Dogecoin Adopts Merged-Mining With Litecoin
Dogecoin has decided to support merged mining with Litecoin and other Scrypt based coins. This is designed to help secure the network, given Doge's rapidly declining miner rewards.
Dogecoin has fallen from the early, heady days when no one really cared about the sustainability of the coin and everyone was riding their shibes to the moon.
Today, Dogecoin is facing a whole host of problems, but perhaps the biggest of them was just solved. Dogecoin was facing the possibility of a 51 % attack. The coin is rapidly lowering it reward rate for miners. That obviously is resulting in fewer miners which means a lower hash rate and a less secure network. The coin's community has decided to go forward with merged mining.
Enabling merged mining will allow users to mine Doge and Litecoin (or other Scrypt-based coins) at the same time. It won't change the total output of coins, but will instead allow miners to receive two revenue streams at the same time, increasing their reward.
Litecoin's creator Charlie Lee has been communicating with the Dogecoin community and has help make the case for merged mining.
Dogecoin was never designed to last as long as it has. Fitting into its meme nature and nearly sarcastic creation, it was designed to last a year or two rather than exist as a long term, stable currency. Dogecoin was and still is very favorable to miners. Dogecoin is designed to be mined 20 times faster than Bitcoin. So whereas Bitcoin was designed to have 95 % of its coins mined in the first 20 years, Doge is designed to be 95 % mined in the first year.
The idea behind Bitcoin's mining algorithm is that in twenty years the coins will be valuable enough that mining is still profitable with 95 % of the currency already in circulation. Once 100 % of the coins are mined, the idea is that the mining fees will be valuable enough to encourage enough miners to secure the system.
But, with 95 % of the world's Dogecoin set to be released by block 600,000 there will then be very little incentive for miners to process transactions and secure the network. If Dogecoin's price jump dramatically and compensated the drop in price, then the network would stay secure, but that appears unlikely.
So, allowing miners to also mine Litecoin will secure both networks and increase the reward for miners of both currencies (assuming they switch to merged mining). It seems like a win/win for both currencies.
But, there are some drawbacks. First, Doge will require another hardfork, something its community had to deal with once already. If the community decides to drop merged mining support then it will need to hardfork again. There will also be some added blockchain bloat, although it is unclear exactly how much. Pools will also have to update to support merged mining.
Still, the community has agreed that the increased security and the longevity added by tying Dogecoin to Litecoin is worth the trouble to the community. Merged mining should become available on Dogemining pools shortly.
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