Dogecoin is up by 3 percent in today’s trading session, reversing a bearish trend that saw its value dropping by 8 percent last week. Despite the price gains, Dogecoin continues to struggle in the market following speculations over potential changes to its proof-of-work model.
Reports on social media have suggested that Dogecoin could undergo a transition to a proof-of-stake model similar to the “merge” that Ethereum completed in September. Such a change would likely involve a switch to a more energy-efficient consensus mechanism.
Michi Lumin, a principal engineer at the Dogecoin Foundation, has acknowledged that there is a plan to present a proposal to the community regarding a potential proof-of-stake transition. However, Lumin emphasized that the approach being considered would differ from traditional proof-of-stake in many ways.
It is worth noting that any change to Dogecoin’s consensus mechanism would require the approval of the majority of its node validators and cannot be implemented unilaterally by the Foundation. Despite its 61% drop in value over the past year, Dogecoin has performed relatively well compared to some other cryptocurrencies in 2022. Solana, for example, has lost 95% of its value this year. It remains to be seen how the market will respond to any potential changes to Dogecoin’s proof-of-work model.
The discussion about Dogecoin’s potential move away from being a proof-of-work cryptocurrency has not augured well with the community as seen from the above fundamental analysis. However, there are still enough reasons to believe that we might see the Dogecoin price starting to recover in 2023.
One of these reasons is an industry-wide trend reversal to the upside. After suffering huge losses throughout 2022, there is a high likelihood that we might see prices starting to go up for most cryptocurrency projects. Dogecoin, being significantly correlated with the industry, will also likely see its prices surging.
However, the possibility of Dogecoin returning to its all-time price high it set in 2021 is still slim, and possibly, it won’t hit those levels again in the coming months. However, a trade above the $0.1 price level is possible within this month.
This post was last modified on %s = human-readable time difference 11:38