More and more networks are recognizing that a Proof-of-Work consensus model might cause problems in the long run. For that reason, crypto projects, such as Ethereum (ETH) for example, are moving to a Proof-of-Stake consensus model. Dogecoin (DOGE) also seems to be planning to do so, and Ethereum founder Vitalik Buterin recently indicated in an interview that he will be assisting with this behind the scenes.
What is the difference between Proof-of-Stake and Proof-of-Work?
Proof-of-Stake and Proof-of-Work both are consensus algorithms, they decide the way a blockchain verifies its transactions. In Proof-of-Work miners verify transactions by solving a complex “hash puzzle”. Enormous amounts of computing power are needed for solving these puzzles, which in turn uses enormous amounts of electricity. The biggest problem for Proof-of-Work, in the long run, will thus be its negative impact on the environment.
The Proof-of-Stake algorithm, however, is far less energy-intensive. In Proof-of-Stake stakers put forward an internal resource - cryptocurrency - instead of an external resource (electricity or hardware). So there‘s no need for a big amount of energy consumption to verify transactions on the blockchain with a Proof-of-Stake consensus algorithm, meaning that it‘s probably better for the “green” future we all strive for nowadays.
Read more about Proof-of-Work and Proof-of-Stake here
During an interview with UpOnly, Vitalik Buterin indicated that the Dogecoin network plans to move to a proof-of-stake consensus model soon. According to Buterin, it is natural that more crypto projects will make this switch. Especially when they see that even the Ethereum network has accomplished this.
"Every major cryptocurrency but one has an active plan to move to Proof-of-Stake. I think the arguments are even easier to make when you know that Ethereum is Proof-of-Stake and when you know that Dogecoin's plans are more advanced and Zcash's plans are even more advanced."
There is also a sneer at the Bitcoin (BTC) network in this statement, of course. Bitcoin is by far the most widely used Proof-of-Work network, and the debate surrounding the energy consumption involved has flared up quite a bit over the past year.
Dogecoin makes the switch
Nevertheless, the Dogecoin network does seem to see the benefits of making the switch. In fact, Vitalik Buterin indicated in the interview with UpOnly that he will actively participate in the important switch.
In December of 2021, the Dogecoin Foundation announced plans for a possible switch and that Buterin would be involved. This has now been confirmed by Buterin himself.
The plan of the Dogecoin Foundation is to build a Proof-of-Stake model that will allow not only the largest DOGE investors to benefit. Instead, the entire Dogecoin community will be able to benefit from the new system.
"Let everyone, not just the big players, participate in a way that rewards them for their contribution to running the network, while giving something back to the entire community through charitable causes."
Dogecoin seems to want to slowly shake off the image of a memecoin with this move. These are serious developments with help from a major player in the crypto world. After all, Vitalik Buterin is not going to put his reputation on the line for nothing.