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Sep

2022

What Is a Bump-Up Certificate of Deposit?

What Are Bump-Up Certificates of Deposit? All You Need to Know

By Laurel Tincher | Growing Wealth, Investing, money | Comments Off

A bump up certificate of deposit (CD), also known as a step-up CD or raise-your-rate CD, is a type of savings account that allows the account owner to “bump up” or increase the interest rate they earn if rates increase during the investment term. Typically one bump up is allowed, and the other terms of the CD remain the same after that.

The initial interest rate of a bump up CD is lower than other types of CDs, but it comes with the opportunity to earn a higher rate.

In this article, we will go over how bump-up CDs work, their advantages and disadvantages, and how to get started earning with this type of savings account.

How a Bump-Up CD Works

Bump-up certificates of deposit are similar to ordinary CDs in most ways.

If an investor buys into a bump-up CD account, it will start out with a certain interest rate. The investor will be required to deposit a certain amount of money to open the account and agree to keep it there for a specified period.

If, during the term of the CD, the issuer’s interest rates increase, the investor can ask the issuing bank to raise the interest rate they earn on their CD. This is quite different from a standard savings account, where the investor has no control over the interest rate. So if the initial rate is 2.0%, and during the maturity term the rate increases to 3.0%, the account holder can request a bump up to 3.0%.

If the interest rate drops to 2.5% sometime after that, the investor is protected and keeps their bump up to 3%.

Step-up CDs are similar, but the difference is the bank will automatically raise the interest rate throughout the term of the CD with a step-up CD. With a bump-up CD the rate is not automatically increased.

Usually, interest rates can only be increased one time during a CD term, but some banks do offer multiple bump-ups if the term of the CD is long. Also important to note, is that some banks put a cap on how high the interest rate can be bumped on a CD. So if interest rates go up a lot, CD owners may not be able to fully take advantage. Generally, bump-up CDs have a two- to four-year term. Like a regular CD, these accounts are FDIC-insured.

Recommended: How to Invest in CDs

Bump-Up CDs: Real World Example

Let’s say an investor opens a bump-up CD with a two-year term and an interest rate of 1.25%. One year into the CD term, the issuing bank’s interest rates rise, and they now offer 1.60% on the same type of CD. The investor can request that the interest rate on their CD be increased to the new rate of 1.60% for the second year of its term.

In this example, let’s say the investor deposited $10,000 into the CD when they opened it. If they had earned 1.25% on their money for the full two-year term, by the end of the term they would have $10,251.56 at the maturity date. However, if they earn 1.25% for the first year and 1.6% for the second year, at the maturity date they would have $10,285.00.

Earning an additional $34 may not seem like a significant difference, but it’s one of the easier and safer ways to have your money earn money.

Advantages of Bump-Up CDs

There are advantages to buying bump-up CDs, including:

• Ability to raise the CD’s interest rate during its maturity term instead of having to wait or open a new CD

• Take advantage of new, higher rates without any early withdrawal penalties

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Disadvantages of Bump-Up CDs

Although there are advantages to bump-up CDs, they come with some downsides as well:

• Since bump-up CDs typically only allow one bump up, they are recommended for investors who have a deep understanding of the interest-rate system and what might happen during their investment term.

• The initial interest rate on bump-up CDs tends to be lower than other types of CDs. So even though there is the ability to raise the rate later, a traditional certificate of deposit may still earn more interest since it likely starts at a higher rate.

• Interest rates may not go up during the CD term, locking the investor into the initial lower rate.

• If interest rates do start to increase, timing the bump-up on a CD can be challenging. By bumping up earlier you can take advantage of a higher interest rate for more time, but you could miss out on an even higher rate that might come later.

How to Open a Bump-Up CD

Banks and credit unions offer bump-up CDs. To open one, an investor deposits a certain amount, and the CD has a particular starting interest rate and term. Once it’s open the account owner can contact the issuing bank or credit union to increase the rate throughout the CD term.

The terms to consider when opening a CD include:

• Maturity term

• Bump up frequency

• nitial interest rate

• Minimum deposit to open the account

• Early withdrawal rules and penalties

• Fees

Alternatives to Bump-Up CDs

There are several other types of interest-bearing deposit accounts and CD investment strategies that investors may want to consider:

Traditional CD

A traditional CD has a fixed interest rate over the course of its maturity term. There are some advantages to traditional CDs and they often earn higher rates than bump-up CDs.

CD Laddering

Since it can be hard to predict what will happen with interest rates in the future, another investing strategy is to create a CD ladder.

A CD ladder is a portfolio of CDs that each have a different interest rate and maturity term. This strategy provides an investor with a range of interest rates, allowing them to take advantage of changes in the market, and each time one of their CDs matures they have some funds to put into a new one or cash out. Usually, a longer-term CD will have a higher rate, but by opening some shorter-term CDs as well investors can put their money into new ones if interest rates increase rather than opening a bump-up CD.

Here is an example of a CD ladder:

• 6-month CD at 0.40%

• 9-month CD at 0.50%

• 12-month CD at 0.80%

• 18-month CD at 0.90%

Step-Up CD

Similar to a bump-up CD, step-up CDs allow investors to take advantage of rising interest rates. The difference is with a step-up CD the issuer automatically raises the interest rates at certain intervals throughout the CD term.

The Takeaway

Bump-up CDs can be a good way to take advantage of rising interest rates. They are safe investments with more flexibility than a traditional CD, but they don’t necessarily earn more interest. Understanding interest rates is complicated, so bump-up CDs are generally only recommended for experienced investors.
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FAQ

What is a 12-month bump CD?

