The joke coin pays the most for on-chain security per capita.
Not having a halving event creates some bonkers financial incentives.
Just for fun I decided to do the math on this today.
The variables are as follows:
- Bitcoin's current spot price sits at $66.1k
- Dogecoin has a value of 12.7 cents
- Bitcoin prints a block every 10 minutes on average.
- Dogecoin prints a block every 1 minute on average.
- Bitcoin has a block subsidy of 3.125 BTC.
- Dogecoin has a subsidy of 10k DOGE.
- Bitcoin has 19,759,634 tokens in circulation.
- Doge has 146,132,426,383 tokens in circulation.
This is all the information needed to compare what Bitcoin spends on security vs the original memecoin.
First and foremost we can see that Doge mints 100k tokens every 10 minutes while Bitcoin allocates 3.125 tokens every 10 minutes. While this number itself is arbitrary and meaningless it becomes more relevant when we compare it to the total supply. At the current rate it would take Bitcoin 6,323,082 blocks (120 years) to double the token supply (ignoring the halving) while it would take Doge 14,613,242 blocks (27.8 years) to double its supply... which now that I've done the math for the first time is actually kind of impressive I thought it would be worse than that.
Given these numbers it's easy to see that Doge currently spends a factor of x4.3 more on security per capita than Bitcoin... which is just insane when you think about it. How much more would Dogecoin have to spike before it was paying out miners the same as the BTC network? Well Doge has a market cap of $18.4B, and Bitcoin sits at $1300B.
$1300B / 4.3 = $301B
$301B / $18.4B = x16.37
And I'd also like to point out that the way I got that x16.3 number was different in the tweet than how I've done it here, so I've already double-checked this number and confirmed this is correct. If Doge went x16.3 and Bitcoin traded flat the Doge network would basically be using the same amount of energy as BTC... which is obviously insane.
I think on a very real level we have to assume such an outcome is nearly impossible even though memecoins like Doge have been known to easily make gains like that during the bull market year. And if a spike like that were to actually happen it would be free money for day traders and the easiest short in the world due to the inherent financial incentives in play. Shorting DOGE in 2026 could be one of the easiest and most profitable moves of the bear market if it spikes up high enough before miners have time to act.
This is due to the fact that crypto mining, like most business models, operates on razor thin profit margins. If Dogecoin moons this math proves that the miners are being way overpaid. More miners will jump in to capitalize on the pump, and the majority of those tokens needs to be sold in order to pay for electricity. This gets even weirder when we start thinking about how it affects Litecoin.
Litecoin is a very serious network that gets very little respect.
Bitcoiners don't respect LTC because they are Bitcoin-only.
Crypto degenerates don't respect LTC because it's old news and "boring".
Meanwhile Litecoin moves to implement AI, DEFI, and privacy while having massive liquidity and being very cheap to move around.
So what does Dogecoin mining have to do with LTC?
Well it just so happens that both Litecoin and Doge use use the Scrypt hashing algorithm. This means high-powered ASIC miners that run this algo can choose to mine either network (and in some cases both at the same time via "merge-mining"). If Doge happens to spike in value a lot of the LTC miners are going to point their rigs at the DOGE network to make more money. Theoretically these Litecoin bros will use those profits to pay their power bill and buy LTC. Seeing as how DOGE currently has over x3 the marketcap of LTC this could be a lot of free money for the Litecoin network as a pump in DOGE will carry them during the 2025 bull market.
It's also important to note that POW tokens like LTC actually have a halving event so they don't suffer from this overallocation to security like DOGE certainly will. LTC can pump pretty damn hard from here and not really have to worry about miners dumping the token. LTC is only one halving event behind Bitcoin, with their block reward currently at 6.25 until 2027.
Some history on Dogecoin's origin story:
At first, the network implemented a randomized block mining reward before changing to static rewards in 2014. Dogecoin uses a proof-of-work consensus similar to Litecoin.
I'm not sure how randomized block production on Doge worked before the switch to static yield in 2014 (it's not even explained on the wikipedia page), but we can see from the charts that inflation at launch was exponential in nature, and then in 2014 this transitioned to 10k DOGE per block for linear emissions with no halving event. This is why it will take 28 years to double the supply at the current rate; due to the fact that so many tokens were printed in the first year. This was the beginning of Doge going from a complete joke asset to something the community was starting to take quite seriously.
https://dogecoin.com/de/dogepedia/faq/dogecoin-inflation/
Dogecoin has a diminished inflation rate because it has a fixed yearly issuance of 5 billion coins. This means that each year, the rate of inflation decreases comparative to the total supply, and in a very predictable way, making Dogecoin the perfect candidate to be used as a currency.
Sounds like cope to me
Imagine trying to compare linear static emissions to other currencies that actually reduce their payment to miners exponentially. Oh wait I don't have to imagine it because I've done this myself. In years past I have always wondered what it would be like if a POW token simply issued linear rewards and what would happen. Little did I know it would be the original memecoin to fill those shoes.
Since Dogecoin is not meant to be hoarded — and hoarding is a major barrier to a cryptocurrency being used as, well, an actual currency — Dogecoin will have a much more utilitarian and practical place in the economy than other cryptocurrencies, which often remain unspent.
