Alex Valaitis, the founder of W3T and former Ethereum researcher, posted research through his Twitter thread about Dogecoin basics and its implications for scalability as well as use cases.
In the tweet’s comments section, Alex stated that he selected three major areas of the DOGE coin to concentrate his investigation, including technology and protocol, instances of using Dogecoin, and “The Dogecoin community.”
He started by speaking about its’s fundamentals, specifically how it is a “standalone layer-1 blockchain” that employs Proof of Work as its consensus process. He went on to say it was based on other blockchains in existence, such as LuckyCoin and Litecoin, but unlike those two, he told DOGE had some additional features.
According to the statement:
While Dogecoin is a PoW blockchain like Bitcoin, its use of Scrypt technology means that SHA-256 bitcoin mining equipment cannot be used to mine DOGE. Instead, miners must purchase less powerful FPGA & ASIC devices for mining.
Dogecoin Mining More Approachable Than BTC
Theoretically, this should make DOGE mining more approachable than Bitcoin mining for the average individual. There are currently 5,896 nodes in total, which are evenly scattered over the world.
It’s also important to think about scalability and processing speeds when considering DOGE’s consensus method. Their average transaction time is only one-tenth of the duration it takes for BTC transactions; additionally, it can process up to 33 transactions per second at full capacity – which is 10x faster than BTC without a lightning network enabled.
Moreover, Alex said:
One question that came up in my research, was whether or not Dogecoin supports smart contracts, like Ethereum does. Dogecoin developer @inevitable360 pointed out that while Dogecoin does not have smart contracts, it does support “Script Opcodes
One concerning thing found from the research was the high concentration of Dogecoin in just a few wallets. In comparison, there are very few addresses for Bitcoin that account for 5%
Alex also highlighted that the block reward had been set at 10,000 $DOGE per block, and one is mined every minute. It creates an additional 5 billion new coins annually, giving the current inflation rate of 3.87%. In addition, he stated that there are 132.6 billion coins in circulation right now.
Dogecoin Use Cases & Community
After examining the various options for custody wallets on Dogecoin’s website, Alex said he “ultimately went with TrustWallet.” Sodogetip was also an option worth considering because it allows users to link their Reddit and Twitter accounts in order to get tips directly.
He believes that the most viable uses of Dogecoin appear to be as a payment method that could supplement already-existing institutions- including large retailers/social media sites- or as a complimentary form of currency.
Furthermore, the long-term viability of a layer-1 blockchain depends on the existence of a sizable and fervent core community. The active community is shown in the DOGE instance; some have even given it the moniker “the people’s currency.”
As demonstrated by the enormous online communities it has on popular websites, such as the 3.5 million followers it has on Twitter, the 2.4 million “Subscribers” it has on Reddit, and the 31,285 members it has on Discord.
According to the statement:
In conclusion, I believe Dogecoin is one of the most misunderstood blockchains in crypto. It would have been easy for me to dismiss Dogecoin and chosen to never research it, however, I’m glad I took the time to dive deep.