If you’ve been keeping up with the news, you’ve probably seen Elon Musk’s name crop up a lot. The South African Tesla entrepreneur is a controversial figure to say the least, but when he speaks, the world listens, and nowhere is that more true than in the world of cryptocurrency. Musk’s words have seen share prices for currencies like Dogecoin and Bitcoin (more on which in a moment) skyrocket or plummet depending on what he says and how he says it.
With that in mind, you might be wondering: is it safe to invest in dogecoin or bitcoin right now, given the volatile state of the markets and Elon Musk’s apparent influence over them? We’ve put together a beginner’s guide to help you understand the strange, ever-evolving world of cryptocurrency. Without further ado, let’s take a look at what’s going on here, who Elon Musk is, what these cryptocurrencies are, and whether or not you should add them to your investment portfolio.
Who exactly is Elon Musk, and why does he care about cryptocurrency?
Elon Musk is a South African businessman and entrepreneur. Among his many ventures are online payment transfer system PayPal and space vehicle manufacturer SpaceX. Musk is perhaps best-known, however, for his somewhat erratic social media profile and his off-the-cuff remarks that often have a huge effect on markets. Recently, Musk told followers that cryptocurrency is “promising”, but that they should “invest with caution”, and this had a profound effect on the markets.
What is bitcoin?
Perhaps the most famous cryptocurrency in the world, bitcoin is becoming more widely accepted by various retail platforms. Bitcoin is a digital currency with no physical counterpart, with a blockchain verifying ownership and all transactions being verified in a digital ledger. It isn’t legal tender, but it’s becoming more acceptable around the world, and Elon Musk himself has said he’s a “supporter” of bitcoin. Expect to start seeing this currency more and more as time goes on.
Okay, what about dogecoin?
Dogecoin is a slightly more obscure form of cryptocurrency that’s taken off more recently. It was created by software engineers from IBM and Adobe and was intended to be a fun cryptocurrency without traditional banking fees or delays. Elon Musk has said that dogecoin is a “hustle”, and these comments unfortunately caused the cryptocurrency to tumble pretty hard on the markets. As you can see, Elon Musk has a rather serious effect on these markets when he makes comments about them.
Should you invest in bitcoin?
Bitcoin is by far the single biggest and most popular cryptocurrency on the market. It accounts for 46% of the total market share, which is down from its original 70% position at the beginning of 2021, but is still a sizable portion of the market. It’s now being challenged by other currencies like ethereum, dogecoin, and litecoin, but that doesn’t mean bitcoin isn’t still worth investing in; during a bitcoin downturn, your investment will still be worth a significant amount, so bitcoin is worth investing in.
Should you invest in dogecoin?
As proven by the fact that dogecoin’s market fate appears to rest on Elon Musk, dogecoin is perhaps a more volatile prospect than bitcoin. While dogecoin could well be one of the currencies that overtakes traditional money in the future, it’s difficult to recommend investing in it right now, especially since the value is so low after Musk’s comments on Saturday Night Live over the weekend. One thing should be clear: the world of cryptocurrency is a fast-moving one, so you should be as informed as possible!
How does cryptocurrency work?
In essence, cryptocurrency is an all-digital currency format in which ownership is validated by the blockchain. You may also have heard that term during recent discussions surrounding NFTs, which also use blockchain security to verify and identify owners. Cryptocurrency is often mined by dedicated miners who complete “blocks” of transactions, which then get added to the blockchain. If it sounds confusing, that’s because it is, but most of this isn’t necessary knowledge for the average bitcoin investor.
How do I know my bitcoin is safe?
To put it simply, no currency format is completely without risk, as you’ll know if you’ve ever been defrauded. There are three major risks around bitcoin: being the victim of fraud, losing your private bitcoin key, or bitcoin’s value tumbling after you invest. You can’t guarantee market value for any asset, whether that be bitcoin or a business, so investing always carries a risk. For the other two, you can simply keep your key somewhere that others can’t view or access it, and then you’re maximising the security around your investment. Beyond that, bitcoin carries the same risk as any other investment does.
What’s the future of bitcoin?
It’s hard to say what might lie in bitcoin’s future. However, prominent investors appear to be optimistic about the currency’s chances. As traditional currency becomes less and less relevant in an ultra-digital world, bitcoin seems like a more and more appealing alternative. It’s the most stable market crypto by far, and since prominent figures like Elon Musk are major supporters, you can expect bitcoin to go from strength to strength, barring a massive upset like government intervention (which looks increasingly less likely).
What lies in dogecoin’s future?
There are some fears surrounding other forms of cryptocurrency and whether their inexorable rise constitutes a bubble. Dogecoin’s icon is the legendary Shiba Inu meme dog, and it’s popular among celebrities and influencers because of its meme origins and inspiration. With that in mind, dogecoin may never perform as well as “traditional” cryptocurrency, and we might see it fall from grace in the next few weeks or months. For our money, dogecoin is a less sound investment, but it also has greater potential for returns.
We hope this has gone some way towards explaining the phenomenon that is cryptocurrency and how Elon Musk has sway over it. Are you planning to invest in bitcoin or dogecoin? What do you think Musk will say next about crypto?