Sounds like cope to me
The problem with this ideology is that Bitcoin has now essentially proven that increased rewards to the miners is completely unnecessary. Would Bitcoin be better off if the miners were paid more? Nope. Would that make on-chain fees lower? It would not. Blocksize and demand to use it would be exactly the same. In fact many would argue that printing less inflation actually ends up paying the miners more via higher token prices. Of course at the same time these higher wages are gobbled up instantly by more miners coming online and increasing the hashrate; so really it's just security going up which has diminishing returns after a certain point.
Bitcoin doesn't need a higher hashrate, and it's unlikely that Doge needs as much security as it has either. I've come to the conclusion that issuing more inflation in this way is simply an inferior way of doing things and just a waste of money and energy, but I do appreciate that DOGE exists so that we're going to know for sure rather than guessing at it in theory. The simulation continues. Every door must be opened and tested within the realm of flat architecture.
If anything the Dogecoin explanation of inflation sounds more like an advertisement for Hive.
Because on Hive we pay for more than just security; a lot more. Every user gets to wield inflation and can reward any other user for any task they deem rewardable. We fund development and communal infrastructure with Hive. We have a stablecoin that offers yield, and it just so happens it was the only algo stable coin to survive the last bear market. Not only did we survive but we didn't even come close to the haircut limit. In fact, only 10% of our inflation goes into block production. That sounds a lot more like a network focused creating actual money that gets used rather than horded, especially considering the USD peg of HBD.
But I am warming up to Doge recently.
In cycles past I would get pretty annoyed that DOGE of all assets would rally harder than everything else. This is due to the fact that I was undervaluing community as one of the primary components of crypto. Back in those days I thought all that mattered were the technical aspects and utility of the token. Turns out community is more important than all of that. So Doge certainly has a place in crypto but the way I see it they are going to be struggling at some point due to the way their chain actually works on the backend. Time will tell.
Conclusion
Can you believe that Doge is the chain out of all the chains in the world that spends the most on security? Kind of mindblowing, isn't it? We're going to have to watch and see how this plays out, but Doge's overallocation to security could be the very thing that keeps them from mooning. Or on the flipside perhaps this allows them to become even more stable than any other cryptocurrency, with lower highs but also higher lows. It's hard to speculate how it will all turn out within this jungle. We just have to let the simulation do its thing.
Posted Using InLeo Alpha
Wow! Never knew about merge mining between Ltc and doge. It seems an opportunity for this block miners to leverage should one hike during this assumed bull run
I didn't know about merge mining until I wrote this post and I randomly found it.
I might have to do a separate post just on that it seems interesting.
That will be wonderful, do let me know should you in case do so. Thanks.
The volume on LTC isn't bad, but it is also pretty cheap to move sats around on bitcoin lately too. Their last halving event was a nothing burger too.
Ah yeah well when you're trading at all time highs before hashrate gets cut in half that's pretty lucky.
This halving was indeed a breeze for the miners.
And a lot of them have figured out ways to tap into sustainable or excess energy or use the heat as a byproduct to heat air/water.
It is funny as practically everyone forgot BCH of any comparison 🤣.
PD: I don't say BCH is better, only that is funny that nobody cares.
With all due respect I don't see how Bitcoin Cash is relevant to this discussion.
They don't overpay on security; in fact they pay exactly the same as Bitcoin per capita.
Can you explain why this post made you think of BCH?
Only thing I can come up with is that you're personally bullish on BCH.
I guess Litecoin is pretty similar to BCH but the different hashing algorithm is a big deal for security.
Well BCH in fact pay less. You can't calculate the pay in coin numbers, you have to do it in USD numbers. That is what mark benefits or not for the miners.
Doge pay more in coins terms, Bitcoin pay more USD terms, Bitcoin pay more in real value.
When I say "per capita" I means I'm specifically not taking USD value into account.
Sorry if this wasn't clear.
Also you must see the irony of using the term "real value" to describe USD debt that's printed out of thin air and has no reserves.
Sadly, still everything is messure in USD. That is the world as it is, not as we like it will.
that does seem to be the case
Litecoin is the right coin. Hahaha it’s one of my fun bags it will be cool if it does spike well in the coming run with Doge.
I need to get me some more Doge just to have it for cope purposes I think, it doesn’t hurt to have some around. Kind of like my Shiba Inu, if it pumps then fuck let’s go. If not, it’s fun.
Doge has also shown it can lead the way in the alt market as well,
so from a trading perspective it's good to have some just to waterfall into other alts.
I spent most of my Dogecoin. I've only got 15k left to spend.
Crazy to think that the Doge peak in 2017 was like 1 penny but 2021 almost got to a dollar.
And the story how I became an instant dolphin trading my Dogecoin for Hive with some spending cash on the side. 🥂
I feel like I vaguely remember this 🤑
I'd love to see LTC get back to where it was eight years ago or so. It was the first crypto I ever bought, so it holds a special place for me.
yeah would be nice i onboarded 2 friends into LTC in 2018
No currency can shake the position of BTC!
My buddy and I made a few hundo dumping doge the last time it pumped and while it wasn't much profit, I was pretty happy!