOGE investors have made millions, if not billions, of dollars.
2. Adoption — You may pay in DOGE for a BitPay gift card (spendable at Pizza Hut, Amazon, and Microsoft), tickets, and goods.
3. Whales advocate for Elon Musk, Mark Cuban, Gene Simmons, Snoop Dogg, Kevin Jonas, and others.

Cons :-

1. Sudden losses — During DOGE’s drop following Elon Musk’s SNL appearance, investors lost nearly half of their earnings.
2. Technical Support — There is no dedicated team of developers for DOGE, meaning no tech support.
3. Retailer’s support — The audience’s negative reaction to celebrities may drop the price.

Conclusion

Every day, Dogecoin continues to astound the globe. Elon Musk has gone so far in his Dogefather position that he is planning to launch a Doge-1 satellite to the Moon, for which he has already paid in DOGE.

Image Credits — Pexels