Dogecoin, which is based on a meme, rode a wave of popularity to become one of the biggest cryptocurrencies this year. Now another crypto, Baby Doge Coin, is looking to follow in its footsteps.
The name may seem silly, but that’s par for the course with crypto, where there’s a LamboCoin, ElonGate, Dogelon Mars, and even a Loser Coin. What isn’t a joke are the returns, as Baby Doge Coin’s price has increased by nearly 700% since it launched.
Will that trend continue? I wouldn’t bet on it. To explain why, let’s take a closer look at Baby Doge Coin.
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What is Baby Doge Coin?
Baby Doge Coin is a cryptocurrency that launched on June 1, 2021, by members of the Dogecoin community (Dogecoin and Baby Doge Coin use different spellings for the term “Dogecoin”). According to its white paper, which it calls a “woof paper,” Baby Doge Coin is 10 times faster than Dogecoin and has cheaper transaction fees.
Every Baby Doge Coin transaction has a 10% fee. Half of the fee is redistributed to all existing holders of Baby Doge Coin. The other half is used for a liquidity pool with Baby Doge Coin and Binance Coin.
The transaction fee is designed to encourage holding on to Baby Doge Coin, and it’s not a new concept. A popular cryptocurrency that came out in March, Safemoon, also has a 10% fee with half going to existing holders and half going to a liquidity pool. Since then, there has been a legion of imitators doing the same thing.
Baby Doge Coin’s tokenomics
Baby Doge Coin has a total supply of 420 quadrillion tokens. The developers manually burn tokens, which means they destroy those tokens. They’ve burned over 125 quadrillion so far, leaving a supply of nearly 295 quadrillion.
That’s a massive supply, and it means that Baby Doge Coin has an extremely low price. Here’s a look at its earliest recorded price and where it has gone from there:
- Earliest recorded price (June 9, 2021): $0.000000000175
- Price at time of writing (June 25, 2021): $0.000000001360 — a 677% increase
- All-time high at time of writing (occurred on June 24, 2021): $0.000000002014 — a 1,050% increase)
Note that since reaching its all-time high yesterday, Baby Doge Coin has dropped in price by over 30%.
Baby Doge Coin’s goals
The white paper for Baby Doge Coin outlines several goals:
- Rescuing dogs in need
- Bringing crypto adoption to the mainstream
- Releasing a crypto wallet
- Creating a marketplace for non-fungible tokens (NFTs) for people to buy and sell digital art
On June 24, Baby Doge Coin announced on its Twitter account that it donated $75,000 to PawsWithCause, a nonprofit organization that helps shelter pets get seen through community paint days.
Should you buy Baby Doge Coin?
If you’re looking for a good cryptocurrency investment, Baby Doge Coin isn’t it. It’s like playing the lottery. You may get lucky, but the most likely result is losing money.
As a general rule, I stay away from cryptocurrencies with hundreds of trillions of tokens that are priced at a fraction of a penny. Baby Doge Coin takes that even further with hundreds of quadrillions of tokens. These types of cryptocurrencies are almost never a long-term success. They launch, sometimes the price increases a lot in the early going, and then they crash.
There’s nothing about Baby Doge Coin that makes me think it will be any different. Here are the main reasons to be wary of it:
- The name gives the impression that it wants to ride Dogecoin’s coattails.
- It doesn’t have any use besides increasing in value. With a 10% fee on every transaction, who would ever buy anything with Baby Doge Coin?
- The 10% fee also means that the price needs to increase that much more for you to profit.
- None of the top cryptocurrency exchanges sell Baby Doge Coin. That’s unlikely to change any time soon, since it’s so new and isn’t widely traded.
- It’s reliant on hype. The woof paper even lists the fact that it has been shared by celebrities as an accomplishment.
The bottom line is that Baby Doge Coin is a big gamble. Cryptocurrencies in general are risky investments, but there are other options that are more likely to succeed.