Dogecoin (DOGE) Just Gave Investors 1 Irresistible Reason to Buy Now

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Dogecoin's potential as a digital currency

Dogecoin has a fixed amount of inflation. Every year, 5 billion coins are released as block rewards for Dogecoin miners. There's no maximum supply, but the inflation rate gradually decreases because the number of coins created per year stays the same while the existing supply grows larger.

For example, the current circulating supply for Dogecoin is about 150 billion coins. The inflation rate this year will be a little over 3%. In 10 years, the supply will be up to 200 billion, and the inflation rate will be 2.5%.

The diminished inflation rate means that for the next several decades, Dogecoin will have a fairly normal, healthy amount of inflation. New coins won't flood the market and lower the value. But since the supply is still increasing, there's less motivation to hoard Dogecoin, like there is with some big cryptocurrencies,(CRYPTO: BTC) being the most famous example. With a fixed maximum supply of 21 million, Bitcoin is a cryptocurrency that people hold because they expect the value to increase.

Dogecoin's website argues that this gives it a more "utilitarian and practical place in the economy than other cryptocurrencies." It's well-suited to work as a legitimate currency, and not just a store of value. Some big names in the crypto community seem to agree, as Elon Musk and Mark Cuban have both expressed support for Dogecoin as a payment method.

A risky bet

While Dogecoin could theoretically work as a digital currency, there are downsides. It's volatile, and it's only accepted at about 2,000 merchants right now. If you decide to buy Dogecoin, only invest what you'd be comfortable losing to avoid taking on too much risk.