A 12 month bump CD is a certificate of deposit savings account that earns a certain amount of interest over the course of one year. If interest rates rise during that year the account owner can request that the interest rate their CD earns be increased to the new rate.

How do bump-rate CDs work?

Bump-rate CDs are similar to traditional CDs, but they allow the owner to request an interest rate increase one time during their maturity term if market interest rates go up.

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SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

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SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

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Sep

2022

Tracking Down Lost Bitcoins and Other Cryptos

By Brian Nibley | Growing Wealth, invest, Investing | Comments Off

It’s a common crypto problem: Because people tend to forget the private keys that give them access to their crypto investments, countless coins — e.g. Bitcoin, Ethereum, Litecoin, Dogecoin — have been lost. As much as 20% of the entire supply of Bitcoin might be lost owing to lost private keys.

Does that mean your lost Bitcoin or other crypto are truly irretrievable?

In many cases, unfortunately, recovering lost Bitcoin or any other crypto is impossible. There are, however, some ways to try and recover an old or lost crypto wallet along with the crypto stored there. The best methods for doing so — and whether or not it will work — depends on how you lost the wallet.

This guide will take you through the process of finding lost crypto, if it’s possible.

What Does It Mean for Crypto to Be Lost?

Crypto is generally considered “lost” if it’s irretrievable, unrecoverable, or otherwise out of circulation. But how you lose your crypto can determine whether you can ever recover it.

Lost Keys

Most often, crypto is lost when people lose the “keys” to their wallet. That is, they have possession of their coins, but may have forgotten their seed phrase or other tools that would help them access the wallet. Their crypto is essentially stuck in the wallet, with no way to get it out.

That’s why it’s important for users who choose to hold their own private keys — a 256-bit string of numbers — to have a backup seed phrase (like a secret password) stored safely.

If you’re able to find or remember your keys, or otherwise access your wallet, you may be in luck. There are some services that may be able to help, but beware of scams.

Sent to the Wrong Address

Coins also get “lost” when they are sent to the wrong address. Sometimes people make the mistake of sending Bitcoin (BTC) to a bitcoin cash (BCH) address, for example. This often results in permanent loss of funds.

Fortunately, this has become increasingly rare, now that many wallets validate a recipient’s address (read more about what a Bitcoin address is) before allowing a transaction to go through.

Forgotten Passwords

Finally, you could lose your crypto by forgetting your password for a crypto exchange account. In most cases, however, the crypto exchange will let you create a new password.

Having a platform’s help in reaccessing your wallet and holdings if you lose your password is one of the advantages of investing in a crypto exchange. Similarly, if you lose a hardware wallet, you can get a new wallet and restore your crypto balances using your old backup seed phrase — assuming you have those safely stored away.

What Happens if You Lose Your Crypto Wallet?

Recovering unclaimed crypto isn’t easy. There are cautionary tales about people who have lost millions of dollars worth of Bitcoin and still don’t have access to it. That’s not the end of the story, though, as some people who have lost Bitcoin might still be able to recover their coins.

Recovering Private Keys

Some developers have created software programs that can help recover the private keys to a Bitcoin wallet. But this only works in cases in which the individual who lost their keys has deleted some or all of their keys. Software usually can’t help those who have forgotten their passwords, PIN numbers, or backup seed phrases.

But if the user mistakenly deleted files with the relevant information, they may be able to recover them. And if a user has a portion of the private key, it may be possible to find the rest of the key.

Recovering the Assets from a Lost Wallet

When you use a wallet, you’ll be able to unlock both the wallet and the crypto inside using your seed phrase. So, as long as you have the backup recovery seed, you can enter that into a new wallet and regain access to your crypto assets in a wallet, even if it’s lost.

But ultimately, whether you can recover assets from a lost wallet will depend on how the assets were lost.

Scammers

If you fall victim to one of the many Bitcoin scams out there, it may be possible to recover your assets. For example, if you’re somehow tricked into giving a scammer your seed phrase or wallet passwords, they can access it, change those passwords, and effectively take ownership of your wallet.

In that case, you may be able to get help from the wallet’s support team. But in many cases, keeping passwords and seed phrases secure is on the user, and no one would be able to help.

You should also be aware that some scammers may pose as crypto recovery specialists in an effort to gain access to your wallet. If you hope to hire a company to help you recover lost Bitcoin wallets, do some serious research to make sure it’s a legit operation.

Losing Cold Wallets

If you lose your cold wallet — and most cold wallets are hardware wallets — it is usually possible to recover the assets you had stored on it. It all depends on whether you have your recovery phrase. If you do, you should be able to safely and securely recover your assets and store them in a new wallet.

But again, it all comes down to whether you kept and securely stored your keys.

Prevent Lost Bitcoin by Safely Storing and Sending It

In a way, Bitcoin allows anyone to become their own bank. This has several advantages, but it also has several risks. Mainly, the risk that users might not be able to recover an old bitcoin wallet if they’ve lost their private keys.

Many people choose to store their private keys in a cold storage wallet in their personal possession. These include hardware, software, audio, and paper storage options that exist offline; cold wallets can be a more secure, long-term method of holding coins. The big tradeoff is that doing so puts 100% of the responsibility for securing those assets in the hands of the holder — if you lose them, there’s no recourse.

The best way to prevent permanent loss of Bitcoin is to make sure that you safely and securely store your coins from the get go, and avoid mistakes when sending Bitcoin.

Storing Crypto

There are a number of ways you can store your crypto for safekeeping, but most investors will likely choose to either leave it on an exchange, or transfer it to a wallet.

