What Companies Accept Dogecoin and Other Cryptos as Payment?

What Companies Accept Dogecoin and Other Cryptos as Payment?

Dogecoin is not the most valuable cryptocurrency (that would be Bitcoin) or the one with a fast-growing financial sector growing on top of it (that would be Ethereum), but it certainly punches above its weight when it comes to attention from enthusiasts and the general public. Named for the adorable Shiba-Inu meme, Dogecoin has become something like the fast of the latest burst of enthusiasm for cryptocurrency.

While its value bounces up and down constantly, getting namechecked by celebrities like Elon Musk and Snoop Dogg, it is not only being adopted as meme-fodder and comedy material, but also by some businesses as a means of payment.

Recommended: A Guide to Meme Stock Investing

Dogecoin Basics

Dogecoin, as of September 21, 2021, is worth almost $28 billion and more than $1 billion of it is traded every day. While this may seem like a lot — and enough to put it in the cryptocurrency top ten according to CoinMarketCap — it’s still relatively minor compared to Bitcoin ($810 billion, $43 billion in daily volume) or Ethereum ($356 billion, $26 billion). And because so much of the currency has been “minted,” the per Doge value is “low” — about 21 cents with around 131 billion coins.

Recommended: SoFi’s Crypto Guide for Beginners

What’s the History of Dogecoin

Jackson Palmer created Dogecoin in 2013 as both a reference to the then-popular meme and to what was then seen as an explosion of interest in Bitcoin. In early 2018, during another huge runup in crypto prices, Dogecoin’s market cap got to over $1 billion, which may have been seen as extreme at the time (it would fall back down to around $400 million), but was nothing compared to what was coming. Between April 8 and May 8 of this year, Dogecoin’s market cap rose from around $8 billion to almost $95 billion, before settling at around $23 billion.

Recommended: How to Read Crypto Charts

While traders can buy and sell Dogecoin like any cryptocurrency on mainstream exchanges like Coinbase, it does not have the buzzing hive of developer activity and use in businesses that others do. That’s slowly starting to change.

More than 240,000 people have signed a Change.org petition aimed at getting Amazon to start accepting the coin. While that request hasn’t gotten much traction, there are some businesses that have decided to start accepting it as a means of payment.

If you’re interested in spending your DOGE rather than trying to HODL, these are some of the businesses that accept Dogecoin.

Who Accepts Dogecoin in 2021?

The Dallas Mavericks

The NBA basketball team owned by tech billionaire, occasional crypto investor, and Shark Tank host Mark Cuban is not afraid of the occasional stunt to get attention. In March, the basketball team said in an official statement that it would be accepting Dogecoin for both tickets and merchandise. In his inimitable fashion, Cuban explained the reasoning for the decision:

“The Mavericks have decided to accept Dogecoin as payment for Mavs tickets and merchandise for one very important, earth-shattering reason, because we can! Because we can, we have chosen to do so. We have chosen to do so because sometimes in business you have to do things that are fun, engaging and hopefully generate a lot of PR. So we will take Dogecoin, today, tomorrow and possibly forever more. For those of you who would like to learn more about Dogecoin we strongly encourage you to talk to your teenagers who are on TikTok and ask them about it. They will be able to explain it all to you”

Cuban has also disclosed an investment in Dogecoin and promoted the cryptocurrency as akin to a lottery ticket.

AirBaltic

Around the same time the Mavericks said they would begin accepting Dogecoin as payment, the European airline AirBaltic made a similar announcement.

“As an innovative airline, we always strive to search for ways to improve the customer experience starting from the booking process. Over the years around 1000 clients have used the payment option, which may not seem like a lot, but still offers passengers a unique payment option hard to find elsewhere,” the airline CEO Martin Gauss said in a statement.

AirBaltic is majority owned by the Latvian state, adding an official level of approval to a cryptocurrency that, as its founder has said whenever anyone would ask, is meant to be a joke.

Newegg

The electronics online retailer said in April that it would start accepting Dogecoin. “We’re committed to making it easy for our customers to shop however works best for them, and that means letting them complete transactions with the payment method that suits them best. To that end, we’re happy to give Dogecoin fans an easy way to shop online for tech,” a Newegg executive said in a statement.

The Kessler Collection

The Kessler Collection owns several luxury hotels throughout the United States. In March, the company said it would “accept Bitcoin, Ethereum, Dogecoin.” The company specifically pointed to cryptocurrencies hitting “an all-time high” as a justification for the expansion of the number of currencies they would accept.

