Elon Musk Supports Plan to Reduce Dogecoin Transaction Fees
Tesla and SpaceX CEO Elon Musk started his birthday with a tweet that may have been responsible for sending cryptocurrency Dogecoin’s price up more than 4% within a 24-hour period earlier this week. As of mid-afternoon Monday, the meme currency was trading at $0.26, a 4.29% increase since the weekend.
Musk responded to Dogecoin founder Ross Nicoll’s tweet about the Dogecoin fee change proposal with three simple words: “Important to support.” But what is the proposal and how will it affect Dogecoin holders, specifically, and the crypto market in general?
About the New Doge Fee Structure Proposal
The proposal, which Doge expert Patrick Lodder posted on GitHub yesterday, revealed a new fee structure to be “gradually deployed to the network over multiple software releases.”
In 2014, Doge developers introduced transaction fees to “reduce on-chain spam,” the proposal states. In 2018, developers discovered that many transactions weren’t in compliance with the policy, resulting in 8% of transactions lacking fees and another 11% not implementing those fees correctly.
In the first half of 2021, the proposal said, all-time-high exchange rates against the U.S. dollar and Bitcoin cryptocurrency led to higher than warranted transaction fees for Doge, provoking people to keep their Doge investments on centralized platforms because the cost of transferring the coin to a secure wallet is disproportionately high. As a result, and to keep Doge more accessible to retail investors, developers have proposed to significantly reduce transaction fees.
Transacting Doge used to be 10 times cheaper than transacting LiteCoin, the proposal states, and it is now five times more expensive.
Among a few other changes, the proposal calls to:
- Lower the minimal relay fee to 0.001 Doge
- Lower the default fee rate to 0.01 Doge
- Bring back a functional free transaction space
What This Means for Doge and Crypto
Doge is already one of the more accessible cryptos due to its low buy-in price and accessibility through platforms such as Coinbase. The fee policy change will enable more people to take advantage of Doge’s low buy-in price as they begin to gain familiarity with trading crypto through a low-stakes coin.
Musk has shown his support for crypto in multiple ways in recent months, including working with Dogecoin developers to “improve system transaction efficiency,” Benzinga reports. He also invited his vast network of Twitter followers to submit their ideas for Doge improvements to the subreddit reddit.com/r/dogecoin or through the GitHub platform.
Not only did the tweet expand the subreddit to 2 million “subshibers” (the community’s nickname for its members) from 1.4 million in mid-April, it raised further awareness for the crypto as a viable investment.
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