Home Finance Does a Dogecoin-Cardano alliance make sense for both cryptos?

Does a Dogecoin-Cardano alliance make sense for both cryptos?

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Thanks to Elon Musk’s acquisition of Twitter, dogecoin is suddenly one of the hottest cryptocurrencies. This Musk favorite has already risen over 100% in the past seven days, and speculation continues to build that Twitter will somehow integrate Dogecoin into its platform as a payment option. Given all the buzz around Twitter and Dogecoin, it’s perhaps not surprising that some cryptocurrencies are now trying to partner with Dogecoin.

Over the weekend, Charles Hoskinson, co-founder of Cardano, tweeted a poll asking his followers if he should propose a Cardano-Dogecoin alliance to Twitter. Such an alliance would require Dogecoin to migrate from its network to the Cardano blockchain, which is superior to Dogecoin’s.

If the response to the survey is overwhelmingly positive, Charles Hoskinson said he would develop a proposal for “A postquantum, ultra-fast, identification-enabled blockchain for Dogecoin on Cardano, specifically designed for social networks“. Is this such a crazy idea that it could work?

Dogecoin is in vogue, Cardano is not.

One way to interpret this proposition is that Cardano is making one last attempt to stay relevant. The cryptocurrency’s price has fallen nearly 80% over the past 12 months, and there are now very serious concerns that it will fall below $0.30 after trading in the $0.50 to $0.60 range for most of the past six months. Dogecoin’s recent surge has propelled it ahead of Cardano in terms of market cap. In addition, the market response to Cardano’s big technology upgrade in September (Vasil’s hard fork) was a “meh” collective.

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As the Cardano summit approaches at the end of the month, Hoskinson may make a desperate move to incorporate Dogecoin as a sidechain in order to have positive talking points for the Cardano faithful.

From this perspective, a Dogecoin-Cardano alliance would help Cardano but offer little or no value for Dogecoin. It seems odd that Cardano – a crypto known for its cautious, academic approach to blockchain development – would suddenly court a silly mimetic coin.

Cardano is in vogue, Dogecoin is not.

But let’s reverse the scenario. It could be that Cardano is throwing Dogecoin a lifeline, and Cardano actually has the upper hand. It has a much faster and more robust proof-of-stake blockchain, capable of handling smart contracts, non-fungible tokens (NFTs), decentralized applications and decentralized financial protocols. In contrast, Dogecoin still operates a relatively slow proof-of-work blockchain that is in dire need of an upgrade to proof-of-stake. So Cardano clearly has the better blockchain.

While it’s unclear how much time or cost the Dogecoin sidechain integration might take, Hoskinson said he would do the integration for free. Twitter is most likely currently overwhelmed with content moderation and other related issues, and may not have time to consider a Dogecoin integration until 2023 at the earliest.

From this perspective, Cardano is doing Twitter a favor by keeping a popular meme currency afloat. A Dogecoin-Cardano alliance could help Dogecoin considerably, but bring little or no value to Cardano.

A win-win deal for Cardano and Dogecoin

One of the hashtags used by Charles Hoskinson to describe the proposed Dogecoin alliance is #QuantumDoge. This suggests an outcome in which Dogecoin gets all the features it has lacked for so long and makes a quantum leap into the future.

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Yes, Dogecoin would have to adapt to its new status as a sidechain of Cardano, but in return it would gain features like smart contracts and NFTs. In short, Dogecoin would become a token on the Cardano blockchain, rather than a coin with its own blockchain. In doing so, it would become a #QuantumDoge.

From this very optimistic perspective, the Dogecoin-Cardano alliance is as close to a merger of equals as you can get in the crypto world. In terms of market capitalization, the two currencies are almost exactly equal.

With this alliance, Dogecoin would shore up some of its weaknesses, while Cardano would have the kind of benchmark blockchain project it was looking for to attract more users and developers to its blockchain ecosystem. If Twitter then joins forces with a Cardano-Dogecoin combination, it would create even more value.

How will Twitter respond?

So far, 80% of Twitter respondents have overwhelmingly voted in favor of integrating the Dogecoin sidechain. So it seems that Charles Hoskinson might actually convince Twitter of the proposed alliance.

Will Elon Musk prefer to focus on his own Dogecoin integration, or will he find Cardano’s offer more compelling? If you’re a Cardano investor, you’d better hope that Hoskinson can present Musk (aka “The Dogefather”) with an offer he can’t refuse. That may be the only way to get the price of Cardano up in 2023.

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