Bitcoin

Dogecoin

Ethereum

Tether

Bitcoin Cash

Newegg Yes Yes Yes No Yes
Dallas Mavericks Yes Yes No No No
The Kessler Collection Yes Yes Yes No No
AirBaltic Yes Yes Yes No Yes

The Takeaway

While merchants have not begun accepting any types of cryptocurrencies — let alone Dogecoin — en masse, a handful of companies have begun accepting the meme coin. Given its volatility, however, it can be hard to know whether using Dogecoin to make purchases will end up saving or costing the buyer money.

If you’re interested in buying Dogecoin or other cryptocurrencies, a great way to get started is an online crypto trading platform. With SoFi, you can use the app to buy cryptocurrency, including coins like Bitcoin, Ether, Dogecoin (unavailable in New York), Cardano, Litecoin and a wide selection of other cryptos.

Photo credit: iStock/Ksenia Raykova


SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).
2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.
3) Cryptocurrency is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.
For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.sofi.com/legal. Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer or pre-qualification for any loan product offered by SoFi Lending Corp and/or its affiliates.
Crypto: Bitcoin and other cryptocurrencies aren’t endorsed or guaranteed by any government, are volatile, and involve a high degree of risk. Consumer protection and securities laws don’t regulate cryptocurrencies to the same degree as traditional brokerage and investment products. Research and knowledge are essential prerequisites before engaging with any cryptocurrency. US regulators, including FINRA , the SEC , and the CFPB , have issued public advisories concerning digital asset risk. Cryptocurrency purchases should not be made with funds drawn from financial products including student loans, personal loans, mortgage refinancing, savings, retirement funds or traditional investments. Limitations apply to trading certain crypto assets and may not be available to residents of all states.
External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
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12 Benefits of Cryptocurrency in 2021

12 Benefits of Cryptocurrency in 2021

Crypto is a relatively new asset class that began with the creation of the Bitcoin blockchain in 2009. The primary benefit of Bitcoin and most other cryptocurrencies based on blockchain technology is that they don’t have a central authority, payment processor, or company owner.

Instead, crypto networks are peer-to-peer, meaning people can transact directly with one another. Many of the additional benefits of cryptocurrency stem from their decentralized and peer-to-peer nature. Let’s look at some positives of cryptocurrency in this crypto guide.

Benefits of Owning Crypto in 2021

1. Easy Transactions

Crypto transactions can be made easily, at low cost, and in a manner more private than most other transactions. Using a simple smartphone app, hardware wallet, or exchange wallet, anyone can send and receive a variety of cryptocurrencies.

Some types of cryptocurrencies, including Bitcoin, Litecoin, and Ethereum, can be bought with cash at a Bitcoin ATM. A bank account isn’t always required to use crypto. Someone could buy bitcoin at an ATM using cash then send those coins to their phone. For people who lack access to the traditional financial system, this may be one of the biggest pros of cryptocurrency.

2. Incredible Security

Because they are based on cryptography and blockchain security, decentralized cryptocurrencies tend to make for secure forms of payment. This might be one of the most certain benefits of cryptocurrency.

Crypto security is determined in large part by hash rate. The higher the hash rate, the more computing power it would take to compromise the network. Bitcoin is the most secure cryptocurrency, having the highest hash rate of any network by far.

Using a crypto exchange is only as secure as the exchange itself, however. Most incidents of crypto being hacked involve exchanges being hacked or individuals making mistakes.

3. Short Settlement Times and Low Fees

While some people only want to invest in cryptocurrency for price appreciation, others might find benefit in the ability to use crypto as a medium of exchange.

Bitcoin and Ether transactions could cost anywhere from nickels and dimes to several dollars or more. Other cryptocurrencies like Litecoin, XRP, and others can be sent for pennies or less. Payments for most cryptos settle in seconds or minutes. Wire transfers at banks can cost significantly more and often take three to five business days to settle.

4. Exponential Industry Growth

The cryptocurrency industry has been one of the fastest-growing markets that most of us have seen in our lifetimes. Being involved now might reasonably be compared to being involved with companies on the leading edge of the internet back in the 1990s and early 2000s.

The total market cap of the cryptocurrency market in 2013 was about $1.6 billion. By June 2021, it rose to over $1.4 trillion.

5. Outsized Returns

It’s no secret that Bitcoin has been the best-performing asset of the last 12 years. When it began in 2009, Bitcoin essentially had no value. In the following years it would rise to a fraction of a penny and then eventually to tens of thousands of dollars. This represents millions of percentage points’ worth of gains. By comparison, the S&P 500 index of stocks returns an average of about 8% per year.

Some altcoins have outperformed Bitcoin by wide margins at times, although many of those later saw their prices collapse. Gains like these might be among the most well-known cryptocurrency benefits. (The losses, on the other hand, may be among the most well-known drawbacks.) Volatility has characterized prices in the crypto space, which has been one of the key benefits of cryptocurrency for day traders and speculators.

