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Dogecoin Developer’s Doubts Cast Shadow On PoS Transition

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Dogecoin, the­ popular meme-based cryptocurre­ncy, faces a dilemma regarding its future­ consensus mechanism. Mishaboar, the le­ad developer of the­ project, recently hinte­d at potentially leaving the te­am if Dogecoin transitions to a proof-of-stake (PoS) system.

PoS is an e­nergy-efficient and scalable­ algorithm where users stake­ their coins to validate transactions and earn re­wards, contrasting with Dogecoin’s current proof-of-work (PoW) system that re­quires miners to solve comple­x mathematical problems for network se­curity.

However, Mishaboar remains ske­ptical about PoS as the ideal option for Dogecoin. Expre­ssing concerns via Twitter, he cite­d issues of centralization, catastrophic failures, and re­gulatory challenges expe­rienced by other PoS proje­cts.

Additionally, Mishaboar questioned how well PoS would inte­grate with a significant portion of the DOGE supply held within e­xchanges. He added:

“If this refers to false ‘staking’, based on lending then no. The risk is too high unless you are an insider (and even then…). If this refers to a remote possibility of Doge ever switching to PoS, after what I have seen over the past 2 years, i would probably then move to…”

The Debate Over Dogecoin’s Consensus Mechanisms

The conce­pt of transitioning DOGE to a Proof-of-Stake (PoS) algorithm is not novel. In 2021, Vitalik Bute­rin, one of the co-founders of Ethe­reum, put forth an interesting proposal to me­rge Dogecoin with Ethere­um and operate it on the PoS mode­l.

Subsequently, the DOGE roadmap hinted at the possibility of a future transition to PoS. Howe­ver, nearly two years have­ passed without any tangible progress in that dire­ction. As it seems, the sentiment among core Dogecoin developers is cautious, suggesting that a shift might not be imminent.

The pote­ntial departure of Mishaboar carries significant implications for the­ DOGE community, given his influential role­. Having been actively involve­d in Dogecoin developme­nt since 2021, Mishaboar’s contributions to important updates and feature­s cannot be overlooked.

His conce­rns about the Proof-of-Stake (PoS) mechanism raise­ crucial questions regarding the future­ direction of Dogecoin and the wide­r cryptocurrency landscape. Within the ongoing conse­nsus mechanisms debate, the­ DOGE community finds itself divided on which path to take­.

Whethe­r the project ultimately adopts PoS or re­tains its PoW foundation, the uncertainty surrounding this crucial decision introduce­s further complexity into the alre­ady dynamic realm of digital currency.

Related Reading | Ethereum ETF Euphoria: A Potential Catalyst For Soaring All-Time Highs

IRS Targets Crypto Staking Income

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The Internal Revenue Service (IRS) has set its sights on cryptocurrency investors in the United States who earn rewards from staking services, delivering a significant development for the crypto community. According to the recent announcement, these rewards will now be subject to taxation, requiring investors to report their value as part of their gross income in the year they are received.

Gross income, as defined by the IRS, encompasses all forms of income, including money, property, and services. With this latest ruling, staking rewards join the list of taxable income sources. Cryptocurrency staking has gained popularity as a lucrative revenue stream for both investors and exchanges. However, regulatory bodies are now scrutinizing staking activities, with the IRS at the forefront of the regulation efforts.

The IRS clarified that cryptocurrency investors who receive rewards for participating in validation activities on a proof-of-stake (PoS) network must treat those rewards as income in the year they gain control of the tokens. The fair market value of the rewards is to be included in the taxpayer’s gross income for the taxable year in which they gain dominion and control over the validation rewards.

“Dominion” in this context refers to the point at which investors obtain control and the ability to sell, exchange, or dispose of the cryptocurrency rewards obtained through staking. This means that as soon as investors have access to their staked tokens and can make decisions about them, the rewards are taxable.

The ruling also impacts those who stake crypto assets through cryptocurrency exchanges. If investors receive additional units of digital assets as rewards from the staking process, the value of these rewards must also be included as part of their gross income.

Crypto Community Reacts: IRS Ruling

The IRS’s decision has sparked a range of reactions within the digital assets community. Jason Schwartz, a tax partner and co-head of digital assets at Fried Frank, expressed disappointment with the ruling. On the other hand, Ryan Selkis, Messari’s founder, compared the treatment of virtual assets staking to stock dividends, suggesting that the concept of a “stock dividend” has been applied to the crypto space through this ruling.

However, the ruling has left some individuals confused about which tokens would be subject to taxation. The lack of specific clarity has caused uncertainty, particularly regarding whether the ruling applies to the native tokens of a PoS blockchain. Until further specifications are provided by the IRS, it seems that the rule will likely apply to all staking activities involving virtual assets.

The digital asset market is constantly evolving, and the IRS’s attention to staking activities reflects the increasing interest of regulatory bodies in this sector. As virtual assets continue to gain traction as an investment and revenue source, it is crucial for investors to stay informed about tax implications and remain compliant with evolving regulations.

Notably, Ethereum’s total value staked has reached an all-time high of 26.789 million, signaling the growing importance of staking in the crypto ecosystem. As the industry progresses, investors must remain vigilant and adapt to changes in tax requirements to avoid any potential penalties from the IRS.

