Dogecoin, Cardano… the biggest marriage between two crypto-currencies begins. Charles Hoskinson, the co-founder of Cardano, asked the opinion of the community on a large project, which will result in a historic operation. Last weekend, in a poll, he suggested inviting Dogecoin to leave his blockchain for him. From a proof-of-work infrastructure, cryptocurrency will move to proof-of-stake. It will not be a question of combining Cardano and Dogecoin but of creating a “sidechain”, to make both evolve on the same blockchain.
Proof-of-stake, compared to proof-of-work, allows for better performance and a way to see more and more widely. Currently, Dogecoin is based on the same principle as Bitcoin, and follows its philosophy of a cryptocurrency as a store of value. The move to Cardano’s infrastructure will go beyond Dogecoin into an exchange token, potentially opening up NFTs and other decentralized finance projects. A path that drives Cardano’s co-founder as well as 80% of survey respondents, who approve of the idea.
Should we put on Twitter a post-quantum ultrafast, and identity enabled doge sidechain of Cardano custom built for social networks? #QuantumDoge
—Charles Hoskinson (@IOHK_Charles) October 29, 2022
The future of Twitter with Dogecoin and Cardano
Why should Dogecoin change its model and adopt a better blockchain for transactions? To understand this, we need to talk about Elon Musk’s takeover of Twitter. In fact, thanks to him, the social network is opening a new strategic plan, far from the simple vision of micro-blogging and social network. The rumors about the creation of a great app likely to include crypto-graphic transaction functionalities are inherent in redemption. In anticipation, some wonder if Dogecoin will not be the lucky one to become the official currency. A favorite of Elon Musk, Dogecoin has grown 100% in the past seven days.
Basically, the creation of a “sidechain” does not serve to invite other cryptocurrencies to a blockchain. But the general idea is reminiscent of the Dogecoin project. Creating a sidechain increases the scalability of a blockchain, allowing it to streamline complex tasks. By definition, Dogecoin will remain Dogecoin but will move from being a cryptocurrency to a token. Tokens, like the SAND platform of The Sandbox for example, qualify as tokens as they change on a blockchain that is not theirs. In this case Ethereum in our example.
Cardano, born in 2017, is one of the blockchains described as competitors to Ethereum, as they seek to push the limits of the number 1 blockchain in the decentralized finance ecosystem. Charles Hoskinson, the co-founder of Cardano, also participated in the creation of Ethereum. First in fashion, for its performance, its popularity is now declining, as is the price of its cryptocurrency (-80% in a year). Meanwhile, Ethereum underwent a historic operation called “The Merge”, which allowed it to gain efficiency and fill its gaps.
That the project remains at the stage of a simple survey, created by an entrepreneur in search of profitability and recognition, the arrival of Dogecoin on the Cardano blockchain, in the hope of a Twitter 2.0, is not important. On the one hand, Elon Musk will need to confirm his intentions to integrate cryptographic exchanges, and for him to choose Dogecoin, just as it will be necessary for the Dogecoin Foundation to find its interest in the exchange. On paper, marriage looks like a win-win. But most of the opportunity falls on Cardano. If Dogecoin takes the gamble, and Elon Musk abandons it, Dogecoin will lose its independence and character as a store of value similar to the idea of Bitcoin.
One thing is certain, the Cardano blockchain is losing momentum because fewer investors are looking at it. Symbolic detail, Dogecoin is now heavier in capitalization. At the eighth position in the ranking, at $17 billion, Dogecoin is ahead of Cardano, at the ninth position and at $13 billion. The difference in trading volume is also impressive. In recent days up to the equivalent of 12 billion dollars have been traded in Dogecoin, within 24 hours. Cardano has rarely exceeded $1 billion in the past six months.