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How will the proof-of-stake plan for Dogecoin change the game for DOGE holders?

How will the proof-of-stake plan for Dogecoin change the game for DOGE holders?

What is Dogecoin?

Dogecoin, named after the Shiba Inu, a prominent Japanese dog breed, was developed in 2013 as a satirical payment system by software engineers Billy Markus and Jackson Palmer to address significant volatility and reckless speculation in the crypto ecosystem.

Markus and Palmer chose the “doge” meme as the face of their enterprise because it was popular online at the time. In comparison to “serious” coins like Bitcoin, Billy believed that a lighthearted coin was more likely to attract new users (BTC).

Dogecoin is an open-source cryptocurrency project that began with PoW mining, which was popular at the time. Dogecoin, contrary to popular belief, received a lot of attention.

DOGE’s popularity skyrocketed after it was backed by Elon Musk and Mark Cuban, driving the token’s value to an all-time high of $0.73 in May 2021. Musk went on to proclaim himself the “Dogefather,” much to everyone’s amusement.

The mining consensus debate has polarised the cryptocurrency community, with Bitcoin supporters considering PoW as the absolute and only solution to decentralization. Despite this, many individuals, including Dorsey, believe that PoS is more centralized and riskier than PoW. On the contrary, Vitalik Buterin is assisting Dogecoin in its goal of transitioning to a new consensus technique. But how precisely is Vitalik Buterin assisting Dogecoin in its transition to proof-of-stake?

Vitalik, a well-known figure in the crypto community, also serves as an adviser to The Dogecoin Foundation, the non-profit organization behind the meme coin. The Ethereum blockchain, led by Vitalik, has been a leader in replacing PoW with the more efficient PoS and resolving the age-old argument between proof of work and proof of stake.

Vitalik, who oversees the intricate multi-step process for Ethereum, is the ideal person to help Dogecoin through the difficult shift.

Advantages of Dogecoin proof-of-stake

The proof of stake system is much from ideal. Giving them a reason to save their coins also provides them a reason to hoard and never spend any of them. This reduces overall transaction volume, which might negatively impact currency prices. Finally, there must be a happy medium between these two systems that minimize their shortcomings while maximizing their benefits. Will a currency like Bitcoin, however, ever use a proof of stake system? Most likely not. This is because introducing a new proof of stake scheme into the Bitcoin protocol will make the currency appear weak and unguided. However, other currencies, like Dogecoin, are quite likely to develop a hybrid system that combines the two approaches in the future.

How will the proof-of-stake plan for Dogecoin change the game for DOGE holders?

As Dogecoin grew in popularity, so did the number of DOGE holders, highlighting the inherent limitations of proof-of-work methods. The high cost of running Dogecoin nodes deters new validators. And, of course, massive power consumption has always been the enemy of PoW consensus systems, attracting harsh criticism from environmentalists and the threat of regulatory action from authorities.

These changes pushed Dogecoin to investigate alternate consensus mechanisms. As PoS became a feasible alternative, Dogecoin opted to implement it, with Vitalik Buterin’s support.

The excessive energy consumption of the PoW consensus protocol always generates negative headlines and ramifications at a time when the globe is undergoing an energy crisis, and everyone is concerned about pollution-induced climate change. Moving to PoS was a reasonable next step in this case.

The migration of Dogecoin from proof-of-work to proof-of-stake will allow anyone staking an adequate number of DOGE to participate in network operations, removing the concentrated mining power from the hands of organized mining cartels that have become so intrinsically associated with proof-of-work protocols.

The proof-of-work methods have been heavily criticized for their delayed transaction output and high energy consumption, and they now have few supporters in the crypto world. The number of proof-of-stake systems is continuously growing, and Dogecoin has jumped on board.

Dogecoin’s proof-of-stake consensus mechanism will improve governance and community interaction among DOGE holders. A thorough examination of proof-of-work vs. proof-of-stake will aid in understanding the logic and reasoning of the change. But when will Dogecoin become proof-of-stake?

The Dogecoin Foundation trail map estimates that Dogecoin will move from PoW to PoS in 2022. However, no official date has yet been declared.

The road ahead 

PoW was an appealing consensus mechanism in the early days of cryptocurrencies when anyone could mine coins using a standard computer. However, the introduction of expensive energy-guzzling mining equipment, as well as scalability challenges with the growing popularity of digital currency, rendered proof-of-work protocols obsolete in the changing era. It’s no wonder that projects started seeking alternatives.

The change of Dogecoin from PoW to PoS is not noteworthy. Rather, it is simply what other projects led by Ethereum have been doing. The proof-of-stake strategy for Dogecoin is anticipated to fix the protocol’s normal PoW difficulties and usher in a new age of PoS-based protocols.

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