Robinhood chief outlines conditions to turn Dogecoin into the ‘currency of the Internet’

For Dogecoin (DOGE) to become the “future currency of the Internet and the people,” the project’s developers would need to increase the block size to 1 GB or even 10 GB. This was stated by Vlad Tenev, founder and CEO of the online broker Robinhood.

Can #Doge truly be the future currency of the Internet and the people? As we added the ability to send/receive DOGE on Robinhood, I’ve been thinking about what that would take.

— VLAD (@vladtenev) April 14, 2022

“Can DOGE really become the future currency of the Internet and the people? Since we added the ability to send and receive DOGE on Robinhood, I started thinking about what would be required,” he wrote.

According to Tenev, there are several aspects by which one can judge whether the cryptocurrency is suitable for mass adoption:

• network fees;
• blockchain write/recording speed;
• the number of transactions the network can process per second (TPS);
• inflation.

The head of Robinhood noted that the transaction fee for transferring funds over the Dogecoin network is fairly low. According to BitIfnoCharts, over the past three months the average fees on the blockchain have rarely exceeded $0.3.

First off, transaction fees have to be vanishingly small. We’re already there. As of the 1.14.5 update in November last year, typical transaction fees have been around $0.003 — you can experience this on @robinhoodapp — compared to the 1-3% network fees that major card networks charge. pic.twitter.com/KHk83nDaek

— VLAD (@vladtenev) April 14, 2022

“First, transaction fees must be extremely low. We’re already seeing this. Since the 1.14.5 update in November last year, typical transaction fees are around $0.003 — you can see this in Robinhood — compared with the 1-3% fees charged by major card networks,” he noted.

Tenev said that block production speed should be lower than the time required for payments at the point of sale. But if the blocks are generated too quickly, it would lead miners to create competing chains and waste too much energy to reach consensus.

Doge’s current block time is 1 minute. This is a bit on the long side for payments – a ten second block time would be more appropriate as it would be less than the typical time spent completing a debit card transaction.

— VLAD (@vladtenev) April 14, 2022

“Doge’s current block time is 1 minute. For payments this is too long — a more appropriate value would be 10 seconds, since this is less than what people spend on completing a debit card transaction,” explained the head of Robinhood.

Tenev stressed that with the current block time (1 minute) and its size (1 MB) the network’s throughput is only 40 TPS. By way of comparison; Visa theoretically can process up to 65,000 TPS. According to the entrepreneur, this problem is easily solved—simply by increasing the maximum block size.

Moving to a 1GB (and later 10GB) block size limit would provide all of the throughput a global currency would need for the foreseeable future. L2 solutions are not necessary to solve this problem.

— VLAD (@vladtenev) April 14, 2022

“Moving to the maximum size of 1 GB (and later 10 GB) would provide the throughput needed by a global currency in the foreseeable future. Layer 2 solutions are not necessary to solve this problem,” he said.

The head of the online broker acknowledged that increasing the block size makes it impossible to run full nodes on devices like Raspberry Pi at home. However, Tenev called this a “fair compromise”.

He said that concerns about infinite DOGE issuance are unfounded. He explained that around 5 billion DOGE are issued each year, and the total supply stands at about 132 billion coins.

“As a result, the current inflation rate does not exceed 5% — lower than the U.S. dollar! Moreover, fixed issuance means that this figure is effectively decreasing over time, and in a couple of decades it will fall to below 2%,” he concluded.

Tenev urged Dogecoin developers to consider the process of expanding the block size. He also asked for their views on his proposals.

In May 2021, Elon Musk said that Dogecoin could surpass Bitcoin if developers increase the speed of block production and reduce fees.

In December, the Dogecoin Foundation, a nonprofit organization, said that is collaborating with Vitalik Buterin on developing a staking mechanism for the meme cryptocurrency.