Which Is a Better Buy – Bitcoin or Dogecoin?

The recent pullback of Dogecoin price got crypto investors thinking. They are bullish on crypto, but which crypto – Bitcoin or Dogecoin? 

| More on:
New virtual money concept, Gold Bitcoins

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

Bitcoin and Dogecoin have been making havoc in the crypto space. Dogecoin memes took the social trading by storm and converted a joke into an $82.88 billion market capitalization. But the recent dip in Dogecoin after Elon Musk’s Saturday Night Live makes you wonder whether Dogecoin or Bitcoin is a better buy?

Why crypto? 

A developer crafted Bitcoin after the global financial system collapsed in 2009 and governments started printing fiat currency. Fiat currency is when the government prints unlimited paper currency with no backing of gold reserve. The money losses its value and the central bank gets too much power. For a long time, Tesla’s Elon Muk has criticized fiat money. 

In 2009, a developer built Bitcoin on the concept of gold. BTC can be used as a global currency and also have a store of value. Only 21 million BTC can be mined in a lifetime. And as more and more people mine BTC, the more difficult it will be to get the digital currency. This was a perfect substitute as no bank will have control over the BTC trading, and it is the decentralized ledger that will keep the accounting of who owns how much.

BTC concept was so revolutionary that many firms like Microsoft and AT&T accepted it as a form of payment. But BTC will have to face the test of time as anything can only become a currency when a majority of people trust in its value. 

Although BTC protected your coins from hackers, it maintained trade secrecy, giving way to money laundering and terrorist funding. If regulators can find a way to regulate these activities, BTC could become the future global currency. This will reduce the power accumulation in the hands of a few. 

Which crypto – Bitcoin or Dogecoin? 

Bitcoin started garnering the attention of hedge fund investors in November 2020 when the governments stalled the pandemic crash with fiat money, understandably. But Dogecoin rose to fame in February when Elon Musk took to Twitter to post memes around Dogecoin. Just some Twitter memes saw Dogecoin surge to 2,400% in three months. And just one statement of Musk on Saturday Night Live that Dogecoin “is a hustle” sent the coin down more than 20%. 

Now analysts say that backing from Amazon’s Jeff Bezos could send Dogecoin to new highs. Isn’t it absurd that Dogecoin multiplied the very thing BTC tried to prevent (accumulation of power)? A developer created Dogecoin in 2013 as a spoof to BTC. So if you look at the logic, a joke will only grow when that joke goes viral. But putting your money in a joke is no joke. 

Musk has not invested a penny in Dogecoin. And anything remotely crypto around Musk is that his company Tesla has invested US$1.5 billion in BTC as an alternative investment. Instead of burning your hard-earned money in a good laugh, read between the lines. Even if you are just following Musk, follow him correctly. He never misled anyone. Musk has clearly stated in one of his tweets that he only owns Tesla shares. 

Which is a better buy – Bitcoin versus Dogecoin? 

I am not in favour of cryptocurrency as it still has a rocky regulatory road to travel before becoming an official currency. But there is no harm in investing only a small fraction, less than 2% of your portfolio in BTC. Remember, Dogecoin is unlimited and gives tremendous power to influencers like Musk and Bezos, destroying the very purpose of an alternative to fiat currency.

Whereas, companies and hedge funds are looking to accept BTC. Canada has also accepted BTC as an investment. Canada launched North Americas’ first BTC ETF Purpose Bitcoin CAD ETF (TSX:BTCC.B). The ETF buys and stores BTC and follows all the rules of the stock exchange. 

You can’t buy BTC through your Tax-Free Savings Account (TFSA), but you can buy the Purpose Bitcoin ETF from this account. You have to pay 1% in asset management charge to get exposure to the value of the BTC pile stored in a digital vault. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Fool contributor Puja Tayal has no position in any of the stocks mentioned. David Gardner owns shares of Amazon and Tesla. Tom Gardner owns shares of Tesla and Twitter. The Motley Fool owns shares of and recommends Amazon, Microsoft, Tesla, and Twitter and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon.

More on Investing

money cash dividends
Dividend Stocks

Want Passive Income? 1 TSX Stock for $8/Day in Dividends

If you need cash right away, then this TSX stock can make you passive income from a stable dividend that…

Read more »

edit Balloon shaped as a heart
Dividend Stocks

My 3 Favourite TSX Dividend Stocks Right Now

Canadian dividend stocks make for great long-term buy-and-hold investments.

Read more »

value for money
Dividend Stocks

3 Incredibly Cheap Dividend Stocks to Buy for Dependable Passive Income

Now is an excellent time to load up on Canadian dividend stocks. Here are top picks that are all trading…

Read more »

A close up image of Canadian $20 Dollar bills
Dividend Stocks

3 Simple TSX Stocks to Buy With $25 Right Now

Canadians with capital of as low as $25 can purchase three simple stocks right now and earn recurring passive income…

Read more »

edit Person using calculator next to charts and graphs
Dividend Stocks

2 No-Brainer U.S. Stocks for Investors in August

Here are two undervalued U.S. stocks to diversify your investment portfolio. They both pay safe and growing dividends!

Read more »

Tech Stocks

Got $300? 2 Simple TSX Stocks to Buy Right Now

Investing whatever little sum you have saved up as soon as possible is one of the best ways to keep…

Read more »

money cash dividends
Stocks for Beginners

Grow Your $2,000 and Get $160 Income, Too: Buy 2 TSX Stocks Now

What if a stock can give both dividends and growth? You can have your cake and eat it too with…

Read more »

Growth from coins
Dividend Stocks

1 Dividend Juggernaut That Could Grow Fast in a Recession

Restaurant Brands International (TSX:QSR)(NYSE:QSR) stock looks way too cheap to ignore, even going into an economic downturn.

Read more »