6. More Private Transactions

Privacy can be one of the benefits of cryptocurrency, but crypto isn’t as private as some people might think. Blockchains create a public ledger that records all transactions forever. While this ledger only shows wallet addresses, if an observer can connect a user’s identity to a specific wallet, then tracking transactions becomes possible.

While it’s worth noting that most crypto transactions are pseudonymous, there are ways to make more anonymous transactions. Coin mixing services group transactions together in a way that makes it hard to pick them apart from one another, confusing outside observers. Individuals who run a full node also make their transactions more opaque because observers can’t always tell if the transactions running through the node were sent by the person running the node or by someone else.

Methods like these are for more advanced users and could prove difficult for those new to crypto. So while absolute privacy is really not one of the main positives of cryptocurrency, transactions are still generally more private than using fiat currency with third-party payment processors.

7. Portfolio Diversification

Cryptocurrency has become known as a non-correlated asset class. Crypto markets largely function independently of other markets, and their price action tends to be determined by factors other than those affecting stocks, bonds, and commodities.

Any asset that has risen by millions of percentage points over just twelve years, as a number of crypto coins have, clearly is not correlated to anything else. But it’s worth noting that during the last few years, cryptos have begun to sometimes trade in tandem with stocks for short periods of time.

8. Inflation Hedge

Mineable cryptocurrencies with a limited supply cap, like Bitcoin, Litecoin, and Monero, to name a few, are thought to be good hedges against inflation. Because monetary inflation can occur when central banks and governments print more money, increasing the supply, things that are more scarce tend to appreciate in value.

With more and more new dollars chasing fewer and fewer coins, the price of these fixed-supply coins as measured in dollars has a higher chance of going up. Additionally, the Bitcoin protocol, for example, is also designed to keep those coins scarce regardless of what happens with monetary policy.

Recommended: How to Invest During Inflation

9. Cross-Border Payments

Cryptocurrencies have no regard for national borders. An individual in one country can send coins to someone in a different country without any added difficulty. With traditional financial services, getting funds across international borders can take a long time and come with hefty fees. In some cases, doing so might not even be possible due to regulations, sanctions, or tensions between specific countries.

10. A More Inclusive Financial System

Some of the benefits of cryptocurrency extend to people who don’t have access to the traditional financial system. Due to its decentralized and permission-less nature, one of the benefits of cryptocurrency is that anyone can participate.

People don’t have to have permission from any financial authority or government to use the crypto ecosystem. (Though it’s worth noting that Bitcoin mining is banned in China.) They also don’t necessarily need to have a bank account. There are billions of people today who are “unbanked,” meaning they have no access to the financial system, including bank accounts. With crypto, all these people need is a smartphone, and they can essentially become their own bank.

11. Transactional Freedom

One of the great benefits of crypto is that it can be used to exchange value between two parties. This can be done independently of any third-party, making the transaction freer and censorship-resistant.

Banks or other payment processors can choose to cut off services to anyone for any reason. This can make things difficult for some journalists, political dissidents, or other individuals working in nations with oppressive government regimes. Because there is no central authority governing Bitcoin or most other cryptocurrencies, it’s very difficult to stop anyone from using them.

12. 24/7 Markets

Stock markets are only open on weekdays during the regular business hours of 9:30 am to 4:30 pm Eastern Time, in the case of the New York Stock Exchange (NYSE). During nights, weekends, and on holidays, most traditional financial markets are not open for business.

Crypto markets, on the other hand, trade 24 hours a day, seven days a week, without exception. Some of the only things that could interrupt a person’s ability to trade cryptocurrency would be a power outage, internet outage, or centralized exchange outage.

The Takeaway

The above are just a few of the most important advantages of cryptocurrency. Of course, there are potential flaws as well — its volatility being a major downside. As with anything, those interested in buying, selling, and trading crypto would be wise to do their research before getting involved in the crypto market.

Ready to invest in crypto? With a crypto trading account from SoFi Invest®, you can buy and sell Bitcoin, Ethereum, Litecoin, Dogecoin, Cardano and more.

Find out how to get started with SoFi Invest today.