Exchanges

Leaving your holdings on an exchange may be worth considering if you only have a relatively small amount of crypto. The chief risks in doing so are that your holdings are out of your hands — and aren’t technically “yours” (as the saying goes: Not your keys, not your coins!) — and they could be more vulnerable to a cyberattack or theft.

Using a custodial wallet on an exchange does, generally, mean that you would be able to gain access to them again if you lock yourself out of your account.

Wallets

If you’d rather get your holdings into your own wallet so that you have full possession and control over them, you can do so by transferring them to a hardware or paper wallet. Just know that if you lose access to that wallet, it could be permanent — that’s the risk.

To ensure that you don’t, however, you can take a few steps:

• When setting up a new hardware wallet, safely store the backup recovery seed phrase.

• Create a PIN or password — not one that’s easy to guess or remember — write it down and keep it somewhere safe. Some people even get a safe or a safe deposit box where they store their passwords or seed phrases.

• Keep your wallet somewhere that you won’t forget. Some people even elect to keep their hardware wallets on their person at all times, putting it on their keychains, for example.

You might want to also consider using a paid service that helps users keep track of their private keys, and that can help you re-access your wallet if you lose your seed phrase. It’s an extra expense, but can provide peace of mind.

Sending Crypto

Making a mistake when sending a crypto transaction, whether from an exchange or from a private wallet, can result in total and permanent loss of funds. If that happens, there’s zero opportunity or chance to find your lost crypto. Here’s how to prevent it from happening:

• Whenever possible, use a QR code to get the recipient’s address. Sending coins to a QR code prevents mistakes or typos in the address. Using a string of characters can result in the funds being lost if even one character is off.

• Always double-check to make sure the currency you’re sending matches the one received. For example, that Bitcoin being sent is going to a Bitcoin wallet. Many wallets and exchanges do this automatically, but it’s worth double checking.

• When sending a large transaction, send a smaller amount first, as a test. After the transaction has at least one confirmation on the network, then send the rest of the transaction.

These simple steps will go a long way toward helping holders avoid sending erroneous crypto transactions.

Total Amount of Lost Bitcoin

We don’t fully know the total amount of lost Bitcoin, but it’s estimated that roughly 20% of the Bitcoin mined thus far is unrecoverable. It may be in lost wallets, or in accounts or wallets that people have forgotten the passwords to.

However, there’s a chance that some of it could be recoverable, as new companies with recovery methods are sprouting up in recent years.

5 Largest Bitcoin Fortunes Lost

If you truly want to make your head spin (or at least force yourself to write down your recovery phrase), read on to learn about the biggest Bitcoin fortunes that have been lost — that are widely known about, anyway.

1. Satoshi Nakamoto

Next to nothing is known about Satoshi Nakamoto, the creator of Bitcoin, including whether it’s an actual person, or a group of individuals. But what is known is that Nakamoto has, or had, a wallet containing more than 1.125 million Bitcoins. At one time, it was worth billions of dollars.

Those coins are still out there, somewhere.

2. Stefan Thomas

Stefan Thomas is a software developer from California who held more than 7,000 Bitcoins, worth, at one time, hundreds of millions of dollars. But Thomas forgot the password to the USB wallet he held them on, and has not been able to recover them.

3. James Howells

James Howell, similar to Thomas, had a laptop that stored roughly 7,500 Bitcoins. And he ended up mistakenly throwing it away, losing hundreds of millions of dollars in digital assets. He offered money to people to try and help him search nearby landfills to find it, but it remains lost.

4. Gerald Cotten

Gerald Cotten, yet another would-be Bitcoin whale, co-founded a crypto exchange called QuadrigaCX. In what’s a fairly long and complicated story, Cotten ended up dying at the age of 30, and the keys and passwords to his exchange’s cold wallets were lost. Those wallets contained more than $100 million in assets.

5. Unknown

Another strange story: Allegedly there’s a Bitcoin wallet floating around with roughly 69,000 Bitcoins in it, and nobody has been able to access it. The U.S. Department of Justice reportedly has the wallet now, after it was passed around by hackers and crackers who had been trying to open it.

Does Lost Bitcoin Affect the Network?

Bitcoin that is lost and deemed irretrievable is presumably out of the market forever. It’s as if you took a $100 bill and burned it — it doesn’t exist anymore. The difference being that there is no particular limit to the supply of $100 bills, but Bitcoin has a capped supply of 21 million (meaning there can never be more than 21 million BTC).

Other types of crypto that have a capped supply include: Litecoin, Stellar, Chainlink.

For that reason, lost Bitcoin shrinks the maximum or existing supply of the asset on the market. Since it makes other Bitcoins more rare, these losses can, in effect, increase the value of the remaining Bitcoin or other capped crypto on the market.

The Takeaway

No matter what type of cryptocurrency you’ve lost, it can be almost impossible to recover — especially if you’ve lost the private keys that gave you access to that crypto.

The easiest way to avoid losing crypto is to make sure it never gets lost in the first place. Doing so involves securing your private keys and other passcodes; setting up and backing up a secure wallet; and being careful when sending transactions. While there are services that may claim to help you recover lost crypto, beware of scams and high fees.

FAQ

Is it possible to recover lost Bitcoin?

Depending on the circumstances, it might be possible to recover lost Bitcoin (for example, if you lose a hardware wallet, but still have your private keys and passwords). However, much of the Bitcoin that has been lost over the years is effectively lost forever.

What is the total amount of Bitcoin that has been lost?

While no one knows the exact amount, it’s estimated that roughly one-fifth, or 20% of the Bitcoin that’s been mined has been lost, chiefly because investors lost their private keys.

Is it possible to lose Bitcoins forever?

