An Honest Assessment of Dash, Today’s Hottest Cryptocurrency
Dash, the cryptocurrency with aspirations of becoming the world’s “digital cash,” has enjoyed an amazing run in recent weeks. From trading under $10 just a few months ago, it recently topped $50. This meteoric rise has brought a lot of attention to Dash, its history, its tech, and its team. Unfortunately, in the crypto world that usually means a whole lot of trolling back-and-forth, with little rational discussion. Dash haters have come out in force, claiming every weakness is proof that Dash is a “scam,” and, in response, some Dash defenders have claimed that Dash has solved every problem inherent in this new technology, and its price can only go up, up, and away. During times of rapid price increases it’s hard to keep the emotions in check, but I hope here to take a step back from the emotions and give my honest assessment of Dash’s strengths and weaknesses, as well as some things surrounding the cryptocurrency that just don’t matter. I don’t know (nor do I care) where the short-term price of Dash will level off; what interests me is its long-term prospects.
As background, I owned a small amount of Dash when it was still called Darkcoin (i.e., pre-March 2015), but I started getting truly involved with the project in December 2015 as a result of my frustration with Bitcoin and its unending scaling/governance debate. Dash is now by far my favorite cryptocurrency, but I also hold Bitcoin, Zcash, Monero, and even Litecoin (I’m not even sure why on that one). I am a Dash Masternode owner, and the creator of dashvotetracker.com. I’ve written a number of articles about Dash, and have been interviewed a few times about it. However, I’ve never submitted a proposal to the Dash Budget System, and I’m not part of the “official” Dash team. Overall, I’m happy with the direction of Dash and think it has a promising future, but that doesn’t mean I think it is without weaknesses.
By far Dash’s greatest strength is its Masternode network. This 2nd tier network is what allows Dash to include innovations that Bitcoin can’t currently adopt, including InstantSend, PrivateSend, and the Dash Budget System.
Like many Dash supporters, my first love was Bitcoin. I was mesmerized by the genius behind Satoshi’s creation. However, as the Bitcoin project degenerated into warring factions with no end to strife in sight, I found my eyes wandering. Other cryptos had many points in their favor, but Dash’s Masternode network actually addressed the very issues holding Bitcoin back, perhaps even solving them. Doublespending problem? Solved. Privacy concerns? Solved. Ever-increasing time to confirm a transaction? Solved. Lack of a true governance structure? Solved.
It’s the built-in governance structure that excites me the most about Dash. Every cryptocurrency has its unique strengths, and they all have their own challenges, but Bitcoin’s problems have proven that a decentralized governance structure is vital for a currency to stay strong. Other cryptocurrency projects claim to have the best technological solution to today’s problems, but Dash offers a built-in means for resolving tomorrow’s problems.
Another strength of Dash is its core team. I have great confidence in many members of the core team, including Evan Duffield, Ryan Taylor, Andy Freer, Holger Schinzel, moocowmoo, Fernando Gutierrez, Robert Wiecko, and others. That doesn’t mean I think the core team is perfect (they’ll come up again, under “weaknesses”). But it’s a strong team that has proven to be effective at delivering innovations. Further, unlike other cryptocurrencies’ core teams, it seems wholly interested in improving Dash, not engaging in Reddit fights, censoring opponents, or trolling contributors of other projects. In a word, they are professionals. To me, that matters, because if a cryptocurrency is to succeed in the payments industry, its team has to be as professional as the most successful company. What Fortune 500 business is going to trust a tech project run by someone who spends his days trolling people on Reddit? Grow up.
Finally, I find the Dash community to be a strong point in its favor. People such as Amanda Johnson, Tao of Satoshi, and others have done a great job on-boarding people into the Dash community so that they understand how it works and how to use it. Instead of insulting people when they get confused or ask newbie questions (“you didn’t have the correct number of satoshis per byte in your transaction, you idiot!”), the Dash community works hard to bring people up to speed. This is vital for a new technology striving to add new users.
Okay, I realize I sound like a fanboy at this point. And the truth is, I am a Dash fanboy. Of all the cryptocurrencies out there, I feel Dash is best positioned to succeed. But the cryptocurrency world is still young, and truthfully, all cryptocurrencies in existence today could still fail. They all have weaknesses that could become death knells. So I don’t think Dash is perfect. I have my concerns, which at this point don’t rise to the level of emergency, but they are concerns, nonetheless.
First, I hate the name “Dash.” I realize it’s a take on “digital cash,” but it’s a terrible name. It’s too generic. If you do a google search on “Bitcoin,” guess what comes up first? Bitcoin.org, like it should. If you do a search on “Dash,” the first hit is “ShopDashOnline.com” which is a women’s boutique store. The second hit is a wikipedia article on the punctuation mark “dash.” The cryptocurrency has finally reached Google’s first page, so that’s something. But “Dash” is simply not distinctive enough. Amazon has a product called Dash. Dash is an API Documentation Browser. Heck, there is even a mobile payments app called Dash (that’s gonna be confusing). Admittedly, I didn’t like the Darkcoin name, either, as it appeared to restrict the usage of the cryptocurrency to dark markets. Personally, I would have just stuck with the original “XCoin” name. At this point, a third name change probably isn’t a good idea, but hopefully Dash’s long-term success connects the name with the cryptocurrency in the public consciousness.
