My response to Elon Musk crashing crypto

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Elon Musk announced he was working with the Dogecoin development team to improve Dogecoin. It was met with a lot of negative response from the cryptocurrency community. In order to understand why his plan won't work here are 5 facts about Dogecoin you didn't know.

1. Dogecoin is inflationary. when the economy is running at full capacity meaning, jobs are abundant, money is flowing, banks are lending because that usually leads to excess in jobs and production which means it helps - stimulate consumer spending. Keynesian economics likes inflation as a mechanic to stimulate growth.

2. Dogecoin is already “better” than Bitcoin as a currency because its cheaper, its faster and because its deflationary that means people are more encouraged to use it to buy stuff which is why #acceptdoge has been trending on twitter. Coinbase has finally said it will start accepting Dogecoin in a few weeks time and when that happens, the price will pump again. As the price of Dogecoin increases, and the currency becomes more valuable, this has also led some people to become scared of miners performing a 51% attack on the network and stealing the coins by using powerful mining equipment from Bitcoin to perform a 51% attack.

3. Dogecoin uses scrypt, not SHA-256 so Bitcoin miners cannot attack Dogecoin. Dogecoin is safe to use

4. The mystery wallet with 36 billion Dogecoin worth roughly 18 billion dollars or roughly 28% of the entire supply (DH5yaieqoZN36fDVciNyRueRGvGLR3mr7L) is not confirmed to be owned by Robinhood. Robinhood denied that they hold substantial coins in their wallet.

5. The two creators who invented Dogecoin in 2013 Billy Markus and Jackson Palmer walked away from the project in 2018 - Jackson didn’t make a single cent on Dogecoin and Markus made enough to buy himself a Honda Civic. After leaving, co-creator Markus announced he was not a fan of Dogecoin.

Here is where Elon Musk's plan to improve Dogecoin will most likely fail. Whenever you want to improve crypto, you have to give something up to make something better. Here is what Elon said about improving Dogecoin "Ideally, Doge speeds up block time 10X, increases block size 10X & drops fee 100X. Then it wins hands down." Let's break it down.

3 Reasons It Won't Work.

REASON 1: Increasing block time from a current block time of 1 minute to 10x means a 6 second block interval. This leads to a decrease in security and a centralization of the network. This is because increasing the frequency of block times means nodes need to store more data. This means more centralization because now, if you want to participate as a node, you need huge hard drives. At some point if the network becomes a global standard and everyone is using Doge to pay for things, miners become much more centralized because the only people who can afford to become nodes are corporations.

REASON 2. Dogecoin’s block size is like Bitcoin’s 1mb. That means each block can store 1mb worth of transaction data. Since we made Dogecoin have a block frequency of 6 seconds which is what Elon wants and you have 10mb blocks every 6 seconds - that is 60 megabytes a minute, and in roughly 15 minutes, you would need a terabyte. That means every single day, you’d need to buy 96 hard drives. If you bought each one for $60, you’re looking at $5,760 per day in hard drives pace. An average person would be able to afford that.

REASON 3. Fee Decrease 100x. Fees drops only work if you instantly scaled it from what it is today to global adoption in an instant. Even if major corporations announced adoption, it would take time to get everyone to start using Dogecoin. Until then, block will remain largely empty which leaves them open to cheap attacks to the network.

Overall Elon's plan is well intentioned but it most likely will not work if you want Dogecoin to remain a decentralized people's money.

*None of this is meant to be construed as investment advice, it's for entertainment purposes only. Links above include affiliate commission or referrals. I'm part of an affiliate network and I receive compensation from partnering websites. The video is accurate as of the posting date but may not be accurate in the future.