Limitless supply of Dogecoin matter of concern over its sustainability and price/value. (Extended article)

To get an overview on what made me write this whole detailed explanation into a part of my previous article, you might consider reading this one of my previous article to understand the current ongoing trend about Dogecoin.

When considering Dogecoin as an asset or currency, like other assets, its price is always predominantly determined in long run by the demand and supply theory. Though, I’m not an expert over the finance topic, but this basic rule applies to everything and there is no confusion about it.

Now, you may wonder what makes its supply limited/unlimited and how it is created, it is also a question on considering Dogecoin’s future similar to as of Bitcoin. The maximum number of Bitcoin’s that can ever be created in restricted to 21 Millions, but that is not the case with Doge.

Successful currencies have six key attributes—scarcity, divisibility, utility, transportability, durability, and counterfeitability. 

The new crypto coins are created as a result of rewards of mining. For dogecoin, it is 10,000 coins reward for each block of transactions. For Bitcoin, it is 6.25 Btc as of now, which was 50 Btc earlier.

In the programming of BTC and LTC, the mining rewards per block keeps halving itself after each 2,10,000 blocks are mined, that is something makes these currencies supply limited and makes them worth the value.

But, In Doge, there is no halving, it is always 10000 coins as reward for each block so no supply constraints over the time, it is like you keep on printing the new currency notes.

Doge’s demand and supply:

The reason behind the Doge’s current increasing demand is the big players like Elon, which definitely works on social media considering lower prices and affordability to any layman.

Supply, on the other hand is determined by the people who already own the coins and the miners which eventually keep up creation of new coins with mining.

Btc and other crypto has risen over the time as the rewards are halving, limiting the supply, and the increasing demand, this capping on the total number of Bitcoin and the demand supply equation makes them worth the value.

Dogecoin has an infinite supply meaning that the cryptocurrency isn’t designed to offer a store of value.

My opinion: Doge is vastly capitalizing on the financial illiteracy of the majority of social media frenzy as it is so cheaper to buy just for fun.

Over the time, it will eventually result in a sustainability crisis for the Dogecoin, because any influencer like Elon or Cuban won’t hold their credibility forever in terms of pushing people to buy certain crypto that is just a mere JOKE.

Current trends & profitability:

People’s have became millionaire in this short quick Doge rally, still people will make money for sometime, but when you see it for long-term vision, there does not seem to be a brighter future in terms of any currency’s key attributes.

Conclusion:

I’m no financial expert, it’s up to you to trade or not, but as the technical aspects and backgrounds of this crypto are concerned, I have made those highlight with this article which might make you look deeper into it and make a good decision.

2 comments

  1. This kind of explanation is all we need to understand about Crypto and Doge …Good work !!🙌

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