If you are looking for multibagger returns, crypto should be on your radar. This highly volatile asset class has minted its fair share of millionaires. And many coins have started to break their way into the mainstream, offering the possibility of sustainable long-term returns as well. Let's explore the pros and cons of Dogecoin (CRYPTO: DOGE) to decide if it still has millionaire-maker potential.
The original meme coin
Launched in 2013, Dogecoin is widely considered to be the first meme coin , a type of cryptocurrency usually based on online jokes and sarcasm. They typically are not designed to solve any real-world problems or offer any fundamental advantages over more serious blockchain platforms. With that said, Dogecoin is somewhat of a special case.
With 12 years of history, Dogecoin is much older than most cryptocurrencies, giving it name recognition and a strong brand. It is also built on its blockchain network instead of being programmed on a third-party smartcontract platform like Ethereum or Solana . This means it isn't bound by its host's network limitations and may have more flexibility when implementing upgrades to its design and functionality.
While Dogecoin's developers haven't made any major changes recently, they periodically implement bug fixes and other improvements.
The Elon Musk effect
Perhaps Dogecoin's biggest edge could come from high-profile backers like Tesla CEO Elon Musk. The controversial executive is the richest man in the world and the most followed person on X (formerly Twitter), with over 216 million followers at the time of writing.
Historically, Musk has used his influence to promote Dogecoin with positive online tweets and statements. He may have also influenced the Trump administration to name the new Department of Government Efficiency (DOGE) after the meme coin. While these promotional efforts don't seem to create sustainable growth, they keep Dogecoin in the public consciousness and prevent it from being forgotten like the thousands of other meme coins that come and go.
The automaker Tesla also plays a role in keeping Dogecoin relevant by accepting it as payment for some merchandise on its online shop, despite its volatility. And Musk has hinted that the company may start accepting the cryptocurrency for car purchases, although this remains speculative.
Dogecoin has serious design limitations
While Dogecoin's hype has allowed it to remain more relevant than the typical meme coin, some of the cryptocurrency's early design choices may continue to haunt the network. The biggest challenge may be inflation. The supply of Dogecoin currently stands at 147.97 billion, with the supply designed to increase by 5 billion coins annually.
The platform's developers claim this design is to prevent hoarding and make Dogecoin more functional as an actual currency. However, this comes at the expense of being a long-term store of value. Just like with a fiat currency, investors will experience a constant downward pressure on the value of their holdings as more Dogecoins enter circulation.
Unlike the dollar, Dogecoin doesn't boast a plethora of low-risk liquid assets (such as Treasury bonds or certificates of deposit) where people can defray inflation. With its proof-of-work (POW) transaction verification system, its design i sn't geared toward allowing users to generate passive income through staking like in proof-of-stake-based cryptocurrencies.
Investors should probably look elsewhere
While Dogecoin remains an exciting cryptocurrency because of its boom-and-bust volatility, it doesn't look like a safe bet for long-term investors -- especially because of its inflation and lack of fundamental advantages over mainstream alternatives. Investors who want to make millions (without taking on unreasonable risk) should probably look elsewhere.
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