Dogecoin is a meme cryptocurrency with a market capitalization of over $9 billion. It’s widely regarded as a joke, but investors are still putting real money into the cryptocurrency. Dogecoin has been so influential that it spurred “Dogecoin killers” like Shiba Inu, and the meme coins just seem to keep coming.
Tesla CEO Elon Musk is a vocal supporter. Most investors see Musk’s tweets as jokes and not investment advice. However, some of Musk’s tweets have real effects on the price of Dogecoin. For example, Musk tweeted on the social network that he plans to “send a literal Dogecoin to the literal moon”, and the cryptocurrency pumped 32% following this statement. It’s important to note that Musk tweeted this on April 1st, so it’s likely just an April fool’s joke.
Whether he is serious or not, Musk brings attention to Dogecoin and the entire cryptocurrency market through his tweets. He’s even urged Coinbase to start supporting Dogecoin; this is unlikely, as Coinbase is strict about which cryptocurrencies it allows its users to invest in. This being said, there are other trading platforms where you can invest in DOGE and even earn interest on your holdings. Learn how you can earn interest on Dogecoin in 4 simple steps below.
Step 1: Open a crypto account.
There are very few cryptocurrency exchanges that support interest bearing accounts for Dogecoin.
If you want to earn interest in cryptocurrency, using a more widely used and less volatile asset like Bitcoin or Ethereum may be in your best interest. Some accounts that let you earn interest on major cryptocurrencies are Coinbase, BlockFi and Binance.
Unfortunately, the only major exchange that supports earning interest on Dogecoin is Binance. Investors can put their Dogecoin in an interest bearing account on Binance to earn a 5% annual interest rate on their crypto.
To open a binance account, go to Binance.us and sign up with email and password.
Step 2: Look at interest rates.
The only accredited platform for earning interest on Dogecoin is Binance. Binance currently offers a 5% annual interest rate on DOGE, but this is subject to change based on market demand and the supply of coins in investor savings accounts. Remember, interest rates for cryptocurrency projects change from one exchange to another.
Compared to other cryptocurrencies, Dogecoin offers a mediocre interest rate. Dogecoin is a highly volatile asset, much more so than Bitcoin and other large market capitalization cryptocurrencies.
Platforms that allow you to earn interest on Bitcoin offer rates from 4% to 8%, and you don’t need to be exposed to Dogecoin.
Another interest bearing option is to stake Ethereum on it’s Eth 2.0 network, which currently pays investors an interest rate of about 8% annually.
Step 3: Add Dogecoin to your portfolio.
To earn interest on Dogecoin, you’ll need to own the asset. This means you’ll be exposed to the high volatility of Dogecoin.
Although you’ll be earning 5% interest on your holdings, this doesn’t mean that your portfolio will grow in USD value.
If Dogecoin depreciates 10% (which its done several times in short time intervals), then your initial investment and interest will be worth less than you spent. Remember, Dogecoin has an unlimited supply, and that means it can only grow so much.
Step 4: Earn interest.
You can monitor the interest rate you earn on your investment on the exchange you make an account with. For Doge, you can see the current interest rates on Binance’s website.
These interest rates are floating rates, meaning they can change with market demand for the asset. It’s a good idea to monitor the interest rate you're earning on a daily or weekly basis to make sure that you’re earning enough interest to make your investment worthwhile.
How Does Compound Interest Work for DOGE?
Binance savings accounts are compounded daily. Compounding interest is advantageous to investors because it let’s you earn interest off of your previously earned interest.
For example, if you earn 10 DOGE a day, then at the end of each day Binance will credit 10 more DOGE to your savings account. These coins will earn interest for each day going forward. As your account grows, so will your interest payments.
Pros and Cons of Earning Interest in Dogecoin
If you plan on holding your Dogecoin for the long term, then earning interest on Dogecoin is a good way to increase your cryptocurrency holdings.
If the price of Dogecoin increases while it's in your savings accounts, so will the interest you’ve earned and the interest you will earn in the future. This is because all the interest you earn from your savings account is paid directly in Dogecoin.
If Dogecoin decreases while it’s in your account, then you will lose money on the interest you’ve earned and the interest you will earn. Dogecoin is currently trading at almost 6 cents per coin, appreciating over 1,000% in the past 12 months.
If you invest in a DOGE savings account and the coin dips to 5 cents, then your initial deposit plus the interest earned over the span of a year will be less than your initial investment in USD value.
Earn Interest or Hold Dogecoin?
Instead of earning interest on Dogecoin, you could choose to simply hold it as an investment. Holding Dogecoin makes your investment more liquid, so you’ll be able to sell your asset quickly if Dogecoin’s price fluctuates dramatically, especially because of news items or posts on social media networks.
Many crypto exchanges support Dogecoin, but very few support interest bearing accounts on DOGE. Your crypto exchange options are expanded if you decide to hold Dogecoin as an investment, irrespective of Elon Musk’s social media posts. Now that Musk’s money is behind Twitter, you may begin to see more influential tweets from the owner himself.
If you want to earn interest in cryptocurrency but don’t want to be exposed to a currency based on a meme, consider earning interest on bitcoin or Ethereum and keeping your assets in a secure mobile wallet.
And if you don’t want to be exposed to high risk assets like cryptocurrency, then you can earn interest on stablecoins. Stablecoins are cryptocurrencies that are pegged to certain assets, usually the U.S. dollar. Depending on the platform you use, you can earn anywhere from 3% to 13% annual interest on stablecoins.
Frequently Asked Questions
Q. Can I get free Dogecoins with a crypto interest account?
No, there currently aren’t promotions for free dogecoin with a crypto interest account. By earning interest on your holdings, you’re receiving “free” Dogecoin from a very low risk savings account.
Although the interest rate is low risk, you’re still exposed to Dogecoin. This crypto asset is highly volatile and high risk, so earning interest on DOGE is still a risky investment.
Q. Should I put my savings into Dogecoin?
You should only put money into Dogecoin that you’re willing to lose completely. Dogecoin is unlike other cryptocurrencies because it doesn’t have a good value proposition.
Dogecoin is a highly speculative and manipulated asset with extremely high volatility. The long term viability of the crypto is questionable, but many short term traders have made profit by swing trading the coin.
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