Investors are often seeking out the next big thing. In the world of cryptocurrency, new things often come as rebranded, improved versions of old things. But oftentimes, those things aren’t exactly the same. Now, as investors turn their interest toward Baby Doge (CCC:BABYDOGE-USD), they believe what they’re getting is similar to Dogecoin (CCC:DOGE-USD). That’s not exactly the case; there are plenty of differences between Dogecoin and the Baby Doge crypto.
Besides the obvious differences — Dogecoin is nearly a decade old while Baby Doge is only a few weeks out from launch — there are a lot of nuances that differ Baby Doge from its progenitor.
What Makes DOGE Distinct From the Baby Doge Crypto?
Most glaringly, Dogecoin is a coin, whilst Baby Doge is a token. This is because Dogecoin operates on its own chain, independently of a parent network. Baby Doge transactions take place on the Binance (CCC:BNB-USD) Smart Chain. As such, users can mine DOGE on chain, creating new DOGE to hold onto or trade. Baby Doge tokens are pre-mined, meaning you cannot create more.
This leads to the second major difference: The Dogecoin supply is ultimately unlimited, while the Baby Doge supply is finite. There are 420 quadrillion Baby Doge tokens, and this may seem like a non-issue when you compare that to DOGE’s roughly 130 billion coin supply. But each model comes with its pros and cons. In a limited-supply, deflationary token like Baby Doge, the thinking is that over time, the value of the cryptocurrency will increase like that of fine wine. However, crypto experts have separately found fault with quadrillion-plus total supplies.
Dogecoin on the other hand is inflationary, meaning miners create new coins every single day. As InvestorPlace Markets Analyst Thomas Yeung explained, that means its upside is limited. With this in mind, some have called for DOGE to switch to a deflationary model.
The creates a fundamental difference in the purposes of these coins. Dogecoin exists for users to spend; it was created with the purposes of being a currency for transaction. Baby Doge is not that way at all. Baby Doge’s model exploits supply and demand economics, where users are encouraged to hold onto their tokens longer, hoping the supply drains and inflates their stash’s value. Ultimately, this fundamental difference will be what gives Dogecoin the potential to be a legitimate currency for everyday transactions, and what will hold Baby Doge back from more practical use.
Baby Doge: Similar in Name, Different in Function
These are just the major differences. There are minor things as well that differentiate the two as well. For example, DOGE can be purchased through a wide number of exchanges, both centralized and decentralized. Investors can only buy Baby Doge through two DEXs. However, differences like this are correctable; in fact, Baby Doge is hoping to see listing on more widespread exchanges, according to its roadmap.
Both of these cryptos offer very different styles of growth. Baby Doge is something with hypergrowth potential; an Elon Musk tweet can elevate your portfolio almost 90%. Dogecoin is something with potential for legitimate future use; you could one day use Dogecoin to buy your groceries. They may have similar names, they may walk with a similar strut. But rest assured, these are two very different cryptocurrencies.
On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.