Dogecoins: The new cryptocurrency on the block

November 2013 saw a significant rise in Bitcoin value (from $200 to well over $1000 USD); it's no surprise that competing cryptocurrencies are popping up left and right. The latest of which, Dogecoin, appears to be a satirical dig at cryptocurrency. Be that as it may, Dogecoin is a real cryptocurrency and is currently valued at $0.00025 USD.

Volatility is the name of the game where cryptocurrency is concerned, after all, the only value hedges on what people are willing to pay. Considering the finite amount of coins that can be mined for each of these currencies, it's expected that they will continue to grow in value. However, with governments posing limitations and bans on financial institutions and their involvement with Bitcoin transactions, the future of cryptocurrencies is anything but certain. In the mean time, day traders willing to take the risk investing in such a volatile market have seen and grasped opportunities for significant return on investment.

Getting into a new currency can be exceedingly frugal; some early Bitcoin adopters have seen the value of their Bitcoins climb to millions, while others have accidentally thrown out their millions. With the way cryptocurrency mining works, difficulty starts off low and early miners (people who run programs to 'mine' the coins) get much more currency for their efforts than they would later on.

All cryptocurrencies are interlinked via exchanges, various free markets such as Crypto-Trade. As such, adventurous holders of the more established Bitcoins and Litecoins will tend to convert some of their existing currency to new currencies to diversify during the initial rush - before prices start to rise. This strategy allows potential for big reward with minimal risk. However, with alternative currencies being a dime-a-dozen, many fizzle quietly out of existence.

It's hard to say what will happen with Dogecoins, but with a cap of 100 billion Dogecoins (significantly higher than that of the 21 million cap on Bitcoins), it's fairly safe to say they will retain significantly less value per coin than Bitcoins. That said, due to the current ease of mining Dogecoins (a midrange graphics card is capable of mining thousands per day), it may be worth looking in to!

Image via Bitcoincharts

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These currencies are like the emperors new clothes, they only have value if enough people think they do.
The only reason someone would see any value in these is only due to the worth other people see in them and that is quite the confidence trick.

The people creaming at the "top" had better be non believers in this **** and sell it while the going is good. One thing is for sure, its been a lot more profitable then most other scams they could have pursued.

That's true and the only thing that creates that confidence is a stable government backing it with their police and military. That's why you see runaway inflation in countries with weak governments that lack law enforcement.

Errr, there is a limit on USD and any other real currency out there? That's how it works, there's a fixed amount on the "worth" of that currency, so if they print more it devalues the currency as a whole (aka quantitative easing).

There is not a fixed amount of worth as the economy is always changing size. Money loses value in the face of normal inflation but your assets increase in value and your debts decrease, so it you really don't lose anything unless you're poorly invested. The amount of currency isn't really that important compared to how quickly it's changing hands. You could have a $1 that gets spent once a month or once a week. Recessions are caused by people sitting on their cash due to lack of confidence in getting more. QA is an attempt to force the movement of money.

"Considering the finite amount of coins that can be mined for each of these currencies, it's expected that they will continue to grow in value."
Wrong. Their value only grows (or yet better: they only have value) because people in general are dumb, and can be manipulated by the few ruthless smart ones.

The amount of coins in these currencies are indeed limited - but since the number of currencies is not limited, in the end, you can create an infinite amount of them. And infinite supply of something makes that something have no value (in the economical sense).

felrefordit said,
"Considering the finite amount of coins that can be mined for each of these currencies, it's expected that they will continue to grow in value."
Wrong. Their value only grows (or yet better: they only have value) because people in general are dumb, and can be manipulated by the few ruthless smart ones.

The amount of coins in these currencies are indeed limited - but since the number of currencies is not limited, in the end, you can create an infinite amount of them. And infinite supply of something makes that something have no value (in the economical sense).

Paper is infinite, however the right sort of paper printed with agreed upon colours and symbols becomes currency which is granted value by governments and banks.

If it was agreed upon that certain crypto currencies where more valid / legal than others then the others would become worthless while the fiat currencies would increase in value.

Hopefully more of these popping up will drive that point home there is no rarity. The other issue is to be a currency you need a government forcing everyone inside their borders to use it. If someone is in your debt, you can only demand your country's currency, and you must accept it if offered. You can always barter of course but the law makes the currency the default option to reconcile the debt.

ramesees said,

Paper is infinite, however the right sort of paper printed with agreed upon colours and symbols becomes currency which is granted value by governments and banks.

If it was agreed upon that certain crypto currencies where more valid / legal than others then the others would become worthless while the fiat currencies would increase in value.

The paper and printing is irrelevant. What makes it a currency is a government requiring you to accept it and aggressively prosecuting anyone that tries to copy it. The only physical requirement is it's difficult to copy in order to keep the enforcement requirements reasonable.

ramesees said,
Paper is infinite

It is not. However, it doesn't even need to be infinite to make it worthless. If your print too much paper money without any backing of something with real value, the money will lose its value. That's what you could see with the dollar happening in the last 30 years. It costantly kept losing value, just because more and more have been printed of it. If they will print even more of it, it will lose even more "value". You can't work around the basic rules of economics.

Buttus said,
Yes! i wonder how hard it is to start one......

Apparently you can just fork the GitHub repo for bitcoin, switch around a couple settings strings and voila!

Matthew_Thepc said,

Apparently you can just fork the GitHub repo for bitcoin, switch around a couple settings strings and voila!

You also have to hire a designer to create your coin logo.

Mr. Hand said,

You also have to hire a designer to create your coin logo.

the neowin logo is already a coin, so we're 50% of the way there

People tend to think that they are the ones taking advantage of the suckers in the base of the pyramid and that they'll know when to pull out their money. Rarely happens.