Photo credit: iStock/tolgart


SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).
2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.
3) Cryptocurrency is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.
For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.sofi.com/legal. Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer or pre-qualification for any loan product offered by SoFi Lending Corp and/or its affiliates.
Crypto: Bitcoin and other cryptocurrencies aren’t endorsed or guaranteed by any government, are volatile, and involve a high degree of risk. Consumer protection and securities laws don’t regulate cryptocurrencies to the same degree as traditional brokerage and investment products. Research and knowledge are essential prerequisites before engaging with any cryptocurrency. US regulators, including FINRA , the SEC , and the CFPB , have issued public advisories concerning digital asset risk. Cryptocurrency purchases should not be made with funds drawn from financial products including student loans, personal loans, mortgage refinancing, savings, retirement funds or traditional investments. Limitations apply to trading certain crypto assets and may not be available to residents of all states.
External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Third Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.
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Pros and Cons of Investing in Crypto Exchanges

Pros and Cons of Investing in Crypto Exchanges

Crypto exchanges provide a platform for people to buy and sell cryptocurrencies with their fiat currency or to trade different cryptocurrencies for one another. These companies take a small fee with each transaction. Given the increasing popularity of crypto, exchanges with a lot of customers and high trading volume can wind up becoming very profitable businesses.

Some crypto exchanges become so profitable that they issue shares of equity in their company on a public stock exchange. This happened for the first time in 2021, when one of the oldest crypto exchanges was the first in the industry to become a publicly traded company.

Why would someone invest in crypto exchange companies? What might be some of the potential benefits and drawbacks to such an investment? We’ll answer questions like these, and more.

A Word on IPOs

First, investors should be aware of the fact that many initial public offerings (IPOs) create a lot of fanfare and buzz. But they don’t always deliver right away.

It’s not uncommon for companies to make their debut on the stock market at valuations that far exceed their true market value. It’s common for IPO stocks to see their prices tank shortly after going public.

While this doesn’t have to dissuade investors from a company they would otherwise remain bullish about, it’s an important thing to keep in mind.

Private investors like venture capital funds can get in on the action before the public, so they don’t care as much about what happens to share prices post-IPO. But for retail investors, buying a lot of shares on the day a stock goes public has quite often proven to be a mistake, at least in the near-term.

Pros of Investing in a Crypto Exchange

Some of the pros of investing in crypto exchanges include potentially taking advantage of rapid growth, owning a piece of crypto infrastructure in a regulated way, and holding a security that can be subjected to more traditional valuation methods than a cryptocurrency.

Rapid Growth

The growth seen in the crypto industry has been unparalleled. In 2015, the entire cryptocurrency market cap was about $7 billion. Today that market cap has risen to over $1 trillion, peaking at over $2 trillion in early 2021.

Bitcoin was only just invented twelve years ago in 2009. To put that into context, it took companies like Apple, Google, and Amazon an average of 20 years or more to reach a valuation in excess of $1 trillion.

If this growth continues at even a fraction of its current rate, then there is a chance that broad investments in the sector like crypto exchange stocks could see substantial returns on a 5-, 10-, or 20-year timeframe. (But as with anything having to do with investing, past performance is no guarantee of future results.)

Indirect Exposure to the Crypto Market

Investing in the stocks of crypto exchanges provides a proxy for investing in cryptocurrency itself. In other words, investors can gain indirect exposure to the crypto market, without exposing themselves to the potential volatility of crypto itself. Investors who aren’t sure about cryptocurrency as an asset class, or who would rather not learn how to own and hold cryptocurrency tokens on their own, might find these stocks appealing.

Buying shares of a crypto exchange lets investors hold a piece of the infrastructure that keeps the cryptocurrency world functioning. Most exchanges also have value beyond simply being brokerages for the buying and selling of cryptocurrencies.

• Exchange-hosted wallets allow users to send crypto off-platform.

• Some exchanges have begun providing staking services, where users who hold proof-of-stake coins can earn what amounts to a crypto dividend by holding those coins in their exchange wallet.

• Exchanges are even beginning to get into borrowing and lending services, letting users lend out their crypto to earn interest or take out a loan using their crypto as collateral.

More Traditional Valuation Methods

The shares are an investment in a real company with cash flow, earnings, a board of directors, and all the things that traditional investors are familiar with. This makes it easier for some investors to grasp than cryptocurrency itself. Crypto exchange stocks can be treated as any other equity in a portfolio. They can also be scrutinized in the same way, using valuation models like the discounted cash flow model, the dividend discount model, and others.

While it seems likely that crypto exchange stocks will have some correlation to the price action and value of Bitcoin and other cryptocurrencies, the relationship might not be 1:1. Traditional company metrics like quarterly earnings will likely also impact share prices.

Cons of Investing in Crypto Exchanges

Some of the cons of investing in crypto exchanges include the potential for speculation, regulatory concerns, a lack of historical precedent, the business models involved.

