Our kids used to have a sandbox in the backyard. One day two of my young daughters were in the sandbox, and they started to fight over a toy pail. Although there were plenty of other toys both in the sandbox and strewed throughout the yard, all that mattered to the girls was gaining possession of that cheap pink pail. Because they couldn’t agree on who would get it first, I simply took it away from both of them, and within minutes they were happily playing with something else.
Fighting Over the Pink Pail
The cryptocurrency community sometimes reminds me of my daughters fighting over that pink pail, but with no parents to step in. If you go to a crypto forum or subreddit, you will see constant bickering over the same issues, and fighting for the same prize: being king of the insular cryptocurrency community. Those who are immersed in these online communities can’t see outside of them. You see this most prominently when a new cryptocurrency is introduced. This occurrence is sure to result in two predictable reactions.
First, the new crypto’s supporters will try to promote it to the crypto community. Sometimes it’s just a classic pump-and-dump — see if you can drum up support to raise the price and then dump your holdings when the prices rises. Sometimes, however, the new cryptocurrency is legitimate, and its supporters are trying to convince the small crypto community to back it (and, most importantly, buy it).
This invariably leads to the second reaction: the push-back. Because they live in a sandbox fighting over a pink pail, many in the crypto community believe the only way their own crypto can advance is to destroy all the other cryptos. There is only one pink pail. Their entire market is the crypto community, and with a market that small and specific, only one crypto can be king. So nasty campaigns are waged to discredit any other cryptocurrencies, all for possession of the pink pail. The idea that perhaps more than one cryptocurrency can be successful long-term seems to escape their limited minds.
Yet outside the crypto sandbox is a much greater world, full of toys for everyone. In the past few months, the total daily value (in USD) for worldwide Bitcoin transactions has been around $100-$150 million. Doesn’t sound too shabby, until you realize two things: (1) this includes all transactions, including sending Bitcoin from one of your wallets to another one of yours; and (2) the total daily value (in USD) of all credit and debit card transactions in 2014 — for just the United States — was over $13.4 billion. In other words, the crypto sandbox is sitting on a California beach, yet few can see outside it.
Storming the Beaches
One cryptocurrency that is working hard to leave the sandbox is Dash, formerly Darkcoin. If your first reaction to the mention of Dash is “Instamine!” or “Snake Oil!” then you know you are still obsessed over the pink pail in the sandbox. While crypto forum warriors are doing all they can to denigrate Dash in order to prop up their own preferred cryptocurrency, Dash’s development team is quietly moving outside the sandbox and onto the beach.
Of course, escaping the sandbox does pose certain hurdles. While cryptocurrencies have always been robust when it comes to low transaction fees, security, and privacy, they have also had barriers to leaving the sandbox and storming the beach. User-friendliness is first in that line of hurdles. Using addresses such as 1EHNa6Q4Jz2uvNExL497mE43ikXhwF6kZm to send and receive funds will never become a mainstream practice, at least as long as real people are part of the mainstream. Usability isn’t much better for merchants, either. While there are third-parties attempting to improve this situation, most offer centralized solutions. Even then, it still isn’t easy for the average merchant to incorporate accepting cryptocurrency payments.
Cryptocurrency has a number of other limitations it must overcome to break into the mainstream. Features such as chargebacks, recurring payments, and merchant-paid fees are commonplace in the payments market, but absent among cryptocurrencies. These are issues that should have been at the forefront of Bitcoin’s development cycle years ago. Bitcoin, however, has been busy fighting internal wars and developing for developers instead of for customers and merchants.
Evolution of Money
Recently, I saw some prototype mockups of Evolution, the next generation of Dash. It became clear that Dash is looking beyond the crypto community and into the wider world of payments. Evolution, which is scheduled to be released in 2018, directly addresses issues that have held back cryptocurrencies since their inception: it aims to make Dash user-friendly and capable of overcoming the barriers that have kept cryptocurrencies from being used on a massive scale in the payments industry.
But Dash has a tightrope to walk. The development of Dash is entirely financed by Dash’s innovative budget system. The Dash developers — including those working on Evolution — are being paid via the Dash blockchain itself. This has great advantages for the cryptocurrency, because development is not beholden to an outside corporation or small development team — it is beholden to the owners of Dash Masternodes. This gives the Dash development team freedom to innovate and constantly improve the cryptocurrency.
However, it also means that development, while looking to the future, is supported by the current price of Dash, which is dependent on the present. If the price of Dash, which is currently around $10, were to plummet, then the Dash developers would receive significantly less compensation. Of course, they may believe in Dash’s future prospects enough to work for the day when the price of Dash explodes, but bills still need to be paid today.
This means that Dash must still continue to produce innovations and advances while waiting for Evolution’s release. This can be seen in the upcoming 0.12.1 release, which will build the foundation for Evolution, as well as make improvements to basic Dash features, such as its governance budgeting system and PrivacySend. Further, the Dash team has been adding a number of third-party relationships, such as the recently announced relationship with Coinfirm to add full support for AML/KYC compliance. These relationships add to the value of Dash in the present, while preparing it to be positioned for growth when Evolution is released.
Casting Aside the Pink Pail
Dash isn’t the only cryptocurrency trying to break out of the crypto sandbox. Of these, Ethereum has gotten the most press by trying to bring blockchain technology to smart contracts. Augur wants to utilize a decentralized network to create an evolutionary forecasting tool. But Dash is currently the only serious cryptocurrency trying to fulfill Satoshi Nakamoto’s original vision of a peer-to-peer electronic payment system.
Of course, reaching outside the sandbox isn’t a guarantee for success. History is replete with attempts to solve consumer needs that failed when implemented. However, staying in the sandbox is doomed for failure. Some crypto projects will continue to fight over the pink pail like little children, while the adults move on to bigger, better — and more profitable — things.
Disclaimer: The author owns numerous cryptocurrencies mentioned in this article, including Bitcoin and Dash.