Cryptocurrency was initially thought to be as a mediocre market, one that’s just a phase but the market topped $2 trillion for the first time in April 2021. Not bad for a speculative fad! To put things into perspective, Bitcoin, one of the market’s prominent digital currencies reached an all-time high of $19,783.06 in December of 2017 but dropped to $13,500 and continued to decline to $3,400. At the end of April 2021, Bitcoin was seen trading at $55,710, showcasing the impressive rise of the cryptocurrency. This seems to be a good market to invest in – it’s as safe as the other markets, but from what we’ve seen from previous years and from what expert traders have predicated, the market is only set to grow further. So far in 2021, the two crypto coins that caught traders’ attention were Bitcoin and Dogecoin – each trading at a completely different value but hold a lot of promise. It’s interesting to look into both of the coins and weigh whether investing in them would be a good idea to boost our portfolio.
What’s up with crypto?
A centralised regulatory authority has been controlling the money system and limiting how the paper currency and credit cards work in the recent decades. Because of the bank being the main institution in the middle for any transaction, which could lead to a point of failure, cryptocurrency was created to remove the bank from being part of the transaction process. Cryptocurrency is a digital or virtual currency that is meant to be a medium of exchange. In contrast to the previous system, cryptocurrency is not owned by banks or by the government but operates through what is coined as a decentralised and distributed ledger, known as “Blockchain” technology. María Paula Fernandez, advisor to the board of directors at Golem Network, explains “Investing in Bitcoin and Ethereum are natural ways to minimise the trust layer in governments and institutions that have failed to look out for the public and protect individuals from the fragility of traditional financial systems as they are both assets that do not require central parties to verify, create or administrate them.” Coinbase, the leading cryptocurrency exchange, is set to go public at around $100 billion. As of January 2021, there are more than 4,000 cryptocurrencies in existence.
Bitcoin is the first blockchain-based cryptocurrency and is probably the most known type of crypto. Apart from its fame, Bitcoin is also most valuable. In 2008, an anonymous person calling himself Satoshi Nakamoto published a paper proposing an alternative way that does not require people to put their trust in banks. The rest, of course, is history. Bitcoin soared in 2021 after Elon Musk, CEO of Tesla, an S&P 500 member and one of the most valuable publicly traded companies bought $1.5 billion worth of Bitcoin. To date, there are over 18 million Bitcoins in existence, with around 2.3 million coins left to be mined. Bitcoin is scarce – the maximum and total amount of bitcoins that can ever exist is 21 million. Like most other cryptocurrencies, Bitcoin can be bought with hard cash, credit or debit cards, or wire transfers. You don’t need to worry about where to store your bought Bitcoins. They can be kept in a software wallet stored on the hard drive of your computer, (2) an online, web-based service or (3) a ‘vault’ service that keeps your bitcoins protected offline or multisig wallet that uses a number of keys to protect the account.*
On the other hand, Dogecoin was created as a joke by Adobe employee Jackson Palmer in 2013. He had tweeted, “Investing in Dogecoin, pretty sure it’s the next big thing” along with a picture of a popular dog meme. The joke was clearly about all the fuss that Bitcoin was getting, but soon after, IBM software developer Billy Markus developed Dogecoin as we know it. “I think it says a lot about the state of the cryptocurrency space in general that a currency with a dog on it which hasn’t released a software update in over 2 years has a $1B+ market cap,” Palmer said in 2018. Moreover, Dogecoin isn’t limited, with around 130 billion Dogecoin tokens in existence. Due to the difference between Bitcoin and Dogecoin, the transaction fee is much smaller for the latter crypto. In addition, it takes longer to buy Bitcoin than it does to purchase Dogecoin. The crypto was also supported by Elon Musk, who often tweets about – after which the Dogecoin price soars. During an interview, Musk noted, “Arguably the most entertaining outcome, the most ironic outcome would be that Dogecoin becomes the currency of Earth of the future.” Whether Musk’s true love lies with Bitcoin or Dogecoin is uncertain, but Snoop Dogg Kiss singer Gene Simmons are also fans of the meme crypto. At the time of writing, Dogecoin trades at 0.3127, leaving many traders questioning if it will finally hit $1.
You can start your crypto investing adventure by downloading the crypto app and learn more about enriching your portfolio. Bitcoin and Dogecoin aren’t the only coins available but you can invest in some of the market’s top coins, including Ethereum, Ripple, Cardano, Litecoin and Polkadot. Furthermore, if you’re unsure of which coin to choose, you can seek the help of an adviser who will help you to your next great investment.