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.
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.
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.
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.”
Exchange platform Coinbase are further assisting users with day-to-day trading via new data which will be an addition to their existing typical data and provide exclusive market analysis. These new data will be made of their own users anonymized and aggregated data on the Coinbase platform, which will be shared with fellow users of the […]
After months of growth, Litecoin is starting to falter just before its halving at the end of August, but is this merely the calm before the storm? Speculation is currently rife about the precarious nature of Litecoin after showing steady growth in price over the last few months alongside other major cryptos, reaching highs of $146 […]
Olaf Scholz, the German Finance Minister, has offered his opinion on Libra project and it is yet more criticism of the fabled Facebook stablecoin. Within a report shared by news agency, Reuters, it quotes the minister as expressing the view that it should not be allowed to compete with the EU’s currency, the Euro. While […]
CoinEx will be incorporating two new additions to their futures trading with the inclusion of BlockStack (STX) and Akropolis (F-AKRO). Yesterday two new options were added for users of CoinEx who wish to partake in futures trading when BlockStack (STX) and Akropolis (F-AKRO) were added to the CoinEX platform. Both coins went live with a […]
Users of leading eastern-European cryptocurrency exchange EXMO who trade Monero (XMR) on the platform will be ecstatic to hear the withdrawal commission have gone done by 50x, among other new updates cocerning trading with the currency via their service. These means that the value for Monero, the 13th large cryptocurrency by market cap which is […]
A draft bill from the US Congress has allegedly found its way online and could spell the end of Facebook’s Project Libra and other similar projects. This will hardly be the first or even the last hurdle for the social media giant’s entry into the crypto industry, but it looks like part of the US […]
Pundi X, a cryptocurrency payments startup company, has announced that it has launched a payments system which accepts both traditional debit and credit cards, as well as crypto payments. This innovative integration was done using a VeriFone point of sale device, which is used by a large number of retailers in America and across the […]
Controversial dollar-backed stable coin Tether, confirmed yesterday that they mistakenly created $5 billion worth of their token in a monumental blunder. The mistake has been put down to human error which saw an intended $50 million transfer turn into a $5 billion one after decimals point were put in the wrong places. This occurred during […]