Potential for Speculation

While crypto markets are often criticized as being speculative, stock markets also have their fair share of speculators. And when crypto markets rally, it’s feasible that some investors could get overly bullish on crypto exchange stocks, creating a mania that ends in a crash. This might be the exact type of thing investors are hoping to avoid by choosing to invest in crypto exchanges rather than actual cryptocurrencies.

Then again, it’s also possible that crypto exchange stocks weather the storm of a crypto market downturn better than the crypto market itself. The phenomenon of exchanges being publicly-traded securities is too new to tell for sure yet.

Lack of Historical Precedent

2021 is the first year that any crypto exchange has been made publicly tradable on a stock exchange. No one knows exactly what will happen, how the securities will trade, what will impact their prices, and so on. Much of the outlook is conjecture at this point.

The future of blockchain technology itself, which powers cryptocurrency, is only 12 years old and also has a degree of uncertainty behind it.

Regulatory Concerns

It’s widely suspected that financial regulators will tighten the noose around cryptocurrencies at some point. What form that might take, and what the impact could be, is largely unknown. Some say that greater regulatory clarity would be a good thing, as larger investors would feel more comfortable entering the space with significant amounts of capital. Others believe over-regulation could cripple the industry and the asset class as a whole. Again, this is somewhat of an unknown.

Fee-Based Business Model

Typically, most of an exchange’s revenue comes from transaction fees. It has been noted that over time, fees like these tend to see downward pressure due to competition. In the world of stock brokerages, for example, trading fees on most platforms have fallen to zero in recent years.

While this could be a possibility, others have argued against it, saying that crypto isn’t analogous to stocks in this respect. Users are also paying for additional services like custody services, or holding crypto, which is an important factor to consider. An exchange-hosted wallet also lets users send and receive crypto transactions without having to create and manage a wallet of their own.

The Takeaway

Investing in crypto exchanges isn’t that different from investing in other companies. And as always, investors should educate themselves about what they’re buying and why. An investigation into the company’s activities, management, history and earnings reports would be warranted regardless of which company an investor chooses.

For investors interested in trading cryptocurrency directly, SoFi Invest® makes it easy to build a crypto portfolio with a choice of more than 25 coins, including Bitcoin, Ethereum, Litecoin, Dogecoin, and Cardano.

Find out how to get started today.

Photo credit: iStock/valiantsin suprunovich


SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).
2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.
3) Cryptocurrency is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.
For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.sofi.com/legal. Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer or pre-qualification for any loan product offered by SoFi Lending Corp and/or its affiliates.
Crypto: Bitcoin and other cryptocurrencies aren’t endorsed or guaranteed by any government, are volatile, and involve a high degree of risk. Consumer protection and securities laws don’t regulate cryptocurrencies to the same degree as traditional brokerage and investment products. Research and knowledge are essential prerequisites before engaging with any cryptocurrency. US regulators, including FINRA , the SEC , and the CFPB , have issued public advisories concerning digital asset risk. Cryptocurrency purchases should not be made with funds drawn from financial products including student loans, personal loans, mortgage refinancing, savings, retirement funds or traditional investments. Limitations apply to trading certain crypto assets and may not be available to residents of all states.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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Dogecoin vs Bitcoin: Key Differences to Know

Dogecoin vs Bitcoin: Key Differences to Know

When it launched in 2014, Dogecoin (DOGE) was literally a joke currency. Based on the famous meme of a Shiba Inu dog with grammatically incorrect phrases surrounding it like “so wow,” “very style,” or “much like,” DOGE had very little value for a number of years.

Then, in 2021, the meme crypto rose from obscurity after being promoted by a number of rich and famous people. The price of DOGE skyrocketed from a fraction of a penny to about $0.70 at its peak before crashing down to $0.15. At the time of writing, one DOGE traded for $0.24.

By contrast, Bitcoin (BTC) launched in 2009 with a white paper by the pseudonymous person or people known as Satoshi Nakamoto who described it in a white paper as “peer-to-peer digital cash.”

Here is a guide to some of the key differences between Dogecoin vs Bitcoin.

5 Key Differences Between Dogecoin and Bitcoin

Difference #1: Purpose of the Coin

Bitcoin’s creators developed it to function somewhat like digital gold. While Bitcoin can only handle about seven transactions per second (TPS), the total value transacted on the network far exceeds that of any other coin. In other words, people choose BTC for payments involving large sums of money.

Some individuals also consider Bitcoin an investment, a view that has paid off as Bitcoin has compounded at an average annual rate of 100% – 200%. From March 2020 to July 2021, Bitcoin had risen by about 800%, generating incredible returns for those who were able to HODL through the volatility.

