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Is Dogecoin Capped?

送交者: USA1969[品衔R2☆] 于 2021-05-05 22:16 已读 31613 次  

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Unlike other cryptocurrencies, Dogecoin is not capped. Each year, five billion new coins will be added to the Doge network. For this reason, many in the crypto community hate this coin. However, it’s not as bad as people claim it to be. 

Bitcoin has a 21 million token cap. Nowadays, Bitcoin is considered as an investment vehicle, not as a transactional currency. Since its inception, its price has been going up. As a result, people are buying and hoarding bitcoin, hoping that its price will further go up and they can make a nice profit.

Miners process all Bitcoin transactions. There are two ways these miners get rewarded — transaction fees and rewards in Bitcoin after successfully adding a transactional block in the blockchain network. Miners are nothing but powerful computers set up by individuals. These individuals spend tens of thousands of dollars to build and keep these computers running.

As Bitcoins and other capped crypto reach their limit, there will be no reward from the network. So, why in the future individuals spend tens of thousands of computers in the Bitcoin network if they can’t profit off the network?

At the time, their only revenue source would be the transaction fee. As of this moment, Bitcoin mining is not profitable anymore, including the Bitcoin rewards. So, what will happen after five years? The transaction fee would undoubtedly rise. Many worries that the transaction fee would become prohibitively expensive.

Miners are the backbone of the Bitcoin network. It’s nice that this coin has a cap, but this coin’s creators failed to realize that miners wouldn’t continue to support this network if there are no incentives for miners. So far, it grew because it had monetary incentives for miners. When we take that away in a few years, they will no longer support this network.

Dogecoin solves the problems mentioned above.

Dogecoin has an unlimited supply. However, it’s capped at 5 Billion coins/year. As of writing this article, there are around 135 Billion Dogecoin in circulation. At the rate of 5 Billion coins/year, it would take another 27 years to double this amount; then, it would take another 54 years.

In the fiat currency world, inflation varies wildly. Here is a table that shows the inflation of USD.
YearUSD inflation rate
2021 2.24%
2020 0.62%
2019 1.81%
2018 2.44%
2017 2.14%
2016 1.26%
2015 0.12%
2014 1.62%
2013 1.47%
2012 2.07%
2011 3.14%
2010 1.64%
On the other hand, Dogecoin has a fixed currency creation rate of 5 Billion Dogecoin/year. Therefore, each year the inflation rate goes down. Here is a chart that shows the Dogecoin inflation rate over time.
YearEstimated DogecoinsInflation rate
2021130 Billion3.85%
2025150 Billion3.33%
2030175 Billion2.86%
2035200 Billion2.5%
2040225 Billion2.22%
2045250 Billion2%
2050275 Billion1.82%
2060325 Billion1.54%
2070375 Billion1.33%
2080425 Billion1.18%
2090475 Billion1.05%
2100525 Billion0.95%
As you can see, though Dogecoin has an unlimited supply, the actual inflation rate goes down, making this coin deflationary. Because of this 5 Billion coins/year supply, miners always have an incentive to keep the Dogecoin network secure and operational.
https://provscons.com/is-dogecoin-capped/

贴主:USA1969于2021_05_05 22:26:51编辑

贴主:USA1969于2021_05_05 22:28:09编辑
贴主:USA1969于2021_05_05 22:36:57编辑
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