What is dogecoin?

To cryptocurrency insiders, dogecoin—pronounced “doggycoin”—is the scammy, jokey “pet crypto” that everyone seems to be talking about, right?

Not exactly. According to some experts, dogecoin has legitimate uses. And despite its unfortunate moniker, dogecoin has an interesting story behind it.

The Idea

Doby, a self-described “very long-standing Bitcoin and crypto forum member,” who wanted to remain anonymous, was looking for a good reason to make a prediction about the price of Bitcoin back in December 2014. In an almost prescient statement, he imagined a scammy and silly cryptocurrency that would go viral on Reddit, where many members of the community congregate.

What are the risks of investing in cryptocurrencies?

Some tokens aren’t associated with any legitimate business, and their value is based on the possibility that some hacker will be able to pilfer the tokens and sell them for more money. Cryptocurrencies are also difficult to find — some are even only available through certain web platforms or at specific online vendors, like gas station convenience stores. In the case of Dogecoin, a popular currency used for tipping, users had no way to spend it at stores other than to trade it.

While crypto transactions are anonymous, losses from scams are typically partially reimbursed with new cryptocurrencies. That means that if you lose money from a scam, there’s always the risk that your remaining funds will be valued at less than the crypto they originally belonged to.

The most common scams on the market

Recently, there has been an explosion in the number of crypto startups in operation. In part, this is due to the growing interest in the space.

According to an article by Bloomberg, the number of new crypto coins out there is growing at a staggering rate.

And the pace of this growth has attracted scammers.

They use sites like GoCoin.com, a digital currency platform, and KickCoin.com, which supports the KickCoin cryptocurrency, to find victims.

They spread negative and misleading information about cryptocurrencies and pump up the price of a coin by getting people to buy it. When they no longer have customers, they just stop working.

For example, these websites claim the WebiMax.com coin will be the next big thing, making it easy for you to make a small investment.

How to avoid crypto scams

The three major types of scams in the crypto community are: pump-and-dump schemes, investment scams, and government-backed currency.

Pump-and-dump schemes involve the same common scheme: Buy tokens at a discounted price, then sell at a higher one and make a profit. Usually, these scams are the work of a single investor (or some very lucky backers), and they’re created to pump up the price of a given coin.

Investment scams — sometimes called “pump-and-dumps” scams because of their predatory nature — are more common in the crypto community. The goal is usually the same as a pump-and-dump: Buy the token now and sell it later at a higher price. Most of the time, the investment scam simply creates a new scam while trying to hide its previous activity.