Meme-inspired Dogecoin, on the other hand, began as a fun way for people to learn about cryptocurrency. A meme coin that traded at a price of a tiny fraction of a penny, people could send it to each other for educational purposes or as a niche hobby. Several online merchants now accept DOGE, although it’s not as widely accepted as BTC.

Recommended: What is Dogecoin? A Guide to the Original Meme Crypto

Difference #2: Market Cap

There is no contest in terms of market cap when comparing the two coins. At the time of writing, Bitcoin’s market cap was about $867 billion, while the market cap of Dogecoin was just over $31 billion. Bitcoin is currently the largest crypto by market cap, while Doge coin ranks ninth.

For much of its history, DOGE ranked somewhere between the 30th and the 50th largest cryptocurrencies by market cap, if not much lower. During the altcoin frenzy of 2017 and 2018, the meme coin reached a market cap of $1 billion for the first time, and its price breached the $0.01 mark.

Bitcoin has always been the largest cryptocurrency by market cap. With the longest history, the most secure network, and the most robust community of users and volunteer developers, other coins can’t compete for the top spot in the same way. When it comes to big-time investors looking to gain exposure to crypto with a lot of working capital, they tend to allocate most of that capital to Bitcoin, often seeing the other options as too risky.

It seems likely that Bitcoin will remain the largest coin by market cap, although the speed with which some altcoins like Dogecoin have climbed the ranks has been remarkable.

Difference #3: Supply

The supply and demand dynamics of Dogecoin and Bitcoin are extremely different.

One of Bitcoin’s properties that makes it valuable is a deflationary monetary policy. Over time, the supply of Bitcoin decreases rather than increases. Every four years or so, the block reward for miners gets reduced by 50% in a process known as “the halving.” There will only be 21 million Bitcoin ever mined.

Recommended: How Many Bitcoins Are Left?

Dogecoin, on the other hand, has an inflationary monetary policy. There is no limit to the amount of DOGE that miners can create, although there’s an annual cap of 5 billion coins issued. The DOGE blockchain stopped halving a long time ago, so the mining reward remains static at 10,000 DOGE per block.

This means that people can keep mining DOGE and dumping it on the market ad infinitum. Rather than sending the price “to the moon,” the supply and demand dynamics of DOGE imply that it’s much more likely to crater toward the center of the Earth as time goes on.

Difference #4: Security, Tech Development

Until the recent flurry of activity surrounding Dogecoin, its Blockchain had a long period of stagnant development. Between the years 2015 and 2020, there wasn’t a single developer update to DOGE. In 2021, developers have proposed several upgrades that could take effect before the year is over.

Dogecoin began as an almost exact clone of Bitcoin with a few minor changes, and it remains a close replica, but there’s a large difference in security between the cryptocurrencies.

The Bitcoin network is more secure than the Dogecoin network by many orders of magnitude. The hash rate of DOGE is less than 416 TeraHash per second (TH/s) while the hash rate of BTC is more than 120 ExaHash per second (EX/s). One TeraHash equals one trillion hashes while one ExaHash equals one quintillion hashes.

Why is this important? It means that conducting a 51% attack against Dogecoin would be relatively simple compared to conducting the same attack against Bitcoin. A 51% attack is when someone takes control of a network by owning the majority of hashing power.

This difference is because the DOGE Blockchain uses a different mining algorithm than Bitcoin’s. This is part of why DOGE is faster and easier to mine. While Bitcoin uses the SHA-256 algorithm, DOGE uses the Scrypt algorithm.

Difference #5: Block Time and Transaction Speed

This is the one area where Dogecoin has an advantage over Bitcoin, since the DOGE blockchain processes transactions more quickly and inexpensively than BTC transactions.

The DOGE blockchain processes a new block of transactions every minute. The BTC Blockchain processes a block every 10 minutes. While this might make DOGE more desirable as a means of exchange, it is less desirable as a store of value.

Because DOGE miners receive 10x the block rewards compared to Bitcoin miners, a higher supply of new Dogecoins entering the market tends to drive down the price.

Is Dogecoin the Next Bitcoin?

It would be difficult for Dogecoin to overtake Bitcoin as the mainstream cryptocurrency of choice. Bitcoin has 98% of the hashing power of all proof of work coins, and there’s little to indicate that Dogecoin or any of the other altcoins could meaningfully chip away at that advantage.

Recommended: What Are Altcoins? Guide to Bitcoin Alternatives

The Takeaway

Despite having risen to be among the top 10 cryptocurrencies by market cap, Dogecoin is still a meme coin. It launched as a joke seven years ago, and little has changed since then, other than some celebrity endorsements.

Cryptocurrency traders who want to make a lot of small, frequent transactions may prefer DOGE to Bitcoin because of its faster confirmation times and lower fees, but Bitcoin Lightning also works for this purpose.

