Will Dogecoin Be the Next Bitcoin? Or Maybe Something Better

There's a new cryptocurrency on the virtual block called Dogecoin, with a cute Japanese dog for a logo. But while its Shiba Inu mascot is almost too adorable to take seriously -- and the currency itself started as a joke four months ago -- Dogecoin (pronounced DOHJ-coin) is now looking to challenge bitcoin and become a legitimate, widely accepted method for buying things online.

Having a cheerful, over-the-top dog meme as its mascot shouldn't cause people to take it less seriously as money, says Ben Doernberg, a volunteer on the board of directors of the Dogecoin Foundation, a nonprofit organization that started in December 2013. Alexander Hamilton, Abe Lincoln and George Washington are portrayed on our currency looking stern and sober for a reason: To instill confidence that those bills and coins will have value for years to come.

"For young people who spend all of their time on the Internet, I don't know that it's any more weird to have a guy from the [1700s] there than a dog," Doernberg, 25, says of U.S. currency. "I don't think it makes any more sense to have Ben Franklin there than Doge."

Like many other cryptocurrencies, Dogecoins are mineable, meaning you can acquire them without paying in cash, as long as you have a reasonably muscular computer equipped to do some number-crunching with its spare power. There are already more than 64 billion Dogecoins in circulation, worth more than $34 million. The popular bitcoin, which leads all cryptocurrencies with a $6 billion market cap, has a current supply of 12 million.

One bitcoin costs $529.50, while one Dogecoin is worth .059 cents, according to recent prices. Or, to put it in more relatable terms, $1 will buy you 1,691 Dogecoins.

That's quite a low barrier to entry compared to bitcoin, which dovetails with the idea that Dogecoin is meant to be used as currency and not as a speculative investment. "It's not as focused as something you hold for 10 years and hope the price goes up," Doernberg says.

Dogecoins are gaining popularity. A man in Wisconsin is selling his vacation home for 100 million Dogecoins. That equated to about $135,000 in early March, but this weekend, it only amounted to around $59,000. PC builder Xidax accepts Dogecoins, and they're accepted by GoCoin for international payments.

Dogecoin supporters also recently raised $50,000 in the digital currency to sponsor NASCAR driver Josh Wise in a May 4 race at the Talladega Superspeedway. The sponsorship fee was raised in Dogecoins, which a private buyer bought for $50,000, says Kevin Dusenberry, who managed the NASCAR fundraiser for Dogecoin.

"Josh is the true embodiment of what the community represents," Dusenberry says. "He's an underdog and the Dogecoin is an underdog."

Wise, 31, of Charlotte, N.C., says he's thankful for the sponsorship, and thinks they picked a good race because drafting is allowed at Talladega, which should help an long-shot racing team like his.

"Talladega is really a race that levels the playing field," he says.

Having the gold Dogecoin logo as the dominant image on his car is something that Wise, and much of the general public, will view as a bit of a surprise. "Until a week ago, I had no idea it even existed," he says of Dogecoin.

Whether using a Doge to tip someone online because you like their video, or buying a song or something else online, the ultimate goal of the people behind Dogecoin is that we should all be able to use it easily for small, daily purchases such as a newspaper or going to a movie, and not as a speculative investment for your child's college fund, Doernberg says. "The goal is to actually be the online currency," he says.

"It's just so much easier than putting in a credit card," he says.

A problem with credit cards, he says, is that chargebacks and the standard 2.9 percent fee that credit card companies charge merchants prevent many businesses from accepting them for small purchases. %VIRTUAL-article-sponsoredlinks%The New York Times, for example, doesn't charge a few pennies to read a story online, but it does charge a monthly fee for a digital subscription.

"The question with all these digital currencies is how do you get to the point that you can take it anywhere and someone will accept it?" Doernberg asks.

Buying Dogecoins is easy enough. You can transfer money from your bank account to a virtual wallet full of Doges. Dogecoin also has its own virtual wallet. Trading them back for dollars, however, is more difficult, Doernberg says, though there are markets such as Moolah that allow it.