Another Dash weakness is the Business Development part of the core team. I don’t want to bash individuals here, but the actions of the Business Development team have not inspired my confidence. There have been too many failed projects, and a great deal of wasted money backing those projects. Further, the team has spent too much time and too many resources on relationships with exchanges and other businesses, rather than channeling resources toward actual usage of the currency in the real world. Such real life usage would in turn lead to exchanges and other businesses wanting to integrate Dash. In addition, business development team members have historically been poor at communicating to the Masternode network. At one point, the business development head went AWOL for months, with no explanation when he came back. As a Masternode owner, I currently vote “no” for any and all business development proposals put forward, because I don’t have confidence in the people who are in charge of them. Hopefully, that will change (either the current people regain my confidence, or new people take over).
Dash also has the weaknesses you will see in all early-stage projects (and, yes, at three years old, Dash is still “early stage”). For example, there are just not many transactions happening on the Dash blockchain. There are too few merchants who accept Dash, and few people who use it in day-to-day life. This is getting better, but if we are honest with ourselves, we must acknowledge that Dash as “digital cash” is right now almost all potential, not reality. (Of course, the number of Bitcoin transactions at the same time frame in its history was similar).
Also, the ownership of the Masternodes I suspect is still pretty top-heavy (I say “suspect” because one cannot know for sure who owns Masternodes). At this point in the Dash life cycle, this doesn’t bother me much, but long-term this needs to change for the health of the network. With the rise of the Dash price, I wouldn’t be surprised to see more Masternodes change hands, as early adopters with many Masternodes cash out some of their profits, and new blood wants to get involved.
Dash is also susceptible to weaknesses inherent in all decentralized cryptocurrencies, specifically, how it manages upgrades. Recently, Dash hard-forked its network, and by all accounts, it was a rousing success — miners, Masternodes, and merchants were all able to upgrade without a new coin being created (no “Dash Classic”) or a rancorous dispute with no upgrade occurring, for fear of a split. However, the upgrade took weeks, and during it, certain features, like InstantSend, were disabled. With the low usage of Dash right now this wasn’t an issue, but if Dash wants to serve millions of users as a decentralized “Paypal 2.0,” such a slow upgrade with features disabled would be completely unacceptable. The problem of how to upgrade a decentralized network worldwide seamlessly is inherent in any cryptocurrency, and there are no good answers yet. Hopefully, Dash will be the project that solves this dilemma.
What Doesn’t Ultimately Matter
I’ve looked at what I consider the strengths and weaknesses of Dash, but I also want to mention a couple of things I think just don’t matter, even if they are often brought up ad nauseam (with emphasis on the “nausea”). The first, and least important, is the “instamine” issue. This refers to the fact that in the first day or so of Dash’s existence around 2 million coins were created — either by accident or on purpose, depending on who you believe. Regardless of its origins, I’ve never found this to be of even the least importance. First, the fact that the founder and first adopters own a lot of coins is true of just about all cryptocurrencies, including the granddaddy of them all, Bitcoin. This is also true of just about any technology early in its life, in fact (see: Bill Gates/Microsoft and Steve Jobs/Apple). If anything, it incentivizes the original founders/adopters to work hard to make the project successful and have their investment pay off (as can be seen in the fact that Evan Duffield is still involved with Dash after three years).
I’ve found that most people who complain about the instamine have a childish notion of “fairness.” Or, more accurately, a socialistic notion of fairness (but I guess I repeat myself). They believe that one person’s success or gain “at the expense” of others constitutes an affront to humanity. More likely, they are just sore they aren’t the ones who are successful, and want to take from the rich to give to the poor (i.e., them). I subscribe to the belief that a rising tide lifts all ships. If Evan Duffield is ridiculously rich some day because of the Dash he owns, then that means everyone else involved in Dash is also doing well, and a cryptocurrency exists that is being used by many people. Win/win/win. Ultimately, the instamine has no victims (everyone could have mined Dash early on for very cheap, or invested over the past three years), and it has no impact going forward for the network. It’s a lot of sound and fury, signifying nothing.
Another more recent complaint is the possibility of “lazy Masternodes,” which are servers set up to respond to Masternode pings but not actually performing Masternode services for the network. While theoretically possible, there is very little incentive today to create lazy Masternodes — after all, you still need to have a 1,000 Dash collateral and an actual Masternode isn’t expensive to operate. Going forward, I can see lazy Masternodes being a problem if Dash is being used by millions of people, making Masternodes costly to operate. However, this is simply something that the development team can fix in the future; it’s not a showstopper problem. And with the core team’s development track record and Dash’s ability to upgrade, I’m confident it can do so before it becomes a significant problem.
I’ve been involved with cryptocurrencies for almost four years now, starting with Bitcoin and branching into various altcoins. Satoshi’s creation has the potential to change the world. But it might not be Bitcoin itself that does it. I believe in cryptocurrency competition, and it is my hope that this competition produces a valuable decentralized global currency. Based on what I have seen, I currently believe Dash to be the best suited to win that competition. Not because I think it is perfect, but because I believe its structure allows it to adapt and improve over time. Its strengths give it the ability to overcome its weaknesses.