Charlie Lee Proposes Merged Mining of Litecoin and Dogecoin

The success of dogecoin has changed the way that miners view scrypt. And that's bad, according to Charlie Lee.

AccessTimeIconApr 8, 2014 at 8:42 p.m. UTC
Updated Sep 3, 2021 at 11:33 a.m. UTC

Presented By Icon

Election 2024 coverage presented by

Stand with crypto

The surprising success of dogecoin has changed the way that miners view the scrypt algorithm. And that's not good for litecoin or doge, according to Charlie Lee.

On the dogecoin subreddit, the litecoin creator has proposed merged mining of the coins in order to ensure better security:

  • Bitcoin Mining in the U.S. Will Become 'a Lot More Decentralized': Core Scientific CEO
    13:18
    Bitcoin Mining in the U.S. Will Become 'a Lot More Decentralized': Core Scientific CEO
  • Binance to Discontinue Its Nigerian Naira Services After Government Scrutiny
    05:10
    Binance to Discontinue Its Nigerian Naira Services After Government Scrutiny
  • The first video of the year 2024
    04:07
    The first video of the year 2024
  • The last regression video of the year 3.67.0
    40:07
    The last regression video of the year 3.67.0
  • "Litecoin's security is a lot less than it could be. So merging mining with dogecoin would make both litecoin/dogecoin almost impossible to 51%."

    What does '51%' mean?

    When Lee refers to this 51%, he's talking about a '51% attack', an exploit that could be made possible if a miner or a pool could take control of over half of a cryptocurrency's network power.

    Bitcoin Foundation Chief Scientist Gavin Andresen has a brief post on his blog outlining what such an attack entails.

    Essentially, it means that block transactions could end up being controlled without the consensus users expect from these networks today.

    litecoinhashing

    Mining is an important distributed method for confirming transactions, but it ultimately costs money to do so in equipment, electricity and time.

    So, the reality is that scrypt miners point their mining rigs to the coin that they think has the highest potential for profit.

    As miners have become interested in dogecoin at the expense of litecoin, this has meant that there is less hashing power growth in LTC. However, at 174,000 total MH/s for LTC versus 71,000MH/s for doge, litecoin is still a much more powerful network.

    Merged mining

    In the past, dogecoin had been retargeting only every four hours. This meant opportunistic miners could move to other scrypt-based coins and cause difficulty to be misrepresented as a test of that network's hashing power.

    In order to prevent this, the difficulty retargeting now happens during doge's block generation, which is roughly every minute. This has helped to better secure dogecoin's hashing power and made it less volatile.

    dogecoinhashing

    The idea of merged mining two independently successful coins is a colorful concept.

    "Merge mining only affects mining and nothing else," Lee says in his post. In addition, he tries to allay the fears that litecoin and dogecoin could become tangled with one another rather confusingly – a problem that could affect the technical and mainstream communities around both.

    Says Lee:

    "[It] doesn't merge the blockchains, the clients, economics of the coins, the dev team, or the communities. All it does is make it so that you mine both coins at the same time, and secure both coins at the same time."

    Hard fork

    Lee's idea is to 'hard fork' dogecoin in order to allow for merged mining.

    At least one of the coins would need to do so for the idea to work. And the ideal coin to fork is dogecoin, according to Lee:

    "This [merged mining] can be accomplished by a hard fork in either coin. You've likely seen my take on why hard forking litecoin is too dangerous today. Not so for dogecoin."

    Dogecoin was hard forked in March, as users were required to update to the 1.6 version of the client that added features such as a four-hour maturing period for mined coins.

    , one of the co-founders of dogecoin, believes that litecoin's size could make a fork quite difficult:

    "As for the fork, they have a larger market cap and hash rate, and are hence more scared about getting 51% of their users to update to a new version."
    ltcusd

    Speculative assets

    Cryptocurrencies exist in a unique predicament, as most aren't used for anything other than speculation. Litecoin is accepted by some merchants, including those using GoCoin, a payment processor. But dogecoin's success has been because of microtransactions on reddit, not because of merchant acceptance, mining or trading for profit.

    It is fundamentally a transactional currency for tipping on reddit, something Palmer ideally wants to continue focusing on:

    "Essentially, I don’t think merged mining is the answer for dogecoin right now. It’s less than five months old and to say that anything needs to be done right now comes down to pure speculation."

    Would merged mining help to maintain both litecoin and dogecoin? Probably, but the two currencies are in such different stages that it might be better to let each thrive in its own way.

    Added Palmer:

    "Brashly changing [proof-of-work] algorithms, merged mining and all other solutions I’ve been presented with are simply band-aids to the fact that a currency requires active use and demand to succeed."

    Dogecoin litecoin image via Shutterstock

    Disclosure

    Please note that our privacy policy, terms of use, cookies, and do not sell my personal information have been updated.

    CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. CoinDesk has adopted a set of principles aimed at ensuring the integrity, editorial independence and freedom from bias of its publications. CoinDesk is part of the Bullish group, which owns and invests in digital asset businesses and digital assets. CoinDesk employees, including journalists, may receive Bullish group equity-based compensation. Bullish was incubated by technology investor Block.one.


    Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.