Yes, you can lose Bitcoin (or any crypto) forever. You can put your coins in a wallet and forget the passwords, for example, or have your crypto stolen — you could even send them to the wrong crypto address. In those cases, it’s typically impossible to recover your crypto.

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$100	$499.99	$15
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$5,000+		$100

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Sep

2022

Will Dogecoin Ever Be Capped?

By Brian Nibley | Growing Wealth, invest, Investing | Comments Off

When evaluating a cryptocurrency, such as Dogecoin, it’s important to know whether it has a supply cap, since that can have an impact on the long-term value of the coin.

Bitcoin, the first and largest cryptocurrency by market cap, is known for having a 21 million coin hard cap, meaning there will only ever be 21 million BTC in existence. Similarly, XRP has a cap of 100 million. However, all cryptocurrencies are different and many do not have a supply cap.

Here’s what you need to know when it comes to the Dogecoin cap.

What Is a Cap in Crypto?

A supply cap, or cap, refers to the upper limit of the amount of new cryptocurrency coins that can be created.

Once miners have mined a certain number of coins, the protocol will stop distributing block rewards, and miners will only collect transaction fees. For Bitcoin, this point is estimated to be reached by about the year 2140, for other types of crypto the cap will be reached at different times.

💡 Recommended: How Many Bitcoins Are Left?

Does Dogecoin Have a Cap?

No, Dogecoin does not have a cap, meaning there is no Dogecoin supply limit. But there is a fixed reward of 10,000 DOGE for each block of transactions added to the Dogecoin blockchain (more on that below).

Thus, miners have an incentive to mine for Dogecoins. After they mine Dogecoin, they can move it from their wallets onto a crypto exchange where other investors can buy it. But as more miners come online, more of them will dump new coins onto the market, causing the price to fall.

Either way, it’s important to understand how the lack of a Dogecoin cap (i.e. the fact that there is no Dogecoin supply limit) can affect this crypto’s long-term value.

How Dogecoin Works

Developers Billy Marcus and Jackson Palmer launched Dogecoin as a low-stakes way for people to learn about cryptocurrency. The meme coin or joke coin, with its famous Shiba Inu logo, traded at a tiny fraction of a penny so people could send it to each other for fun while learning how to use crypto wallets.

In 2018, as cryptocurrencies caught the attention of mainstream investors, the altcoin reached more than $0.01. In 2021, Dogecoin attained record highs around $0.70 before crashing down to about $0.06, as of September 7, 2022.

DOGE is a proof-of-work (PoW) crypto, which means that mining Dogecoin involves running powerful computers known as nodes that process transactions for the network. In exchange for this work, miners receive block rewards of 10,000 newly minted DOGE.

A new block of transactions is mined roughly every minute on the Dogecoin network. The block reward is 10,000 DOGE, or about $600 as of September 7, 2022. Unlike Bitcoin, which has a hard cap of 21 million and releases fewer coins over time, there is no Dogecoin supply cap.

Is There a Limit to the Dogecoin Supply?

Is Dogecoin unlimited? Yes, as of September 7, 2022, there is no Dogecoin supply limit. But the reality is that 10,000 DOGE are mined every minute, which adds up to about 14.4 million DOGE per day, and over 5 billion DOGE per year added to the supply.

Although some argue that the vast number DOGE may depress the price.

Will Dogecoin Ever Have a Cap?

It’s hard to say for certain whether there will ever be a Dogecoin cap. In theory, DOGE developers could choose to implement a cap on the creation of new coins, but to date there hasn’t been much discussion about this.

Sometimes the crypto community decides to alter the protocol of a currency. An active cryptocurrency needs periodic upgrades to its software to remain functional, relevant, and secure.

For now, it seems reasonable to work from the assumption that there might never be a Dogecoin cap limit.

Has Dogecoin Ever Been Capped?

In the eight years since Dogecoin’s creation, there’s never been a cap on the crypto. In fact, for much of those eight years, no one thought much about DOGE at all and it traded for less than a penny.

In 2017 when cryptocurrency began reaching the masses in a big way, the valuation of DOGE hit $1 billion. Many investors considered this a sign of irrational exuberance in the crypto markets, as DOGE had no special features (it’s simply a clone of Litecoin, which is a clone of Bitcoin), and hadn’t had a developer update in three years at that time.

Nonetheless, in 2021 DOGE took a seat among the top 10 cryptocurrencies by market cap, a feat few would have thought possible just a year earlier.

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3 Reasons Why Dogecoin Doesn’t Have a Cap

Some say the decision to not cap the supply of DOGE was intentional on the part of developers. They wanted to create a currency that people would be more likely to spend. DOGE was created as a joke, but it was also intended to be used for transactional purposes.

The DOGE developers set out to create a cryptocurrency that would differ from Bitcoin in several key ways. Most if not all of those ways stem from the fact that there is no Dogecoin max supply.

Here are three reasons that are thought to have been big factors contributing to the decision to never implement a cap on Dogecoin.

1. Cheap Transactions

Dogecoin is an altcoin that developers created for spending meant to be spent, so they intentionally made it inflationary (meaning that the supply of DOGE increases, or inflates over time).

By contrast, Bitcoin is deflationary (the supply of BTC decreases over time), which makes its value relative to inflationary currencies likely to continue rising. As a result, BTC has become more of a store of value investment, making many investors want to HODL it.

If you think your Bitcoin might be worth twice as much next year, you’re less likely to use it to make purchases in the short term. But a currency like DOGE, with no supply cap, is more likely to be spent. People will use it today, while it still has value, and be less likely to hold it for the long-term as they know it’s unlikely to increase in price.

