Cryptocurrencies across the board are crashing. Bitcoin and Ethereum, the two most valuable digital assets that are largely viewed as bellwethers for the entire industry, have both cratered more than 30% over the past two months. The ongoing pandemic, soaring inflation, and the potential for multiple rate hikes by the Fed this year are triggering a move to safer assets.
There's one cryptocurrency, though, that hasn't followed the poor performance of the overall market. In fact, Baby Doge Coin (CCC) has already soared more than 100% to start 2022. Like me, you're probably wondering what's going on.
Does Baby Doge Coin deserve a place in your portfolio? Continue reading to find out.
Image source: Getty Images.
What is Baby Doge Coin?
Similar to Dogecoin and Shiba Inu, Baby Doge Coin is a dog-themed meme coin that was really created for fun. Launched in June 2021 by fans of Dogecoin, Baby Doge Coin had a massive initial supply of 420 quadrillion tokens, although only 268 quadrillion are in circulation today. While the original Dogecoin ultimately is a tweaked version of Bitcoin, Baby Doge Coin is a token on the Binance Smart Chain network. Baby Doge Coin is tiny in the crypto world, sporting a market cap of $1.15 billion on the morning of Jan. 12.
Baby Doge Coin has some unique economic features. For example, to encourage enthusiasts to hold on to their Baby Doge Coin balances, a 10% transaction fee is charged anytime someone sells. Five percent is redistributed to existing holders, while the other 5% goes to a liquidity pool. Tokens are also burned over time, providing deflationary pricing pressure.
If you're finding this confusing and unnecessary, you're not alone. Because it's so easy to create and launch a cryptocurrency, pointless projects that tout special incentives pop up to drive interest from speculators. This one is no different. The pet-coin frenzy is in full swing, and Baby Doge Coin is riding it to new heights as its 2022 performance shows.
Stay away from this cute cryptocurrency
Before you consider buying any cryptocurrency, which is already an extremely risky and volatile asset class, ask yourself whether the coin in question has any real-world utility. Unfortunately, in Baby Doge Coin's case, there isn't much.
The token is only listed on a handful of exchanges today, limiting access to it. The product roadmap, aptly termed "paw map," contains ambitious goals like offering a credit card and building a marketplace for non-fungible tokens, targets that seem unlikely to happen given the massive innovation occurring on Ethereum's blockchain today. On a positive note, the developers have a mission to donate a small portion of coins to rescue dogs in need.
Babe Doge Coin has no legitimate potential for use, so buying it for your portfolio isn't recommended. Undoubtedly, the token can attract a wave of enthusiasm from social media hype, as it has in the past couple of weeks, but this is unpredictable and not a game that long-term investors want to play.
Additionally, there's nothing stopping anyone else from creating another dog-inspired meme coin with similar characteristics as Baby Doge Coin. If this were to happen, speculators likely would run to the next shiny cryptocurrency in hopes of a quick profit.
I think there are better options out there for cryptocurrency investors to allocate a portion of their hard-earned savings to, with more promise and staying power.