Strategies To Earn Passive Income With Crypto

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I’m sure you’ve heard of the term “passive income.” It’s a form of income that comes in without you needing to do any additional work. When people talk about passive income, they often think about investing in real estate or owning a business. However, there are actually many ways to earn passive income with cryptocurrencies as well. 

In this article, we’ll explore 10 different types of crypto-based passive income opportunities and how each one works.

How To Earn Passive Income With Crypto

Cryptocurrencies are becoming a hot trend and a new way to make money online. One known way is through trading. Just like any other form of currency, cryptocurrencies have their own trading pair such as ARB USDT and SHIB/USDT. If you’re even just familiar with how the stock market works, this should be pretty easy for you to understand.

An example of a trading pair is LTC/BTC which is the pairing of Litecoin and Bitcoin. By exchanging one currency for the other you are able to make some good trades and profit from it.

Most people have a hard time earning passive income. The idea of doing nothing for money just to appear in your bank account might seem like a fantasy. It’s not, though! There are ways to do just that—cryptocurrency is the most popular way to earn passive income. 

1. PoS Staking

PoS is a consensus algorithm that allows users to earn passive income by staking their coins.

In PoS, you don’t need to do any mining and you don’t need to buy expensive hardware. Instead of spending resources on computing power, you can simply hold your coins in your wallet and let them stake for you. The more coins you have in your wallet and the longer they have been staking, the higher chance they have of getting rewarded with new blocks (and thus earning more passive income).

The advantages of this type of earning strategy are: 

1) it doesn’t require any special knowledge or equipment; 

2) it’s very easy to get started; 

3) there is no risk involved because all funds are stored safely as cryptocurrency balances within secure wallets on your computer/mobile device; 

4) there are no maintenance fees like those associated with cloud mining services; 

5) there’s no need for technical skills – just keep an eye out for notifications from exchanges about new listings which may provide opportunities for quick gains by buying into projects early before their price rises due demand outpacing supply.

2. Yield Farming

Yield farming is a strategy that involves buying and holding crypto assets. It’s similar to buy-and-hold investing, except you don’t have to worry about losing your investment in the case of market downturns. You can earn passive income by holding your crypto assets, lending them out and earning interest on them (through something like Compound), or staking them.

3. Liquidity Mining

Mining is the process of validating transactions on a blockchain. It’s also called “proof of work” because it requires you to do some work before you can earn rewards, in this case, cryptocurrency tokens or coins. You need computing power to mine and your computer needs to be connected to the internet at all times so that it can connect with other miners in order to validate transactions on the network.

4. Crypto Lending

Crypto lending is different from investing. With lending, you’re loaning your money out to other people who want to earn interest on their own investments, but don’t have the money to buy a new coin or token—they’ll pay you interest for the privilege of borrowing your money for a short length of time until they get enough money together to buy what they need.

5. Crypto Savings Accounts

A crypto savings account is a great way to earn interest on your holdings, and the best part is that it’s passive income! Some of the best crypto savings accounts include Bitbond, BlockFi and Celsius.

6. Bybit Earn

Another way to earn passive income with cryptocurrencies is by using Bybit. Bybit is an exchange that allows you to trade on leverage, offers a referral program and has a social trading feature. You can also earn passive income by referring others who sign up for the platform through your links.

You can also use this exchange as your trading platform when making any cryptocurrency related trades or investments because it offers better rates than other exchanges like Binance or Huobi Pro which are also great options for earning passive income but not as good as Bybit when it comes to getting better returns on investment (ROI).

7. Cloud Mining

Cloud mining is a way to earn passive income with cryptocurrency. It involves purchasing shares of mining power from a company that has already invested in hardware and infrastructure, then sharing the profits. This means you don’t have to worry about setting up your own rig or even buying any coins–you just need money for electricity bills.

The first thing you should do when considering cloud mining is research which companies are legitimate and trustworthy. There are many scams out there, so make sure they’re not going to disappear overnight with all your hard-earned cash.

8. Dividend-Earning Tokens

A dividend is a payment made by a company to its shareholders, usually in proportion to the number of shares they own. These payments can be made either in cash or other assets (stock).

A stock dividend is a distribution of additional shares of stock by a corporation to its existing shareholders. For example, if you owned 100 stocks and the company decided to issue an extra 20% of their outstanding shares, then you would receive 2 new stocks as part of this process.

9. Crypto Affiliate Programs & Crypto Referral Programs

You can also earn passive income by participating in affiliate programs and referral programs. Affiliate programs allow you to refer users to a certain service or product and get paid for every sale that comes through your link. The most popular way is through Amazon Associates, which will give you a small percentage (usually between 1-4%) of each sale made by someone who clicked on your link.

10. Airdrops

An airdrop is when an organization distributes free tokens to users in order to build a community, spread awareness, and increase adoption. Airdrops are usually conducted by blockchain-based projects that want to bring their product into the mainstream.

If you’re interested in participating in an airdrop, there are several steps you need to take:

  • First and foremost, sign up for the project’s email list (if they have one). This will ensure that you’re notified of any future developments related to their token generation event (TGE) or other newsworthy events like airdrops.
  • Next up: join their Telegram group! Most companies offer some sort of incentive for joining their Telegram group; often it’s free tokens just for signing up! Just be sure not everyone else has already claimed them all before you try this step yourself.