2. New Coins Forever

It’s estimated that about 20% of all the Bitcoins mined to-date have been lost forever. This happens when people forget their wallet password or lose a piece of physical hardware they used to store Bitcoin. This makes the supply of BTC even more deflationary, as those coins won’t be replaced. Meaning: A deflating supply means that the value may rise over time, assuming demand doesn’t decrease.

With Dogecoin, there will always be plenty of new coins. Even if someone loses millions of DOGE, the long-term impact is minimal, since there are constantly new coins going into circulation. With no supply cap, lost coins don’t matter as much.

3. Mining Longevity

At some point, there will be no more Bitcoins left to mine. When that happens, the only monetary incentive for mining BTC to keep the network secure will be transaction fees.

In theory, this could sustain miners interest in mining DOGE.

Pros and Cons of a Capless Cryptocurrency

Should there be a Dogecoin cap? It’s a good question, given the relative successes and failures of DOGE thus far. Here are some advantages and disadvantages.

Pros

By keeping DOGE as an inflationary currency, it’s more likely that people will spend it rather than hold it as a store of value.

With no Dogecoin cap, theoretically miners will always be able to mine more DOGE and keep earning Dogecoin as a reward.

Cons

Because it’s inflationary, DOGE has less appeal for buy-and-hold investors.

With its unlimited supply, the value of DOGE may never rise much above $1.00. At its peak in May of 2021, it was worth about $0.70.

Pros	Cons
DOGE has value as a transactional currency.	Low demand from buy-and-hold investors.
Miners can always mine more DOGE and get rewards.	Price unlikely to rise above historic high of $0.70.

How Many Dogecoin Are in Circulation?

According to CoinMarketCap data, there are about 132.6 billion DOGE in circulation as of Sept. 7, 2022. Keep in mind, 10,000 new DOGE are mined every minute, so the number will be higher by the time you read this.

It’s also worth noting that more than half of DOGE’s total supply is held by only about 20 different wallet addresses, making it one of the most unevenly distributed of the different types of cryptocurrency.

How Many New Dogecoin Are Created Every Day?

Every time a new block of transactions is added to the Dogecoin blockchain, 10,000 DOGE are mined. That’s about 14.4 million DOGE added per day, or about 5.26 billion per year.

How Much Dogecoin is Left?

There is an unlimited amount of DOGE left to be mined. Just like U.S. dollars or any other national fiat currency, there’s no upward limit on the creation of Dogecoins.

There are some key differences between DOGE and fiat currencies, of course, like the fact that anyone can mine Dogecoin, but only central banks can print money.

The Takeaway

The answer to the question, Will Dogecoin ever be capped? is likely a “no.” Nothing is for certain, as developers could decide to alter the Dogecoin protocol, but the history of the coin and the ethos of the community surrounding it suggest that they will not enact a cap.

Just as the Bitcoin community tends to value scarcity and a fixed supply cap, the Dogecoin community tends to value low transaction fees, large block rewards, and the other benefits that can arise from not having a supply cap. For investors, there may be a place for both types of cryptocurrency in their portfolio.

FAQ

Is there a cap on the supply of Dogecoin?

No, Dogecoin does not have a cap on its supply.

Will DOGE be capped at $1?

At the moment, there are no signs that DOGE will have a price cap or a supply cap.

Is the supply of Dogecoin infinite?

In theory, the supply of Dogecoin could be infinite. In reality, though, the annual supply is somewhat limited by the block reward, which is 10,000 DOGE per minute.

Photo credit: iStock/Amax Photo

²
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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.

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.

Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.

²Terms and conditions apply. Earn a bonus (as described below) when you open a new SoFi Digital Assets LLC account and buy at least $50 worth of any cryptocurrency within 7 days. The offer only applies to new crypto accounts, is limited to one per person, and expires on December 31, 2023. Once conditions are met and the account is opened, you will receive your bonus within 7 days. SoFi reserves the right to change or terminate the offer at any time without notice.

First Trade Amount		Bonus Payout
Low	High	Bonus Payout
$50	$99.99	$10
$100	$499.99	$15
$500	$4,999.99	$50
$5,000+		$100

SOIN0822018

Sep

2022

Dogecoin vs Bitcoin: Key Differences to Know

Guide to Dogecoin vs Bitcoin

By Brian Nibley | Growing Wealth, invest, Investing | Comments Off

There was a stretch in 2021 when the price of Dogecoin (DOGE) skyrocketed from a fraction of a penny to a little more than $0.70 before falling again — drawing comparisons to similar spikes (and drops) in the price of Bitcoin (BTC).

But while BTC is still the biggest and most popular type of crypto, DOGE has remained a low-priced memecoin, known for its Shiba Inu logo. Yet it has remarkable staying power. As of August 29, 2022, DOGE was the 10th largest crypto by market cap, according to CoinMarketCap.

So, how do Dogecoin and Bitcoin actually compare? Here is a guide to some of the key differences between Dogecoin vs. Bitcoin.

5 Key Differences Between Dogecoin and Bitcoin

While both cryptocurrencies — and popular ones — Dogecoin and Bitcoin have some stark differences. Read on to see the five most pertinent, or see the chart below for a quick cheat sheet.

Dogecoin vs Bitcoin: Key Differences
Dogecoin	Bitcoin
Intended purpose: Capitalize on meme popularity	Intended purpose: Act as digital cash
Market cap: $9.12 billion	Market cap: $413 billion
No limit on total number of Dogecoins	Hard limit on the quantity of eventual BTC
Less secure, but easier to mine	More secure, but more difficult to mine
Faster block time and transaction speed	Slower block time and transaction speed

1. Purpose of the Coin

The two cryptos were created with different end-goals in mind.

