Bitcoin hasn’t caught on as a means of payment, and technical limitations prevent it from even being possible in the foreseeable future. Could Dogecoin accomplish what Bitcoin failed to do? Memcoin offers hope – but also pokes fun at it in the end.
Once upon a time, just a few years ago, most Bitcoin fans expected their favorite currency to soon triumph as a means of payment.
Bitcoin would be used to pay on the Internet, at Amazon and at every other small store, live in retail stores and supermarkets; indeed, Bitcoin would make entirely new payment models a reality, such as micropayments for newspaper articles.
Those plans from, say, 2014, have failed miserably today. Neither was the option to pay with Bitcoin used more than sporadically in the stores that offered it, nor has the number of acceptance points increased significantly since 2014. It feels like two to three stores have been added in Germany, while a dozen have gone. Acceptance in retail is not on the rise, but on the decline.
What’s the reason for that? Some say it’s because the Bitcoin exchange rate fluctuates so much. Who would want to accept a currency with such volatile value? Others refer to Gresham’s Law and think that no one wants to spend their precious Bitcoins instead of worthless Euros.
In any case, they say, payment is a problem that was solved long ago; micropayment fails not because of the technical possibilities, but because of the mental ones, since it overtaxes people to constantly think about whether it is worth paying something because of 2-3 cents.
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How Bitcoin sabotages its own success
However, some people continue to hold on to the ideal of being able to pay everywhere with an independent cryptocurrency. Those who love Bitcoin and loathe the euro will prefer not to have to pick up the colorful bills at all. Bitcoin has only arrived in life when you pay for everything you can buy with it. Anything else means being stuck halfway.
For these people, the above problems are only part of the truth. For just as oppressive – if not more so – are Bitcoin’s technical limitations. As is well known, Bitcoin only handles 3-4 transactions per second, and this obviously cannot be used to process large-scale retail payments. Worse, the capacity has long been exhausted. Any further growth, any further payment, any further acceptance point will only drive up transaction fees. The Bitcoin system itself effectively prevents it from succeeding.
The liquid sidechain may add the odd transaction per minute that flows from exchange to exchange, but it has yet to even begin to catch on in this niche. The Lightning network could, in theory, add hundreds or thousands of transactions per second, but continues to be a disaster in practical use, deterring even experienced users. Overall, there is currently little prospect that Bitcoin will stop sabotaging its own acceptance in commerce. Therefore, only one hope remains: can another coin accomplish what Bitcoin cannot?
The likeable Mr. Dogecoin
- The number 2 ranked cryptocurrency, Ethereum, suffers from the same problems as Bitcoin. The fees are already insanely high, even much higher than Bitcoin. Switching to Ethereum would not improve the situation, but make it worse.
- What would be needed now is a coin that is like Bitcoin but carries more transactions, and a coin that has an unspent, clean reputation. A coin that is fast and a likeable coin. In other words, you would need a cryptocurrency like Dogecoin. Right?
- Dogecoin as a memecoin is firstly likeable: who can dislike the cute Shiba Inu? Since cryptocurrencies are 10 percent technology and 90 percent marketing, Dogecoin thus has the perfect foundation to find general distribution.
- At the same time, Dogecoin is based on exactly the same technology as Bitcoin. This makes it so impressively easy to get Dogecoin into a wallet, such as Electrum, into payment software, such as BTCPayServer, or into a block explorer, such as blockchair.com.
And third, although https://dogecoin.com/ has the same block size limit as Bitcoin, it can process about ten times as many transactions because of the much smaller block intervals.
Perfect, right? At least it sounds like a good start. Would it be conceivable for the Internet to simply agree to make Dogecoin the cryptocurrency for payments? It would be the perfect mockery of all those techno-fixated developers and users who are rushing to create ever more complex technical quasi-optimizations – Cardano, IOTA, Avalanche, Polkadot, Steem, EOS, Solana and so on – only to see the new peaks of progress sink unused into the cryptocurrency rankings.
If it ends up being Dogecoin, it could prove that our lives are a simulation – and that the AI behind it has a sense of humor. That wouldn’t be the worst metaphysics we could get.
Nothing goes without buts, no justification, no praise, no apology, no agreement, no contradiction. The “but” with Dogecoin is pretty big, though. Because, first of all, Memecoin reproduces all the weaknesses of Bitcoin: the price is even more volatile, the distribution of coins among users is even more uneven, awareness is even lower, distribution in commerce and in other software is even less widespread … If you don’t just assume that the world can hardly wait to finally use a cryptocurrency for payment, and that so far it is only held back from doing so by low-capacity Bitcoins – then Dogecoin does not improve the chances, but worsens them.
And most importantly, Dogecoin pushes the mantra that cryptocurrencies are 90 percent marketing and 10 percent technology to absurdity. After all, Dogecoin is based on the Bitcoin software from 2013, which was fine at the time, but has hardly been further developed since then and is hopelessly outdated today. Development on Dogecoin has lain dormant for years.
It reportedly takes months, if not years, to sync a Dogecoin node. The software is far too slow to verify all the blocks and transactions. This weakness of the program also makes it highly questionable whether Dogecoin will actually be able to max out its capacity limit of 30-40 transactions per second. Presumably, the real limit will be much lower, at least under a sustained load.
As one reader mentioned in the comments, this problem was already solved in February with the latest version of the Dogecoin node. Perhaps a cryptocurrency really is only 10 percent technology. But if that 10 percent isn’t even “good enough” but “insufficient” – then the remaining 90 percent excellent marketing won’t help.
By making Dogecoin the fourth most valuable cryptocurrency without even being technically up to snuff, Memecoin not only makes fun of value itself – it also mocks the scene’s fixation on technology. But as cryptocurrencies for payment, Dogecoin is not so much. Those looking for that are probably still best off with coins like Bitcoin Cash, Litecoin or Ripple at the moment. Technology is only a small part of the story, but it is still part of it.