Dogecoin, the meme-inspired cryptocurrency beloved by 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 ongoing “health” issues.
Dogecoin Struggles: Network Congestion Raises Concerns
According to a tweet by Timothy Stebbing, a Dogecoin developer and foundation member, the network is currently experiencing issues due to a large number of inscriptions. He described the situation as “Dogecoin is currently sick,” emphasizing the urgency for solutions.
Dogecoin is currently sick. We’re being contacted by a number of exchanges saying Dogecoin is jammed/unresponsive etc. We know the issue is inscriptions clogging the network, and devs across the board, core, fdn, etc are now putting their heads together on various ideas from…
— Timothy Stebbing (@tjstebbing) February 6, 2024
The congestion stems from the meme coin’s blockchain’s dual purpose: facilitating financial transactions and storing inscriptions, similar to NFTs on other blockchains. However, unlike NFTs, many within the DOGE community view these inscriptions as having no real value or practical use, labeling them as “bloatware” or “spam.”
This data overload is causing the network to become “jammed/unresponsive,” as reported by Stebbing. Several cryptocurrency exchanges have contacted the Dogecoin Foundation to express concerns about the network’s sluggishness.
Rocky, I’m not a fan obviously but I’m also not a gatekeeper, Dogecoin is a decentralised project. Absolutely we 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 bring down…
— Timothy Stebbing (@tjstebbing) February 6, 2024
DOGE Foundation Seeks Solutions Amid ‘Sickness’
The Dogecoin Foundation and its core team are actively brainstorming solutions to address this issue. Stebbing mentioned exploring options “from friendly to extreme,” suggesting that moving data off-chain at the protocol level might be a potential solution. This would free up space on the main Dogecoin network for core functionalities like financial transactions.
The issue of network congestion is not entirely new. Dogecoin contributor @Tdogewhisperer had previously flagged a surge in transactions, reaching a peak of 1.9 million within 24 hours. However, he clarified that these transactions were primarily for creating inscriptions, not for transferring funds.
Dogecoin currently trading at $0.07856 on the daily chart: TradingView.com
Further 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 sparked concerns about potential 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 treading water around $0.07, down 0.7% in the last seven days, and 1.8% since February began. The “love month” hasn’t been kind to memecoins. Major players like Shiba Inu, BONK, and PEPE are all in the red, with losses ranging from 4% to 9%. This downtrend casts a shadow over the once-booming memecoin market.
Despite the wider slump, 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?
Whales Dive In
Meanwhile, on-chain data hints at strategic whale activity, with large investors scooping up DOGE. Estimates suggest whales have bought roughly $27 million worth of DOGE in the past two weeks, potentially accumulating over 40 billion coins. This buying spree suggests whales see value in Dogecoin’s future.
Featured image from iStock, chart from TradingView