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

Some individuals also consider Bitcoin an investment — a view that has paid off in recent years, as Bitcoin has seen its value rise in a huge way. 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. Of course, the market sputtered in early 2022, and is slowly recovering. BTC’s price fell from roughly $48,000 to less than $19,000 between January and June 2022.

💡 Recommended for Beginners: What Is Bitcoin?

Dogecoin (DOGE) launched in 2014 as a literal 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.

So, the meme-inspired Dogecoin 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 for Beginners: What Is Dogecoin?

2. Market Cap

There is no contest in terms of market cap when comparing the two coins.

As of August 25, 2022, Bitcoin’s market cap was about $413 billion, while the market cap of Dogecoin was just over $9 billion. Bitcoin is currently the largest crypto by market cap, while Doge coin ranks tenth.

For much of its history, DOGE ranked somewhere between the 30th and the 50th largest cryptocurrencies by market cap, if not much lower. But it broke the $1 billion barrier in early 2021, and its price breached the $0.01 mark shortly after.

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 have not been able to 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, likely seeing the other options as too risky.

3. Supply

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

One of Bitcoin’s properties that makes it so valuable is a deflationary monetary policy. That means that over time, the supply of Bitcoin decreases rather than increases — it becomes more rare, in other words. Every four years or so, the block reward for miners gets reduced by 50% in a process known as halving.

There’s also a limit on how much BTC will ever exist: There will only be 21 million Bitcoin 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 Dogecoin in perpetuity.

4. Security, Tech Development

Before entering the mainstream crypto lexicon, Dogecoin’s Blockchain had a long period of stagnant development. Between the years 2015 and 2020, there wasn’t a single developer update to DOGE. But as of 2022, developers have been at work, and updates have been regular.

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 hashrate of DOGE is around 540 TeraHash per second (TH/s) while the hashrate of BTC is more than 238 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, which is partly why DOGE is faster and easier to mine. While Bitcoin uses the SHA-256 algorithm, DOGE uses the Scrypt algorithm.

5. Block Time and Transaction Speed

Speed 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 10 times the block rewards compared to Bitcoin miners, a higher supply of new Dogecoins entering the market may drive down the price. However, if investor demand is strong, the price of Dogecoin may not necessarily go down.

How Are Bitcoin and Dogecoin Alike?

Despite the myriad differences between Bitcoin and Dogecoin, the two are more similar than you might think. A big reason for that is because, as discussed, Dogecoin started out as a copy of Bitcoin, but has since kicked off the training wheels, so to speak.

But for how the two remain alike? For one, they rely on similar blockchain software and networks. They also have similar proof-of-work consensus methods, which means that miners are involved in validating blocks on those networks. And on a broader scale, both Bitcoin and Dogecoin are cryptocurrencies that are used to transact and store value.

Granted, Bitcoin’s value is, and likely will remain, much greater than Dogecoin, but they are still a store of value nonetheless.

Is Dogecoin the Next Bitcoin?

There’s no way to predict the future, so no one can say for sure. But, it would be difficult for Dogecoin to overtake Bitcoin as the mainstream cryptocurrency of choice. Bitcoin remains dominant as the market leader in the crypto space, and there’s little to indicate that Dogecoin or any of the other altcoins could meaningfully chip away at that advantage. At least for the foreseeable future.

The Takeaway

Despite having risen to be among or around the top 10 cryptocurrencies by market cap (depending on the swings in the market), Dogecoin is still a meme coin. Don’t forget: It launched as a joke nearly a decade ago, and little has changed since then, other than some celebrity endorsements, and a brief 15 minutes of hype.

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

FAQ

Is Dogecoin better than Bitcoin in any way?

The primary advantage that Dogecoin has over Bitcoin is speed — but that speed also comes with a cost, as the DOGE network tends to be less secure overall than Bitcoin’s.

Is Bitcoin more secure than Dogecoin?

Yes, the Bitcoin network is more secure than the Dogecoin network. That’s largely due to the constant upgrades and technical progress made on Bitcoin’s network over the years, and a lack of similar progress, for a long stretch, on the DOGE network.

Is Dogecoin going to be the next Bitcoin?

In all likelihood, no. Dogecoin’s value has fallen considerably from its highs, and it still lags well behind Bitcoin in terms of market cap. For instance, for Dogecoin to get to $100 would be quite the feat. That said, anything can happen, and nobody knows what the future holds!

Photo credit: iStock/Ksenia Raykova

First Trade Amount		Bonus Payout
Low	High	Bonus Payout
$50	$99.99	$10
$100	$499.99	$15
$500	$4,999.99	$50
$5,000+		$100

SOIN0721286

Sep

2022

How to Roll Over Your 401(k)

By AJ Smith | Budgeting & Goals, Building Your Career, Growing Wealth, invest, Investing, Life & Career | No Comments

It’s pretty easy to rollover your old 401(k) retirement savings to an IRA, a new 401(k), or another option — yet millions of workers either forget to rollover their hard-won retirement savings, or they lose track of the accounts.

According to a 2021 study by Capitalize, some 24 million 401(k) accounts seem to be forgotten or “lost”, with an average balance of about $55,000 in these dormant accounts.

Given that a 401(k) rollover just takes a couple of hours and, these days, minimal paperwork, it makes sense to know the basics so you can rescue your 401(k), roll it over to a new account, and add to your future financial security.

How Does Rolling Over Your 401(k) Work?

Many people wonder how to rollover a 401(k) when they leave their jobs. First, you need to know the difference between a transfer and a rollover.

