If You’re Forced to Buy Crypto, Go for the Notorious Dogecoin

After having jumped more than enough sharks to fill all the aquariums in the world, I no longer follow The Walking Dead television show. However, once memorable scene involving a set of the program’s protagonists had me thinking about Dogecoin (CCC:DOGE-USD), the lovable though controversial canine-inspired cryptocurrency meme.

Concept art for Dogecoin (DOGE).
Source: Shutterstock

As a group of motorcycle gang members demanded that the onscreen heroes turn over their firearms, the leader turned to one of the stubbornly reluctant characters with a classic line (though modified for language): “If you have to eat [brown stuff], best not to nibble. Bite, chew, swallow, repeat. It goes quicker.”

It certainly does, not that I know from personal experience, but the man sounded very logical. And logic is what you must apply when dealing with the seemingly irrational Dogecoin.

As you may know from my prior takes on InvestorPlace and other publications, I’ve not been too kind on the meme coin. Yet as enthusiasm for the benchmark cryptos continued to rise to insane valuations, I have started to appreciate why Dogecoin gets the adoration that it does. For one thing, it’s unpretentious and that could go a long way.

Too many times, I see blockchain being proposed as the answer to many of our social ills, such as cancer. No, seriously, more than one person has made the argument that the blockchain can cure this dreaded disease.

To be fair, I don’t think anyone’s suggesting that a decentralized distributed ledger can literally cure cancer. Rather, through an immutable, transparent and trustless system, global communities at large can foster efficient funding for cancer research. As well, the blockchain can facilitate a financial incentive for pharmaceutical companies to cure the disease rather than to manage it.

Largely, you’re not going to find grandiose statements like the above for Dogecoin – and thank goodness for that!

Dogecoin and the Greater Fool

What we have with this most popular of meme coins is perhaps a perfect manifestation of the greater fool theory. Fundamentals? There are not fundamentals, not unless you consider a crypto based off a joke as being functionally pertinent to Dogecoin.

And in some ways, there are neither any technicals. Sure, technical analysis is likely the best way to approach Dogecoin. But if you look at a long-term chart of DOGE (on a logarithmic scale so you can see the smaller-denomination-based movements), many of the swings in either direction appear wild and random.

Ultimately, you’re hoping that if you buy Dogecoin today, somebody else will buy it at a higher price tomorrow. In the end, is that such a bad idea?

Here’s why I bring up the TWD quote. Per Jamie Dimon of JPMorgan Chase (NYSE:JPM) fame – or infamy depending on your perspective – Bitcoin (CCC:BTC-USD) is fundamentally worthless. Despite being an avid supporter of cryptos all these years, it’s hard to disagree, at least to some extent. After all, Bitcoin isn’t tied to a productive enterprise. It doesn’t employ people, nor does it generate earnings and dividends.

Therefore, if you found yourself in an apocalyptic scenario where motorcycle gangs forced you to buy a crypto of your choice, you might as well go with Dogecoin.

While Bitcoin proponents argue all day about the underlying blockchain technology, the reality is that this platform isn’t proprietary. Sure, specific blockchain protocols may be but the concept of decentralized distributed ledgers is not. Therefore, anyone can make their own blockchain network – and many do just that.

Therefore, rather than nibbling on Bitcoin (because at $60,000, all most people can do is nibble), why not take huge bites out of Dogecoin? With nothing backing neither coin except the belief that it can move higher still, the relative risk-reward profile might favor DOGE.

A Dangerous Way to Live

Another factor that supports the meme is the Dogecoin community. I can’t say for sure what its main motivation is. But as I mentioned, it lacks pretention. And that could be very appealing for younger investors, who look for authenticity in their purchasing decisions.

What could be more authentic than a crypto project whose sole purpose is to make its stakeholders money?

Nevertheless, I don’t want to mislead any investors. Dogecoin is insanely risky. The only reason I own some units was because I probably bought them as a joke (I actually don’t remember the real reason why). It’s a mistake that panned out very well but usually, such errors end in tears.

But the thing is, you can suffer from greater tears going all-in on Bitcoin. Therefore, a smaller nominal wager in Dogecoin makes sense due to its higher percentage-based reward profile, that is if you were going to invest in cryptos anyways.

On the date of publication, Josh Enomoto held a LONG position in DOGE and BTC. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.

Article printed from InvestorPlace Media, https://investorplace.com/2021/10/if-youre-forced-to-buy-crypto-go-for-the-notorious-dogecoin/.

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