To Merge or Not To Merge? Merged Mining Research Released

To Merge or Not To Merge? Merged Mining Research Released

Ready to join our tribe?

We respect your email privacy

Subscribe now to recieve exclusive updates and offers!

Analysis revealed by the research arm of Binance has detailed the results of merged mining between two of the most prominent coins in the cryptocurrency world, Litecoin and Dogecoin, which could indicate its wider operability uses.

In recent months, Litecoin and Dogecoin have become a frequent fixtures in the cryptocurrency news world. The former having soared in price ahead of its halving next month and Dogecoin, a cult albeit comedic coin in the industry, seeing serious increases in the last two weeks after gaining an important listing. However, what some people may not have realised is that the two are interlinked via their practice of merged mining.

What Is Merged Mining?

Merged mining is a form of crypto mining which sees the work done on a larger blockchain, known as a “Parent Blockchain”, reflect on a smaller blockchain too via Auxiliary Proof of Work (AuxPoW). Hence, they benefit simultaneously. It is believed that this practice improves the security aspects of smaller proof-of-work (POW) blockchains as a result.

As mentioned, this is partaken by both Litecoin and Dogecoin, two of the oldest crypto’s in the game who see a large volume of trading with 30,000 on-chain transactions daily. Hence, this makes them the ideal coins to act as the subjects of the analysis newly released by Binance at the start of this weekend.

What Was Revealed?

Ultimately, from their research, significant benefits arose from the practice, despite the fact that it has decreased in prominence when compared to proof-of-stake procedures that most coins now implement.

Most notably, these benefits were seen in Dogecoin, who, since 2014 when they implemented the mining format, has seen “extremely strong and positive correlation (0.95) with Litecoin’s hashrate. As of July 2019, nearly 90% of Dogecoin’s total hashrate comes from large Litecoin mining pools, with its blockchain processing around 30,000 transactions per day”.  

However, like anything, there are shades of grey, and the Litecoin/Dogecoin example may not apply to all crypto, with the format only working if the prospects of the crypto mining are appealing enough for miners to alter their setups.

Three core negative emerging from the miner’s point of view are maintenance work, Anticipated child-chain reward value expected to decline, and lack of awareness. Which may deter miners.

As such, “the value proposition of the underlying crypto asset needs to be compelling enough to attract a critical mass of miners to switch their current mining set-up to a new one that supports merged mining,” the research.

As well as this, for the coin itself, three other risks were highlighted, concentration risk, potential new attack vectors and dependency on the parent blockchain.Another trio of reasons as to why the approach should be taken with caution.

To Merge or Not To Merge?

As you can see, while the existing model seems to have worked, it is not a one size fits all approach and the landscape of the coin has to be taken into account, not to mention the risk, before merged mining can be considering the ideal approach.

As the research concludes, the benefits are clear. Saller blockchains could move to AuxPow approach in order to “maintain greater network security while reducing the need for a separate miner set”. While bigger blockchains, like Litecoin and Bitcoin, could “Could potentially provide an opportunity to increase incentives for miners to continue mining these “legacy”, high-value, PoW cryptocurrencies.”

Recently Similar News

Latest Guides

Latest News

Bitcoin,eToro,Trading

eToro Temporarily Raises Minimum Deposit To $1,000

For the past few weeks, the increase in Bitcoin’s price has led to a massive interest in cryptocurrency trading. eToro has been overwhelmed by new registrations and has decided to temporarily raise the minimum deposit from $200 to $1,000. Although 2021 has barely gotten started, it promises to be an exciting time to invest in […]

11 January, 2021
Bitcoin,Investment,Trading

Global Cryptocurrency Market Value Surpasses $1 Trillion

Thursday has proven to be a monumental day for cryptocurrencies as the world’s combined value tops the $1 Trillion mark. Energised by a substantial rise in the value of Bitcoin in recent months, the volatile crypto market has reached a once-unreachable value. Following the latest Bitcoin Halving in May 2020, the world’s largest digital token […]

10 January, 2021
Sponsored

Victory over virus: SiGMA Virtual Expo hosts 100+ exhibitors

SiGMA Europe and AIBC Virtual Expos launch with record breaking attendance, providing a cure to the industry’s events sector In the light of this year’s changes in our everyday lives, SiGMA was close to having to stop doing what it does best; creating networks for people through the company’s iconic physical events, but luckily, the […]

26 November, 2020
Blockchain,Changelly,Cryptocurrency,Exchange Platforms

Changelly Adds Ardor, Ignis, and NXT to Changelly PRO

Changelly, the online cryptocurrency exchanges, has added three more tradable assets to their Changelly PRO platform. Changelly, the large online crypto exchange, has recently added an additional three cryptocurrencies to their Changelly PRO platform, Ardor, Ignis, and NXT. All three tokens developed by Jelurida will be tradable against BTC as ARDR/BTC, IGNIS/BTC, and NXT/BTC. Jelurida […]

6 November, 2020
Crypto Wallets,Exchange Platforms,Kraken,Ledger

Ledger Phishing Scam is Targeting Crypto Wallet Users

Ledger, the cryptocurrency wallet company, has been massively affected by a data breach and phishing scam. Ledger, the world renowned cryptocurrency hardware wallet producer, is facing a lot of problems with a data breach that is being used to target their customers. Kraken Intelligence, the intelligence arm of the Kraken cryptocurrency exchange, analyzes this data […]

5 November, 2020
Bitcoin,Blockchain,Cryptocurrency,Ethereum

Ethereum on Track to be First Blockchain To Process $1 Trillion In Yearly Transactions

Ethereum, the second largest cryptocurrency by market cap, is preparing to break the $1 trillion mark in yearly processing. Ethererum, the largest cryptocurrency behind Bitcoin, is on track to be the first blockchain to process over $1 trillion in transactions in a single year. Currently, the Ethereum network is processing more than double the amount […]

4 November, 2020
Binance,Blockchain,Cryptocurrency,Exchange Platforms

Binance is Giving Away $20,000 in Fifth Learn and Earn Series

Binance, the largest online cryptocurrency exchange, is hosting its fifth learn and earn series, this time with Orion Protocol. Binance, the worlds largest cryptocurrency exchange, will be hosting their 5th Learn and Earn campaign in collaboration with the Orion Protocol. In this campaign, Binance will be giving away $20,000 worth of ORN, the native cryptocurrency […]

3 November, 2020
Bitcoin,Blockchain,Cryptocurrency,Exchange Platforms

Bitcoin Monthly Prices Finishes at Second All-Time High

At the end of October, Bitcoin has registered its second highest closing price of all time. Bitcoin bulls continue to rejoice as Bitcoin closes at its second highest monthly price in the history of the digital currency. Bitcoin closed October with a price hovering right around $13,800, the second highest monthly price finish besides the […]

2 November, 2020