Dogecoin is increasing its adaptation rate and turning into a payment instrument. Dogecoin mining rewards and transaction volumes are now comparable to Litecoin and Bitcoin Cash.
Litecoin and Bitcoin Cash with Dogecoin
Dogecoin quickly reached # 13 in market capitalization. DOGE token has gained 1800% in value since the beginning of the year.
DOGE has recorded most of the price increases on January 28 and 29 since the GameStop hype and a tweet from Elon Musk took the token to its all-time highs.
Gerald Votta, Communications Director at crypto market research firm Quantum Economics, discussed the viral movement behind the breast token with Crypto Briefing.
“The power of the community has created value, and the face of this doge is a powerful marketing tool that has been proven viral over and over,” Votta said.
Elon Musk’s support has added a lot of credibility to the cryptocurrency. In fact, DOGE’s on-chain statistics have improved significantly, competing with leading payment protocols such as Litecoin and Bitcoin Cash.
Mining is more profitable
The total daily commissions of the cryptocurrency increased from $ 1000 to $ 27,000, and miners earned similar fees on Litecoin and Bitcoin Cash. Dogecoin’s rising price means miners earn more with commissions.
The transaction fee on the network is 1 DOGE per 1 Kb transaction. At the time of writing, Dogecoin’s average transaction was $ 0.15. In comparison, the average value of Litecoin and Bitcoin Cash transactions is $ 0.05 and $ 0.0035, respectively.
The increase in the network’s total commissions came thanks to the rapidly rising prices in the two days of January. The chart below shows the change on a logarithmic scale that reduces the apparent size of Dogecoin’s rising commissions.
Also, Dogecoin is working on merged mining as a byproduct of Litecoin miners. Higher profitability promotes the token’s mining ecosystem. However, there is one major downside to DOGE token.
There is a block reward of 10,000 DOGE to compensate for low fees. This economic consensus made the DOGE supply unlimited and the current inflation rate is 4.1%.
Dogecoin Transaction Volumes
The total volume of USD transferred daily with Litecoin is currently around $ 100 million. DOGE’s price increase in January caused the transfer volume to rise to $ 1.4 billion.
In contrast, the 90-day average transaction volume in BCH is $ 825 million.
The disparity between Bitcoin Cash commissions and the transferred value indicates that BCH is processing high-volume transactions. On the other hand, Litecoin and Dogecoin seem to be used for small transfers. Votta suggested that Doge’s BCH is unlikely to surpass market capitalization.
Compromising with inflation to reward the miners also lowered its intrinsic value. Votta added that Dogecoin is not “likely to surpass Litecoin due to its scarcity and speed”.
Dogecoin tokens make cryptocurrency available for tips, game loans and micropayments.
However, the sentiment on Dogecoin is very positive and is supported by the ongoing crypto bull market. While the currency may not have the potential for long-term growth, the short-term technical outlook of the cryptocurrency may be ready to climb higher.
“Because of this last visibility, developers are starting to create new apps,” Votta said.
Dogecoin’s ecosystem development requires the development of the mining ecosystem together with a dedicated development team to fix bugs and release updated Dogecoin node client software such as Bitcoin and Litecoin. With a company adopting DOGE so far, the adoption of payment will also help the project.