By opening an account on the SoFi Invest brokerage platform, you can trade Bitcoin, Dogecoin, and other altcoins such as Ethereum, Cardano, or Litecoin. You can use the app to manage your holdings in not only crypto but also stocks and exchange-traded funds.

Photo credit: iStock/Ksenia Raykova


SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).
2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.
3) Cryptocurrency is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.
For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.sofi.com/legal. Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer or pre-qualification for any loan product offered by SoFi Lending Corp and/or its affiliates.
Crypto: Bitcoin and other cryptocurrencies aren’t endorsed or guaranteed by any government, are volatile, and involve a high degree of risk. Consumer protection and securities laws don’t regulate cryptocurrencies to the same degree as traditional brokerage and investment products. Research and knowledge are essential prerequisites before engaging with any cryptocurrency. US regulators, including FINRA , the SEC , and the CFPB , have issued public advisories concerning digital asset risk. Cryptocurrency purchases should not be made with funds drawn from financial products including student loans, personal loans, mortgage refinancing, savings, retirement funds or traditional investments. Limitations apply to trading certain crypto assets and may not be available to residents of all states.
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What Are Separately Managed Accounts? How Do They Work?

What Are Separately Managed Accounts (SMAs)?

Separately managed accounts, also referred to as managed accounts or controlled accounts, are investment vehicles that hold individual securities. Investors own those securities — which may include stocks, bonds and cash — but a professional money manager oversees them.

High and ultra-high net worth investors who want to build customized portfolios often use these types of accounts, which allow investors to keep their assets separate, versus pooling funds alongside other investors through a mutual fund or exchange-traded fund (ETF).

They’re an increasingly popular method of investments, with the separately managed accounts increasing by more than a third in the first quarter of 2021. Understanding the differences between separately managed accounts and mutual funds or other types of pooled investments can help you decide if it’s the right approach for you.

What Is SMA in Finance?

A separately managed account is an investment account owned by an individual investor but managed by someone else. The manager may be a financial advisor or a wealth management firm. The advisor or wealth manager can typically make investment decisions on the investor’s behalf, including when to buy or sell securities.

SMA investing is typically the domain of individuals with a higher net worth or more disposable income to invest. The minimum investment for a separately managed account may be in the five- to six-figure range, depending on the wealth manager’s requirements. Investors may choose to open separately managed accounts in addition to taxable brokerage accounts or Individual Retirement Accounts (IRAs).

Recommended: What is a Brokerage Account and How Does it Work?

How Do SMAs Work?

Investors pay a financial professional a fee to manage the separately managed accounts that they own. The financial advisor handles day-to-day decision making, but the investor retains control over the overall investment strategy. That includes making initial decisions about which securities to hold inside a separately managed account.

A wealth management firm may give SMA investors several portfolio options to choose from. These portfolios can include a mix of different securities that reflect a specific investment strategy or goal. For example, SMA investing may focus on:

• Increasing tax efficiency

• Generating current income

• Managing interest rate risk

• Producing above-average returns through trend trading

• Promoting ESG (environmental, social and governance) principles

Within the portfolio there may be stocks, bonds, and cash or cash equivalents. Stock investments may include small-cap, mid-cap, or large-cap companies. It would be up to the investor to choose which strategy to follow, based on their individual needs, risk tolerance and objectives. Once they make their selection, the financial advisor or wealth manager would assume responsibility for overseeing the SMA in exchange for a fee.

Recommended: What is Market Cap?

Financial professionals typically calculate the fees on separately managed accounts fees based on a percentage of the assets under management. Often, they use a tiered structure in which the percentage decreases as your account balance climbs. So the more you invest in a separately managed account, the less you’ll pay as a percentage of assets for professional management.

Wealth managers may also charge separately managed accounts fees based on the type of investment strategy. So, for instance, you may pay one management fee for an equities-based strategy but a different fee if you prefer to focus on fixed income. Generally, separately managed accounts do not carry trading or transaction fees the way there would be in a traditional brokerage account.

How Can SMAs Benefit an Investor?

Separately managed accounts can yield several benefits to investors. Generally, SMA investing may be a good fit for higher net worth investors who want to take advantage of professional asset management while still having a say in what happens with their portfolios. SMAs sit at the opposite end of the spectrum from robo-advisors, which offer automated investing directed by an algorithm.

Here are some of the key benefits associated with separately managed accounts.

Control, Transparency, and Customization

While an asset manager may make investment decisions on an investor’s behalf, the investor still has the final say on what happens with their portfolio inside a separately managed account. For instance, if you’re offered a prebuilt portfolio you may be able to exclude certain securities or request that others be added to align with your investment goals. Or you may be able to work with your advisor to hand-pick all the securities that are held inside an SMA, or to change the direction of the strategy in the case of a recession or other market event. Either way, you always directly own the securities held inside your account.

