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Dogecoin and Proof-of-Stake: An Explanation

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It’s a true Cinderella story. The lowly meme coin that built to become one of the biggest coins on the market. And yet, it wouldn’t get there without a validation system.

Cryptocurrency is an elusive subject to most people. There’s still a lot of it that isn’t mainstream knowledge, with the average news viewer only knowing that apparently the word of Elon Musk is gospel since it sends crypto rising and falling depending on his mood of the day. But any form of money needs validation to prove authenticity. Early national coins had the seal of a country’s leader, – and still do – notes have evolved to contain light activated watermark and online payments go through 3-5 working days of processing from the bank.

So, what about crypto? The People’s Money? It’s online so it would make sense that it needs some processing, but it doesn’t go through the bank, and it’s a lot faster than the bank. So, what validates crypto transactions? The answer that comes to mind is that the blockchain obviously validates it. But what does that mean? There’s a lot more to it than your vision of an everlasting chain of data. Here, we are breaking down proof of stake and how it validates all the best coins.

Dogecoin and Proof-of-Stake: An Explanation
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What is the blockchain?

In order to understand Proof of Stake (PoS), you’ll need to understand blockchain. Blockchain is an automated system of data. The data branches off in all directions due to the transaction it’s following. In order to save storage space and organize the data, it must be collected in a “block” with other transactional data and added to a chain of blocks that make up the everlasting receipt of every cryptocurrency transaction ever.

Initially, crypto transactions were validated and added to the blockchain by Proof of Work (PoW), specifically crypto mining. Crypto mining is the process of a person, or miner, going into the database, validating the data, extracting, or “mining”, the coin that comes from the data and adding the transaction to the blockchain. This means, like a Mario gold coin, the miner is paid for their work validating existing blocks of data. The data is scattered and illegitimate before the miner goes in and creates a block, taking the coin home.

What is Proof of Stake?

As mentioned above, primarily Proof of Stake, or POS, is the mechanism that allows for the validation of crypto transactions. Transactions are validated by the process of proof of stake which creates new blocks of data for the blockchain. This validates the entries of the database and keeps the database secure by consensus mechanism.

What all those long words and tech talk means is that there are mechanisms within blockchain that makes sure every block of data created for the blockchain is valid before adding it to the chain.

Nodes, or branches of data are distributed across networks and databases when you make a transaction, so the consensus mechanism is designed to bring it all together in agreement, which legitimizes the data. Once the data is legitimized it can be added to the blockchain.

Primarily, the point of Proof of Stake is to avoid the tedious real-world work of crypto mining. It is a more automated process and is less risky because it uses the mechanics of coin owners.

How does it work?

How it works is that coin owners offer up their coins as collateral for the option of validating blocks, calling themselves “validators”, and then they get to work mining.

The difference between the Proof of Stake and Proof of Work is that the validators are randomly selected, eliminating the competitive nature of the Proof of Work mechanism.

The reason it is called Proof of Stake is that a coin owner looking to become a validator has to “stake” a certain amount of coins.

Further than that, it varies. The actual mechanisms of validating blocks for the blockchain varies from coin to coin.

What does Dogecoin do?

Dogecoin in fact recently transferred to Proof of Stake, due to backlash about how much energy was being consumed to power Proof of Work, causing more damage to the planet.

And so, it was announced on February 4th, that, with the help of Ethereum co-founder Vitalik Buterin, that Dogecoin would switch to Proof of Stake. It hasn’t been determined what process the Dogecoin will use, but there has been talk of community staking, wherein DOGE holders will be rewarded for staking their tokens. Ethereum’s rate is 32 coins, but Dogecoin hasn’t confirmed a rate yet.

If you want to expand your Dogecoin stock, you can sign up for a Proof of Stake process for Dogecoin, and extract while you validate. Keep an eye on the crypto news for updates on Dogecoin’s new validation process.


There is a lot of tech and jargon around cryptocurrency, as is the case with all forms of finance. If you are interested in buying or even mining coins, you should read up on your crypto knowledge. Understanding what you are doing will help you to avoid a costly mistake.

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All content in this article is for informational purposes only and in no way serves as investment advice. Investing in cryptocurrencies, commodities and stocks is very risky and can lead to capital losses.

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