With it’s price up over 12,000% this year, and with big names, like Elon Musk talking and tweeting about it, dogecoin has become one of the buzziest cryptocurrencies, alongside bitcoin, which itself hit a fresh record of over $63,000 last month.
But the two cryptocurrencies have major differences. Here are three important distinctions between dogecoin and bitcoin, according to experts.
Bitcoin has ‘built-in scarcity’
“There are many differences between dogecoin and bitcoin,” says Meltem Demirors, CoinShares chief strategy officer.
One of the “most important” is the supply of each, she says.
Dogecoin is inflationary, says Demirors, meaning “more doge is printed every minute of every day, giving doge a potentially infinite supply.”
For example, “every minute of every day, 10,000 more dogecoins are issued. That equates to nearly 15 million doge per day or over 5 billion doge per year,” she says.
An unlimited cap on supply can negatively impact value over time.
Bitcoin, on the other hand, has a finite supply of 21 million, which creates a “built-in scarcity … akin to the way that gold or diamonds are valuable because they are scarce,” James Ledbetter, editor of fintech newsletter FIN and CNBC contributor, says.
This scarcity is central to why bitcoin bulls argue for holding the cryptocurrency long-term – because it is limited, as demand increases, the price of bitcoin should as well.
Because of this difference, “I see most people trading dogecoin on a short-term basis,” with investors hoping to make a quick profit, “and choosing to hold bitcoin over a longer duration,” Demirors says.
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