A transfer is when you move funds between two identical types of retirement accounts. For example, if a person moves money from an old 401(k) to a new 401(k), a traditional IRA to another traditional IRA, or from an old Roth IRA to a new Roth IRA — that’s a transfer. It’s the most direct way to move funds from one tax-advantaged account to another.

A rollover is when you move money between two different types of retirement accounts. For example: You might rollover a 401(k) to an IRA.

💡 Recommended: What Is an IRA and How Does It Work?

Bear in mind, rollover accounts can be different, but must have the same tax treatment. You can’t rollover a tax-deferred traditional 401(k) to a Roth IRA without doing some kind of Roth conversion.

Steps to Roll Over Your 401(k)

Here are the basic steps, with more detail to follow:

1. Decide whether you want to roll it over to an IRA (a common option); transfer the funds to another employer’s 401(k); or set up an account like a self-directed IRA.

2. Set up the rollover account. Remember that rollovers have to be apples to apples in terms of tax treatment: a tax-deferred 401(k) to a traditional IRA; a Roth 401(k) to a Roth IRA.

3. Contact your former employer or 401(k) plan sponsor to initiate the rollover. (Depending on which rollover option you choose, the process or paperwork may be slightly different.)

4. Generally, the funds are sent to you in a check although they can be wired to a rollover IRA at a new institution, for example. Either way, you have 60 days to deposit the funds in another tax-deferred account, or you will owe taxes on the money and possibly a penalty.

Benefits of Rolling Over Your 401(k)

Once you understand how to roll over a 401(k), it’s easy to understand what the advantages are. First and foremost, by doing a rollover, you ensure that you are in charge of your retirement funds (which is important, after years of investing in your 401(k)).

Other pros include:

• Your investment account costs will likely be lower once you do a rollover, because leaving your savings in your old 401(k) when you’re no longer an employee means you may pay higher account management fees. Fees matter, and can substantially reduce your savings over time.

• You may have more investment choices. Typically, when you do a rollover from a 401(k) to an IRA at a new institution, your investment options increase which might improve portfolio returns and could further reduce fees.

• If you don’t want a self-directed portfolio, where you choose the investments in your rollover, you may be able to choose a robo-advisor or automated portfolio so there’s less for you to manage.

• If you have more than one 401(k) from various jobs, you can consolidate them as part of the rollover process.

Disadvantages of Rolling Over a 401(k)

Since you want to avoid retirement mistakes, it’s also important to consider some of the reasons why a rollover may not be the best idea.

• First, if you have a lot of appreciated company stock, you may be able to pay a lower tax rate on the gains if you transfer the stock to a brokerage account.

• While a rollover account at a different institution may provide more investment options, if you keep your 401(k) where it is, you may be able to buy investments at the cheaper institutional rate.

• If you do a rollover, you may lose some of the federal legal protections that come with 401(k) plans. For example, the money in your 401(k) is typically protected from creditors or collections, whereas the money in an IRA is shielded by state laws, which can vary.

• In some cases, your employer may allow you to withdraw funds from your 401(k) without paying the usual 10% penalty, if you are 55 or older when you leave your job.

Pros and Cons of Doing a 401(k) Rollover

Pros	Cons
Potentially lower investment fees, which can impact savings over time.	If you have company stock in your 401(k), it might save on taxes if you transfer the stock to a brokerage rather than doing a rollover.
More investment choices; more control over your portfolio.	Investment options may cost less in a 401(k) vs. an IRA.
The option to switch to a robo advisor if you prefer an automated approach.	Keeping your 401(k) may offer legal protection from creditors or collections.
Ability to consolidate accounts.	Keeping your money in your 401(k) could give you penalty-free access before age 59 ½ vs. an IRA.

When Is a Good Time to Roll Over a 401(k)?

Once you know how to roll over a 401(k), and you’ve decided that’s your next step, doing it as soon as you leave your job is likely the best time. But you can generally do a rollover any time. It’s your money. If you decide to do the rollover five years after leaving your job, that’s a better time than never.

That said, if you have a low balance in your 401(k) account — for example, less than $5,000 — your employer might require you to do a rollover. And if you have a balance lower than $1,000, your employer may have the right to cash it out. Be sure to check the exact terms with your employer.

In most instances, you have 60 days from the date you receive an IRA or 401(k) distribution to then roll it over into a new qualified plan. If you wait longer than 60 days to deposit the money, it will trigger tax consequences, and possibly a penalty. One rollover per year is allowed under the rules.

5 Things You Can Do With Your Old 401(k)

If you’re still asking yourself, But how do I rollover my 401(k)?, here are five possible choices that might make sense when deciding how to handle your old account.

Option 1: Leave Your 401(k) Where It Is

Is it ever a good idea to let sleeping 401(k)s lie? Sometimes, yes.

For instance, maybe your old job was with a super-hip, savvy startup that chose a stellar plan with multiple investment options and low administration fees that stayed in place even after you left your job. This is rare! But the point is: If you’re happy with your portfolio mix and you have a substantial amount of cash stashed in there already, it might behoove you to leave your 401(k) where it is.

Other than that, you probably want to make sure you’re in charge of your money — not your former employer.

Also, besides any additional fees you might end up paying, racking up multiple 401(k)s as you change jobs could lead to a more complicated withdrawal schedule at retirement.

Option 2: Roll Over Your 401(k) Into an IRA

If your new job doesn’t offer a 401(k) or other company-sponsored account like a 403(b), don’t worry: You still have options that’ll keep you from bearing a heavy tax burden. Namely, you can roll your 401(k) into an IRA, or Individual Retirement Account.

The entire procedure essentially boils down to three steps:

1. Open a new IRA that will accept rollover funds.

2. Contact the company that currently holds your 401(k) funds and fill out their transfer forms using the account information of your newly opened IRA. You should receive essential information about your benefits when you leave your current position. If you’ve lost track of that information, you can contact the plan sponsor or the company HR department.

