Dogecoin, the beloved meme-inspired cryptocurrency of many, is facing a technical hurdle as its network becomes increasingly congested with “inscriptions,” data messages stored directly on the blockchain. This has raised concerns about the network's current “health” problems.
Dogecoin Struggles: Network Congestion Raises Concern
According to a tweet from Timothy Stebbing, Dogecoin developer and foundation member, the network is currently experiencing issues due to a large number of signups. He described the situation as “Dogecoin is currently sick,” emphasizing the urgency of finding solutions.
Dogecoin is currently sick. We are being contacted by several exchanges saying that Dogecoin is blocked/not responding etc. We know the problem is signups clogging up the network, and developers across the board, core, fdn, etc. They are now brainstorming various ideas for…
—Timothy Stebbing (@tjstebbing) February 6, 2024
The congestion is due to the dual purpose of the meme coin blockchain: facilitating financial transactions and storing inscriptions, similar to NFTs on other blockchains. However, unlike NFTs, many members of the DOGE community consider these inscriptions to have no real value or practical use and label them as “bloatware” or “spam.”
This data overload is causing the network to “hang or become unresponsive,” Stebbing reported. Several cryptocurrency exchanges have contacted the Dogecoin Foundation to express concerns about the slowness of the network.
Rocky, I'm obviously not a fan, but I'm not a keeper either, Dogecoin is a decentralized project. We definitely need discussion. Dogechain and Doglabs (doginals) are using Dogecoin for an alternative purpose that I'm not fundamentally against, but if it's going to take down…
—Timothy Stebbing (@tjstebbing) February 6, 2024
The DOGE Foundation seeks solutions amid the 'disease'
The Dogecoin Foundation and its core team are actively seeking solutions to address this issue. Stebbing mentioned exploring options “from friendly to extreme,” suggesting that moving data off-chain at the protocol level could be a potential solution. This would free up space on the Dogecoin mainnet for basic functionalities such as financial transactions.
The problem of network congestion is not entirely new. Dogecoin contributor @Tdogewhisperer had previously noted an increase in transactions, peaking at 1.9 million in 24 hours. However, he clarified that these transactions were mainly to create registrations, not to transfer funds.
Dogecoin currently trading at $0.07856 on the daily chart: TradingView.com
Adding to the complexity is a recent transfer of 100 million Dogecoin (approximately $7.8 million) to Robinhood, a popular cryptocurrency platform known for attracting retail investors. This has raised concerns about possible speculative activity and its impact on the price of Dogecoin, which has been experiencing fluctuations in recent days.
DOGE price at a glance
Dogecoin (DOGE) is floating in the water around $0.07, It is down 0.7% in the last seven days and 1.8% since February began. The “month of love” has not been kind to memecoins. Major players like Shiba Inu, BONK, and PEPE are all in the red, with losses ranging between 4% and 9%. This bearish trend casts a shadow over the once booming memecoin market.
Despite the broader decline, Dogecoin has shown surprising resilience. Its price drop is the smallest among its memecoin peers, suggesting it might be weathering the storm better. Could whales be the secret weapon?
The whales dive
Meanwhile, on-chain data hints at strategic whale activity, and large investors are snapping up DOGE. Estimates suggest that whales have purchased approximately $27 million worth of DOGE in the past two weeks, potentially amassing over 40 billion coins. This wave of buying suggests that whales see value in the future of Dogecoin.
Featured image from iStock, chart from TradingView