A problem with cryptocurrencies is that because they're so new, they often gain value fast and can become significantly more expensive to buy from week to week, says John Arsenault, a Denver lawyer who represents a VPN company that accepts cryptocurrencies. Wide swings in value don't happen as much with currencies backed by governments.

Such price changes can make cryptocurrencies more popular with speculators, Arsenault says. "A lot of the value of a cryptocurrency is based on the Internet's perception of it," he says.

And here's another fun twist to using virtual currency: The IRS recently ruled that such payments are considered property and should be reported as income, making them subject under some circumstances to the capital gains tax. If you're making money as the market for a virtual currency rises, you'll have to give some of it to Uncle Sam. And no, the federal government won't accept Dogecoins as payment for a tax bill.

11 Money Moves to Make Before You Turn 40
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Will Dogecoin Be the Next Bitcoin? Or Maybe Something Better
Creating an emergency savings fund can prevent you from relying on a credit card and going into debt when unexpected costs strike, says "Today" show financial editor Jean Chatzky. "You've got to watch it with the debt," she warns, adding that half of Americans lack emergency funds. "Lack of savings and debt go hand in hand ... an emergency cushion is insurance against debt," she says.
"Insurance is always that thing that we don't think about that we should," Chatzky says. Rental insurance and disability insurance both tend to be "chronically under-bought," but taking out policies can end up saving you from financial catastrophe, she adds. She recommends looking into policies offered through work because they can be more affordable.
Automating your retirement savings -- having money taken out of your paycheck and put into a tax-advantaged retirement account -- makes it easier to save without thinking too much about it, Chatzky says. Since many companies' automatic opt-in programs start at 3 percent of income, you might need to scale it up yourself, and Chatzky says if you do it in 2 percent increments, you might not even notice the difference.
While some people prefer to manage their money on their own, others benefit from a professional's help. "It's easy to feel overwhelmed by all of the competing expenses," says Suzanna de Baca, vice president of wealth strategies at Ameriprise Financial (AMP). "Sitting down with a financial adviser can help you understand where your expenses are and what is discretionary versus essential, and then you can create the right kind of budgeting and savings plan for you."
Kathleen Grace, a certified financial planner and author of "Prince Not So Charming," says maintaining excellent credit is important as you progress through your 30s, particularly because your credit report can play a big role when it comes to determining how much you will pay to borrow money for big expenses like a mortgage. She suggests reviewing your credit report once a year to check for errors and paying off your credit card balance in full each month.
Learning the ins and outs of income taxes, including any tax deductions and credits that might apply to you, can help you save a few hundred, or even a few thousand, dollars each year, says certified financial planner Nancy L. Anderson. Those amounts can add up over a lifetime, she adds.
This move isn't right for everyone, but it is a smart investment for many 30-somethings, says Bart Astor, author of "AARP Roadmap for the Rest of Your Life." Despite the flux in the real estate market, "it's still a good idea for a young person or family. It brings stability," he says. And over time, the investment should grow.
Many companies provide an additional 30 percent of pay in terms of employee benefits, Anderson says. Those benefits include retirement, tuition reimbursement, pretax transportation benefits, health savings accounts, employee assistance programs, wellness programs, financial planning and more. Since your company is already paying for those benefits, you can take advantage of them to help boost your own wealth.
"The single most important financial move you can make in your 30s if you have minor children is to put the time, effort and money necessary into drafting solid estate planning documents," says Tim Maurer, director of personal finance for the BAM Alliance of independent advisers. They should be written by an attorney who specializes in estate planning and include advance directives, a durable power of attorney and most importantly, a will.
You don't need to become a financial professional, but knowing your way around the stock market will help you make the right decisions for your own long-term savings and investments. Money and retirement expert Kerry Hannon recommends smartaboutmoney.org, by the National Endowment for Financial Education, for free guides on stocks, bonds and mutual funds. She also suggests taking a personal finance course at a local community college.
This decade is also the time to make slow and steady progress toward paying off any remaining student loan debts, as well as unloading any expensive credit card and other types of debt. Hannon even opted to cash in her 401(k) plan at age 30 to help pay off her credit card debt, which isn't necessarily the right choice for everyone. Still, becoming debt-free by age 40 is definitely something to celebrate.
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