3. Once your money is transferred, you can reinvest the money as you see fit. Or you can hire an advisor to help you set up your new portfolio. It also may be possible to resume making deposits/contributions to your rollover IRA.

Option 3: Roll Over Your 401(k) to Your New Job

If your new job offers a 401(k) or similar plan, rolling your old 401(k) funds into your shiny, new 401(k) account may be both the simplest and best option — and the one least likely to lead to a tax headache.

That said, how you go about the rollover has a pretty major impact on how much effort and paperwork is involved, which is why it’s important to understand the difference between direct and indirect transfers.

How to Roll Over Your 401(k): Direct vs Indirect Transfers

Here are the two main options you’ll have if you’re moving your 401(k) funds from one company-sponsored retirement account to another.

A direct transfer, or direct rollover, is exactly what it sounds like: The money moves directly from your old account to the new one. In other words, you never have access to the money, which means you don’t have to worry about any tax withholdings or other liabilities.

Depending on your account custodian(s), this transfer may all be done digitally via ACH transfer, or you may receive a paper check made payable to the new account. Either way, this is considered the simplest option, and one that keeps your retirement fund intact and growing with the least possible interruption.

Another viable, but slightly more complex, option, is to do an indirect transfer or rollover, in which you cash out the account with the express intent of immediately reinvesting it into another retirement fund, whether that’s your new company’s 401(k) or an IRA (see above).

But here’s the tricky part: Since you’ll actually have the cash in hand, the government requires your account custodian to withhold a mandatory 20% tax. And although you’ll get that 20% back in the form of a tax exemption later, you do have to make up the 20% out of pocket and deposit the full amount into your new retirement account within 60 days.

For example, say you have $50,000 in your old 401(k). If you elected to do an indirect transfer, your custodian would cut you a check for only $40,000, thanks to the mandatory 20% tax withholding.

But in order to avoid fees and penalties, you’d still need to deposit the full $50,000 into your new retirement account, including $10,000 out of your own pocket. In addition, if you retain any funds from the rollover, they may be subject to an additional 10% penalty for early withdrawal.

Option 4: Cashing Out Your 401(k)

One recent review of 401(k) accounts found that 21% of Americans who left their jobs during the pandemic also cashed out their 401(k) accounts. Generally speaking, withdrawing these retirement funds is not a good idea, and here’s why.

Because a 401(k) is an investment account designed specifically for retirement, and comes with certain tax benefits — e.g. you don’t pay any tax on the money you contribute to your 401(k) — the account is also subject to strict rules regarding when you can actually access the money, and the tax you’d owe when you did.

Specifically, if you take out or borrow money from your 401(k) before age 59 ½, you’ll likely be subject to an additional 10% tax penalty on the full amount of your withdrawal — and that’s on top of the regular income taxes you’ll also be obligated to pay on the money.

Depending on your income tax bracket, that means an early withdrawal from your 401(k) could really cost you, not to mention possibly leaving you without a nest egg to help secure your future.

This is why most financial professionals generally recommend one of the next two options: rolling your account over into a new 401(k), or an IRA if your new job doesn’t offer a 401(k) plan.

Option 5: Rolling Your 401(k) Over to a Self-Directed IRA

A self-directed IRA, sometimes called a SDIRA, is an unusual type of retirement account — and it’s not widely available. That’s because these types of accounts aren’t just for traditional securities, but for alternative investments normally not permitted in traditional IRAs: i.e. real estate, collectibles (like art and jewelry), commodities, precious metals, and more.

These accounts are considered self-directed because, first, they are only available through certain financial firms that will custody SDIRA accounts, not manage them. Second, SDIRA custodians can’t give financial advice, so all the due diligence and asset management falls to the investor.

While you can consider doing a rollover to a SDIRA, be sure that setting up such an account makes sense for your current holdings, or whether a traditional IRA or Roth might do just as well.

The Takeaway

It’s not difficult to rollover your 401(k), and doing so can offer you a number of advantages. First of all, when you leave a job you may lose certain benefits and terms that applied to your 401(k) while you were an employee. Once you move on, you may pay more in account fees, and you will likely lose the ability to keep contributing to your account.

Rolling over your 401(k) — to a new employer’s plan, or to an IRA — gives you more control over your retirement funds, and could also give you more investment choices.

There are some instances where you may not want to do a rollover, for instance when you own a lot of your old company’s stock, so be sure to think through your options.

If you know that moving your 401(k) money over to an IRA is the right thing, SoFi makes it super easy. Once you open an investment account with SoFi Invest and set up a traditional or Roth IRA account, you can transfer the funds from your old 401(k) and either keep the same (or similar investments), or choose new ones.

For a limited time, opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.

FAQ

How can you roll over a 401(k)?

It’s fairly easy to roll over a 401(k). First decide where you want to open your rollover account (usually an IRA), then contact your old plan’s administrator, or your former HR department. They typically issue a check that can be sent directly to you or to the rollover account at a new institution.

What options are available for rolling over a 401(k)?

There are several options for rolling over a 401(k), including transferring your savings to a traditional IRA, or to the 401(k) at your new job. You can also leave the account where it is, although this may incur additional fees. It’s generally not advisable to cash out a 401(k), as replacing that retirement money could be challenging.

Does SoFi allow you to roll over your 401(k)?

Yes, you can rollover funds from a 401(k) to a rollover IRA with SoFi.

To initiate the rollover, set up an account with SoFi Invest, and contact your 401(k) plan administrator or the HR department of your previous employer.