Dogecoin will ‘migrate to proof-of-work from proof-of-stake,’ to make it viable, predicts head of crypto lending platform

PUBLISHED WED, MAY 14 2021 – 1:58 PM
By: @mdecambre – Mark DeCambre – https://marketwatch.com

Dogecoin will likely transition from a proof-of-work protocol to proof-of-stake, speculated Alex Mashinsky, the chief executive and founder of The Celsius Network on Friday during a webcast hosted by his lending platform on YouTube.

“I’m going to make a prediction,” declared Mashinsky, “in the next two years dogecoin is going to migrate from proof of work to proof of stake,” he said.

Proof-of-work is the protocol that bitcoin BTCUSD, 2.15% uses to confirm transactions on the blockchain and that framework has been criticized for using a tremendous amount of energy to verify transactions on the digital ledger.

Under the proof-of-stake protocol, miners are randomly selected to confirm a transaction, but to do so they must commit a certain number of cryptocurrency to the blockchain. By predetermining the miners, the race to solve the complicated puzzles, which proof-of-work uses, reduces high electricity and hardware costs and discourages illicit behavior such as double-spending and controlling the network, crypto experts have argued.

Mashinsky’s comments come after crypto bull Elon Musk tweeted on Wednesday that he would halt the use of bitcoin for purchases at his electric-vehicle company Tesla Inc. TSLA, 3.01%

“We are concerned about the rapidly increasing use of fossil fuels for bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel,” Musk said.

“Cryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at great cost to the environment,” he added.

The Tesla boss later tweeted that his comments weren’t intended as an indictment of the crypto complex.:

“To be clear, I strongly believe in crypto, but it can’t drive a massive increase in fossil fuel use, especially coal,” he said.

Mashinsky said that Dogecoin, created in 2013 as a fork of bitcoin, was a lighthearted riff off the proliferation of bitcoin-based alternatives and it too uses a proof of work protocol and could benefit from transitioning to a proof of stake to lower its electricity consumption.

Dogecoin DOGEUSD, 43.14% is already one of the cryptos with the lowest electricity consumption, at 0.12 kilowatt-hour, according to technology company TRG Datacenters. Ripple Lab’s XRP coin uses the least amount of energy, 0.0079 KW/h.

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