Tax Efficiency

Managing tax liability in an investment portfolio matters. The more tax efficient your portfolio is, the more of your returns you get to keep. With separately managed accounts, a financial advisor or wealth manager can implement tax-loss harvesting strategies to help you get the most from your investment dollars.

Cost

As mentioned, with separately managed accounts fees are typically asset-based. That means you typically won’t pay commission fees and since you’re investing in individual securities versus pooled investments (i.e. mutual funds or ETFs), you don’t have to pay fund expense ratios either. Compared to the fees associated with investing in mutual funds or trading in taxable brokerage accounts, SMAs can be more cost-friendly for investors.

What Are the Drawbacks of SMAs?

While separately managed accounts may work well for some types of investors they aren’t necessarily a good fit for everyone. Considering the possible disadvantages is also important for deciding if this investment strategy may be right for you.

Here are some of the downsides of SMAs to keep in mind.

Investment Minimums

Separately managed accounts may have higher minimum investment requirements, which may be a barrier to entry for some investors. For instance, instead of being able to invest with as little as $100 in a brokerage account you may need $100,000 or more to open a separately managed account. So if you’re just getting started with investing, you may not qualify for a separately managed account.

Less Diversification

Since separately managed accounts hold individual stocks, it’s harder for them to offer the same level of broad-based diversification as a mutual fund or exchange-traded fund which could hold hundreds or thousands of different stocks.

SMAs vs. Mutual Funds vs. ETFs

Separately managed accounts, mutual funds and exchange-traded funds all offer different pathways to investing. Whether you prefer one over the other can depend on your goals, risk tolerance and the amount you can invest. While you might assume they’re the same it’s important to understand how all three compare.

Separately Managed Accounts vs. Mutual Funds

When discussing separately managed accounts vs. mutual funds, you’re really talking about the difference between an individual investment and a pooled investment. With an SMA, your portfolio includes individual securities that you own. A mutual fund, on the other hand, is a pooled investment that includes money from multiple investors.

When you invest in a mutual fund, you don’t get to choose what the fund holds. That’s the job of a fund manager, who decides what to buy or sell, based on the fund’s objectives. So a fund may hold a mix of stocks, bonds, cash or other securities. You, along with the other investors who have pooled their money in the mutual fund, share in the fund’s returns or its losses.

Compared to separately managed accounts, mutual funds can have a much lower initial investment. You may need $500 or $1,000 to get started, versus tens of thousands of dollars. But you have much less control compared to SMAs and instead of paying an asset-based management fee, mutual funds charge expense ratios. This expense ratio reflects the annual cost of owning the fund.

The Difference Between SMAs and ETFs

The difference between SMAs and exchange-traded funds is very similar to the difference between separately managed accounts and mutual funds. Instead of building a portfolio that’s composed of individual securities and managed by a financial professional, you’re pooling money into a fund along with other investors. This fund can hold different securities and have specific goals. For example, there are ETFs that invest in gold.

Many investors begin by putting their money into exchange-traded funds or mutual funds, and then move some of their portfolio into a separately managed account once it grows larger.

Recommended: ETF vs. Mutual Funds: Learning the Difference

The Takeaway

Separately managed funds are a popular way for high net worth investors to have some control over their professionally managed funds when building an investment portfolio. However, if you can’t meet the high minimum investment requirements for a separately managed account, there’s another way to build wealth with professional guidance.

By opening a SoFi Invest brokerage account, you can invest automatically, with no SoFi management fees. Using the platform, you can choose either automated or active investing and build a portfolio of stocks, exchange-traded funds, and cryptocurrency.

Photo credit: iStock/adamkaz


SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).
2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.
3) Cryptocurrency is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.
For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.sofi.com/legal. Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer or pre-qualification for any loan product offered by SoFi Lending Corp and/or its affiliates.
Exchange Traded Funds (ETFs): Investors should carefully consider the information contained in the prospectus, which contains the Fund’s investment objectives, risks, charges, expenses, and other relevant information. You may obtain a prospectus from the Fund company’s website or by email customer service at [email protected] Please read the prospectus carefully prior to investing. Shares of ETFs must be bought and sold at market price, which can vary significantly from the Fund’s net asset value (NAV). Investment returns are subject to market volatility and shares may be worth more or less their original value when redeemed. The diversification of an ETF will not protect against loss. An ETF may not achieve its stated investment objective. Rebalancing and other activities within the fund may be subject to tax consequences.
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