Dogecoin witnessed huge growth last year and now has again jumped high with the announcement of Elon Musk to accept it as a mode of payment to buy Tesla merchandise. The coin has gained 30 percent momentum with the support tweet.
Musk has been with the meme coin since the beginning and his frequent tweets throughout 2021 played a key role in the price rise. Simultaneously, he has been working with the developers to improve the Dogecoin network.
However, some experts believe there is no unique about the coin to set it apart from the crowd of thousands of cryptocurrencies. It is not equipped with anything exciting from a functionality perspective. Even though it is capable of processing more TPS compared to Bitcoin, but the same is possible with many other cryptocurrencies and some can process many more TPS. Moreover, Dogecoin is missing the new smart contract capabilities as found in Ethereum to help programmers develop dApps or decentralized applications. It is simply focusing on the PoS concept that is believed to be adopted by most blockchain networks.
Dogecoin lacks good supply-and-demand dynamics. Currently, there are over 133 billion tokens and an annual increase of 5 billion has been set. This means it cannot be used as a hedge against inflation. It simply sees the coin as using the power of marketing to build a fun community and a similar strategy is being followed by many other coins.
However, Dogecoin may not go away. It will exist abreast of other cryptocurrencies. It currently has a market cap of over $22 billion and the continued backing of Tesla's CEO may push the value further up. But the good days of 2021 are over.
Dogecoin is a digital currency similar to Bitcoin, Litecoin, Polkadot and other cryptocurrencies. It runs on a decentralized network through which users can transmit money across the world instantly. It was founded as a joke by software engineers Jackson Palmer and Billy Markus in 2013. The coin quickly developed an online community.
Musk got involved in it after learning that many of the production-line workers at Tesla owned Dogecoin. He has been working with the developers since 2019. He had offered funds in the development but it was declined by the founders. However, the developers have considered his advice to increase the TPS and make the network more energy-efficient. Energy consumption is a big issue with most cryptocurrencies. Bitcoin miners require immense computer power to create new coins by solving cryptographic puzzles.
Very recently, Dogecoin was reported to be transitioning the network to a proof-of-stake from proof-of-work. Coin owners are to become validators and thereafter approve transactions.