Roc  · 06/17/22

BTC to Doge Migration: The Fee Structure Policy on Dogecoin Core

Altcoin Trading Blog
04/08/22 · Reports

About This Blog Post

  1. DOGE has been used for cheap and fast value transfers since 2016
  2. Tx must be cheap, but spam also must be eliminated
  3. Fixing DOGE tx price and spam problem helps the fundamentals
  4. Uses shrimpy  ( + more posts) 
  5. Uses bitfinex  ( + more posts) 
  6. Filed as Fundamentals
  7. On the same topic: Crypto Staking Taxes in the US - Overview & Tools
  8. On the same topic: Gary Vee on Ethereum
  9. On the same topic: [Checklist] Incorporating Blockchain Technologies Into Your Business

Note: This report was written in 2021 and remains published for reference purposes only.


Not a bad way to build up fundamentals of a cryptocurrency that is profiling as the cheaper and faster vehicle for transactions.
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High transaction fees on major blockchains is one of the main issues for which small altcoins can provide a solution.

Bitcoin, being the first cryptocurrency, incurs high transaction fees. As a result, many traders have been migrating their coins from BTC to DOGE at least temporarily, whenever they need to make quick and cheap transfer of value between addresses.

Using a dino altcoin to move money between crypto exchanges is a long known practice that has been around at least since 2016.

In response to this practice, DOGE developers keep working towards making the coin compatible with that.

Dogecoin market does not stand on influencers

Although big shots like Elon Musk show their support of the DOGE cryptocurrency, that on its own is not enough to support its market in the long run.

To make sure DOGE keeps a steady user base, the founders proposed a structured policy for its transaction fee to disincentivize spam and support the use of Dogecoin as a vehicle for fast and cheap transactions.

The original fee policy was first presented by Dogecoin founder Patrick Lodder in 2014. In 2018, a new policy took full effect to prevent users from spamming the on-chain transactions. Further updates were introduced in 2020 and 2021 in response to the changed market conditions.

This article explains the key points in Dogecoin’s fee structure policy and its impact on DOGE’s fundamental value.

Impact of Recent Dogecoin's Price Surge on Transaction Fee

As you probably know, early in 2021 the Dogecoin price surged substantially. This along with increased trading and transfer volume had an effect on its transaction fee.

It was simply impossible to retain the old fee level of one Dogecoin per kilobyte of transaction data at the higher market price. Users kept trying to apply the old transaction fee which quickly clogged the mempool, leaving many transactions unverified.

Patrick Lodder then proposed a policy to reduce the minimum relay fee to 0.0001 DOGE. That fee level would allow microtransactions to go through and at the same time promote the use of Dogecoin as a faster and cheaper vehicle to move Bitcoin.

At the same time, relay operators were allowed to set their own relay fees.

This increases the sovereignty of each node and decreases their dependency on the entire blockchain system. The policy ensures miners do not receive a sudden relay fee from a random node in the system. It reduces a miner's chance of connecting to a node even though they can tweak a customer's relay fee. Doge developers ensure a minimal relay fee is lesser than the recommended fee to ensure the sustainability of a low transaction fee.

Exchanges stepping in

Amidst Dogecoin's new policy, exchanges are getting involved in creating a better trading experience through the fast and low costs of the transaction.

Evonax said its platform ensures smooth transactions between parties without any delay.

"The average time it will take to get the confirmations will vary depending on the currency. The Bitcoin network operates with an average block time of 10 minutes. It means that on average, it will take up to 60 minutes to get the required confirmations, and the transaction is considered final and irreversible. Once the confirmations are completed, the Bitcoins will be exchanged and we will send the exchanged Dogecoins to the wallet you provide."

The proactive approach from crypto exchanges helped a lot to keep the market liquid and the DOGE cryptocurrency usable for fast transactions and easy exchanges between DOGE and BTC.

Dogecoin vs Litecoin

In the first months of 2021, high lending rates led investors to holding their coins on centralized platforms. In this way, investors to stayed ahead even in times when cryptocurrencies were losing value.

Every slump in crypto prices and trading activity is an opportunity to make changes in code and implement innovations though. With cryptocurrency like Dogecoin, it makes sense to reduce transaction fees because there’s a chance in it to beat DOGE’s closest competitors like Litecoin.

Although every cryptocurrency is technically decentralized and uses the cryptography mechanism, its market valuations depends on the laws of supply and demand.

Since the past free transacts were abused for spam, the current free structure policy aims to provide a reliable free transaction to increase users' investment chances by eliminating the network clog caused by spam.

Cryptocurrency enthusiasts observing this new development encourages investors to own a btc to doge wallet, flip the two currencies easily. Bitcoin’s drawbacks are reportedly still the same and therefore the market opportunity for a cheaper transactional cryptocurrency still exists.

Thanks to its network upgrades, Dogecoin has gained significant credibility as a coin to fill that demand, creating a promising future expectations.

Final words

Reducing blockchain transaction fees in altcoins already widely adopted for quick transactions between platforms builds users' confidence and reduces spam rates.

Dogecoin’s GitHub has also lately shown its support in allowing users to use alternative nodes and participate directly in keeping the network decentralized. This is not a bad way to build up a fundamental value of a cryptocurrency that is trying to profile as the cheaper and faster coin used as a vehicle for transactions.


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