The price of Dogecoin spiked upwards in April on the back of news that Tesla boss, Elon Musk, was putting together a takeover bid for Twitter, the microblogging platform.
The takeover is now the subject of a court battle between Mr Musk and Twitter – a battle that could last for months.
Dogecoin, a cryptocurrency often promoted by Musk on his own Twitter feed, is popular with amateur investors. It’s based on an internet ‘meme’ – a witty or memorable online phrase or image – of a type of Japanese dog called Shibu Inu that has subsequently become the cryptocurrency’s mascot.
Here’s what you need to know about both buying – and selling – Dogecoin.
Note: investing in cryptocurrencies is speculative and your entire capital is at risk. Cryptocurrencies are given to volatile price swings. The UK’s financial watchdog, the Financial Conduct Authority (FCA), issues regular warnings about the crypto industry.
The FCA reminds would-be traders that crypto assets are unregulated and high-risk. It says this means people are “very unlikely to have any protection if things go wrong, so people should be prepared to lose all their money if they choose to invest in them”.
How to buy DOGE in 4 steps
1. Choose a crypto exchange or broker
Both a crypto exchange and a crypto broker can help you buy DOGE, but the two are slightly different.
An exchange is a platform on which buyers and sellers can trade cryptocurrencies. A broker is an interface that interacts with exchanges on your behalf.
Some exchanges only deal in crypto, so if you’re new to investing and need to use a fiat currency (for example, sterling in the UK) to buy crypto, make sure you choose an exchange that accepts it.
If you choose a broker instead, be aware of its rules around moving your assets off a brokerage platform because some brokers don’t allow you to move holdings out of your account. If you wanted to store your DOGE in a crypto wallet for added security, this would not be possible.
Read a list of FCA-registered cryptoasset companies here.
2. Choose a payment method
Most exchanges let you add funds to your account from your credit or debit card, bank account, crypto wallet or other payment service. Transaction fees may apply, and your payment method may have a bearing on the amount you’ll pay.
Use a credit card and the card issuer will treat it as a cash advance, which will be subject to a higher rate of interest than a normal purchase.
3. Buy your DOGE
Within your chosen exchange, find the DOGE currency option and enter the amount you want to invest.
4. Select secure storage
Unlike a bank account holding fiat currency, cryptocurrencies like DOGE aren’t protected by the Financial Services Compensation Scheme. This means you would not be entitled to reimbursement if your DOGE were stolen, you lost your access codes, or if the exchange/broker in question went bust.
A broker might not provide any choice about where your DOGE is stored, but while an exchange might not provide an integrated crypto wallet, you’re free to store it in wallets elsewhere – whether ‘hot’ or ‘cold’.
Hot wallets are stored online, making them more convenient but also more exposed to hackers.
Cold wallets are external storage devices such as hard drives or solid-state drives. They’re arguably more secure but if you were to lose your own access codes there may be no way for you to ever access your assets.
Whichever you choose, you may be charged a fee for exporting your DOGE to an external wallet.
Alternative ways to invest in DOGE
Buying shares in an organisation which uses or owns cryptocurrencies and the blockchain that powers them is another way to invest in cryptocurrency. If the company is subject to regulatory scrutiny, you may feel this is a more secure way to invest.
Nvidia (NVDA), for example, is a manufacturer of graphics processing units which are used by cryptocurrency miners. Paypal (PYPL), meanwhile, allows users to buy and sell select cryptocurrencies.
Note: Nvidia and Paypal are used for illustrative purposes and are not share recommendations. Investing in publicly traded companies is no guarantee that you’ll make money or even recoup your investment. You’ll require an online investing platform or trading app to get started.
