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Inflation And Influencing Factors: How Investors Can Send Dogecoin On USD 10
So much wow. When Billy Markus founded Dogecoin (CCC: DOGE-USD) in 2013, he did so as a joke. DOGE’s mining reward system was so ridiculously structured that no one could take it seriously. Initially, miners could earn anywhere from zero to 1 billion coins for completing a single block. Source: Orpheus FX / Shutterstock.com But Dogecoin holders had the last laugh. Today, the cryptocurrency is worth nearly $ 10 billion and has one of the most dedicated supporters of all tradable securities. Lucky investors could have turned an initial $ 1,000 stake into nearly $ 1 million. Crucial to this success was a 2014 technical change that the developers made quietly, although celebrities helped. At block 145,000, the coin switched from its random mining reward to a constant payout. Miners now only earn 10,000 DOGE per reward. That move limited today’s inflation to 5.256 billion coins per year and removed the joke that originally made the cryptocurrency unusable. InvestorPlace – Stock market news, stock advice and trading tips 7 Cheap stocks with growing tailwind A renewed interest in the development of Dogecoin could trigger even more changes. If the course of inflation changes again, DOGE could become a reality at USD 10. Why are the DOGE prices at 6 cents? Cryptocurrencies typically fall into three groups: Inflation: an offer that increases indefinitely (i.e. Dogecoin) Deflationary: a limited supply (i.e. Bitcoin) Pegged: an offer that changes to reflect the USD or other underlying asset (i.e. Tether). Dogecoin lives life as an inflation coin. Similar to fiat currencies, more is minted every day. And just like its government-backed counterparts, Doge’s benefit remains limited as buyers know they can always purchase more later. (As a real-world example, consider that the EUR / USD exchange rate of 1.2 is practically the same as it was in 1999). In other words, if your currency adds 4% supply every year, it will eventually find a price equilibrium with other 4% growth currencies. Meanwhile, Bitcoin (CCC: BTC-USD) and other limited supply coins can often see astronomical increases in value. Much like Picassos, vintage wines, and 1868 collectible stamps, their limited availability means that each minted piece becomes more valuable every day. DOGE price to $ 1? Or $ 10? Even without inflationary changes, the price could still reach $ 1. There are 130 billion coins outstanding in the cryptocurrency. At $ 1 per coin, it still remains 55% the size of Ethereum (CCC: ETH-USD), the second largest crypto in the world. And because only marginal trading is involved in asset pricing, even some large account holders could theoretically send rising values. With a bit of luck, the coin could even stay at $ 1. With renewed interest in the Shiba-Inu coin, the developers have now returned to their code repository and have proposed decisive improvements in terms of ease of use and speed. Developers have already made major changes – DigiByte and Litecoin snippets (CCC: LTC-USD) are of paramount importance in the Dogecoin source code. More could be on the way. Inflation also becomes a minor problem over time – the result of a blanket reward divided by a growing capital base. By 2040, Dogecoin inflation would have dropped to just 2.4%, which is roughly the equivalent of today’s US dollar. By 2060 it would be 1.6%, which makes it deflationary relative to the dollar. Source: Author calculations Sending Dogecoin at $ 10, however, requires an even more significant change: moving to a deflationary system before 2060. Dogecoin Rule 10,000 Currently, miners earn 10,000 DOGE per block, which happens roughly once a minute. This means that a target price of USD 10 is no longer within reach. No matter how many people buy Dogecoin, its ever-expanding supply makes winning prizes an uphill battle. A price of USD 10 means that Dogecoin must outperform Bitcoin’s market cap and stay there. However, in open source cryptocurrencies, no rule is permanent. With enough key players voting for change, even projects as big as Ethereum can change their building blocks to keep up with newer coins. Today, Dogecoin is at the same crossroads. The code base is aging fast and newer coins like Cardano (CCC: ADA-USD) and Polkadot (CCC: DOT-USD) are on its heels. Even Bitcoin appears to be vulnerable to third generation coins, which can execute transactions much faster and cheaper. So far, the basic Dogecoin approach has helped the cryptocurrency avoid obsolescence. People buy the coin for fun and profit, not for ease of use. But unless larger stakeholders are also reinforced, these efforts can only go so far. The Dogecoin Whale usually has prominent crypto stakeholders helping with code funding and business development. For example, the Cardano network has three official organizations that manage standardization, technology, and developer support. Together they share around billions in financial resources. Ripple Labs has a similarly large budget for promoting XRP (CCC: XRP-USD). DOGE now relies on 200 part-time programmers and a legion of online fans for support. Many look like the primary in charge, Ross Nicoll – he works for free to keep an ever-growing system up and running. Because of this, much of the code is removed from other coins: there simply aren’t enough resources to develop proprietary code. Others are like the thousands of social media followers on Dogecoin; Many are constantly tracking the developers to limit the supply of the currency. If investors want to send Dogecoin prices down to $ 10, it takes a lot more than buying the coin and posting tweets. It takes a benefactor to fund improvements. The coin already has some well-known supporters. On Thursday, Elon Musk promised to literally send the coin to the moon using a SpaceX rocket. He could make an even bigger impact by setting up a Dogecoin Foundation to fund development and promote acceptance among startups and companies. So far he has avoided that and blamed the “Dogecoin Whale”. Regular investors can help by making contributions rather than following developers. Dogecoin on $ 10 is more than a dream – it’s an opportunity that is just around the corner when the community unites one day. At the time of this writing, Tom Yeung held positions (neither directly nor indirectly) in the securities identified in this article. Tom Yeung, CFA, is a Registered Investment Advisor committed to making the world of investing easier. More from InvestorPlace Why Everyone Is Investing In 5G WRONG It doesn’t matter if you get $ 500 million or $ 5 million in savings. Do this now. Top Stock Picker Reveals Its Next Potential 500% Winning Prodigy Who Found NIO At $ 2 … Says YOU’LL BUY THIS NOW The post Inflation and Influencers: How Investors Can Send Dogecoin on $ 10 first appeared on InvestorPlace.