Every dog has its day, and in the world of cryptocurrencies the luckiest dog recently has been Dogecoin. Everyone from Elon Musk to Mark Cuban has voiced their enthusiasm for the original cryptocurrency meme, setting it on a meteoric rise of more than 7,000% over the first half of 2021.
While its price has been wildly volatile, with a 78% drop in May 2022 from its all-time high of just over 70 cents per coin, Dogecoin continues to be a popular crypto option. If you’re wondering how to buy Dogecoin, here’s what you need to know.
How To Buy Dogecoin In 5 Steps
1. Consider How Much You Want to Invest in Dogecoin
While there are viral stories of people who invested trivial amounts in DOGE but are now millionaires, invest with caution. Cryptocurrencies are very risky investments, and Dogecoin is uniquely volatile because it has an unlimited supply.
Here’s how that works: For Dogecoin’s price to increase or even remain steady, investors have to buy more coins continually. Otherwise, the supply of DOGE rises rapidly and diminishes the value of all the coins already in circulation (think inflation on steroids). In fact, the limit on the number of Dogecoins was expressly removed by one of its creators to discourage people holding onto it long term. That’s in stark contrast to other major cryptocurrencies like Bitcoin, which have caps on how many coins are issued. This creates scarcity, which helps coins retain their value.
When deciding how much to invest, consider your overall financial situation, investment portfolio and risk tolerance. Experts don’t recommend you invest more than you’re willing to lose with cryptocurrencies in general.
2. Decide on a Cryptocurrency Exchange
To purchase Dogecoin, you’ll need to open an account with a cryptocurrency exchange, where buyers and sellers meet to exchange cryptocurrency for dollars. Popular exchanges include Coinbase, Binance Canada and Netcoins, all of which offer a simple, easy-to-use platform that charges higher fees as well as a more advanced trader platform with lower fees.
You can also purchase crypto through beginner-friendly investment apps like Wealthsimple Crypto, but keep in mind that these may not let you transfer your coins off of the app. For Wealthsimple Crypto, you can transfer Bitcoin and Ethereum into external wallets. but must convert other cryptocurrencies into cash to take them off-app. Some investors prefer to move their crypto into separate crypto wallets to protect their coins from hackers. In order to do that with a brokerage app like Wealthsimple Crypto if you’re preferred cryptocurrency on the app is not Bitcoin or Ethereum, you’d have to sell your coins and then rebuy them on an exchange to move them to a separate wallet, which kind of defeats the purpose of buying them with an investment app in the first place. All of this is to say if you even think you might want to move your coins to a separate wallet, you’re probably better off starting with an exchange.
An important note: While Dogecoin has become much more popular recently, it is not universally available on all crypto exchanges. Make sure any exchange you’re considering has DOGE available for purchase if you wish to buy it.
3. Select a Payment Option
Before you can begin trading cryptocurrencies, you must deposit money in your exchange or brokerage account. In most cases, the exchanges will let you deposit money from a checking or savings account. Some accept wire transfers and Interac e-Transfers.
Typically, you get instant access to a portion of the money of your deposit for trading. If you deposited a large amount of money—typically more than $1,000—you may have to wait a few days for the transfer to clear before you can use the entire deposit.
Note: A few exchanges allow you to use a credit card to buy Dogecoin and other cryptocurrencies. Before using a card to finance your crypto purchases, keep in mind that your credit card company will consider the money to be a cash advance and charge added fees and a higher APR. This can make investing in crypto even pricier and riskier. That’s why experts generally encourage people to avoid buying crypto this way.
4. Place Your Order for Dogecoin
Once your money is in your account, you can purchase Dogecoin. On the exchange’s trading or purchase platform, search for Dogecoin or enter its ticker symbol: DOGE. Then pick your trade type and input either the dollar amount you want to invest or specify how many Dogecoins you want to buy.
Once you place the order, it should go through immediately. Like other cryptocurrencies, Dogecoin is not limited by trading hours; you can buy and sell Dogecoin 24 hours a day, seven days a week.
5. Consider Your Storage Options
When you buy Dogecoin, it’s by default kept in your exchange’s or brokerage’s crypto wallet. Because these are generally connected to the internet, some investors prefer to withdraw the crypto they purchase from their exchange or brokerage and store it in another wallet.
You can choose to store your Dogecoin in a hot wallet or a cold wallet outside of your exchange. Hot wallets are digital and connected to the internet whereas cold wallets are physical hardware that you can disconnect, making them much less susceptible to hacking. Cold wallets, however, are generally more expensive than hot wallets, and you also run a greater risk of being unable to access your crypto currency if you lose or forget the password necessary to get into your cold wallet.
How to Sell Dogecoin
If you’d like to sell your Dogecoin, the process is very straightforward. You’ll go to your holdings on your crypto exchange or brokerage platform and enter the amount you’d like to sell. Then your order will be processed.
If you have made a profit investing in Dogecoin, you will likely have to pay capital gains tax. Failure to pay taxes on your crypto gains can result in substantial issues, including expensive penalties. If you’re not sure how to report your Dogecoin profits, consult a tax professional.
Should I Buy Dogecoin?
While Dogecoin infamously started out as a joke, investors take it a lot more seriously now. However, it’s still a very risky investment. That’s why experts recommend investing no more than 3% to 10% of your portfolio in cryptocurrencies.
How much you ultimately decide to invest in Dogecoin should be guided by your risk tolerance and your current financial situation. For example, if you’re behind on your retirement savings and don’t have an emergency fund, you should invest less money in Dogecoin. If you’re financially stable, are on target to meet your retirement goals and have a large financial cushion in the bank, you may be willing to invest more of your portfolio in Dogecoin.
Unsure if buying Dogecoin is right for you? Find a financial planner near you to discuss your goals and investment options.