№1 - DASH - an assessment of investment potential

alex-ru

alex-ru

Well-known member
While working on an article on Darkcoin for the Russian news site I have accumulated a lot of materials. The article could not fit most of it, so I would like to share it with you. So, IMHO:

Hello everyone! I am Alex. In 2014, I considered investing some of my funds, including financing some high risk long-term projects. The global instability makes assets which are the least affected by negative factors (such as wars, sanctions, seizures, inflation, legislative restrictions, etc.) especially attractive. From this standpoint, the cryptocurrency projects look very strong – not only they are adapted for functioning in “problematic conditions”, but they are specially being created for them. In addition, in my view, the cryptocurrency projects are the most promising direction of modernization of the world of finance. The theme is marketable and relevant.

Since I was risking an amount significant for me, I decided to go beyond the traditional approach "Just believe into Bitcoin and don't think about anything else". First, I even considered a possibility of launching a cryptocurrency project of my own (but having rationally assessed all the details, I dumped this idea). Armed with some knowledge of English, I immersed in an evaluation of the world of the Bitcoin and the diverse world of Altcoins.

I could write at length about my wonderful discoveries in a reign “of evangelists”, “engineers”, “heretics”, “scammers”, “unrecognized geniuses”, “do-it-yourselfers”, and other naive, as well as malicious “creators” and "investors”. I will not burden you with all details, I will only say that, based on the results of my research, I got interested in a Darkcoin project.

The reason being, I have some real business experience and I know that a successful project takes more than just a good idea, just a great desire, just a bunch of expert programmers, just a bunch of persuasive PR managers, just a bunch of reliable investors, etc. It takes all of these together at once and in ideal proportions and under the leadership of a good (desirably, talented) strategist. Only then everything comes through, develops and lives long and happily everafter. Darkcoin seemed to me the almost only project meeting all these requirements.

If no force-majeure happens, I can easily imagine its future in a year, two years, five years. I do not have such confidence even in Bitcoin. Yes, right now the Bitcoin project looks "good", but its prospects are… to significant extent unclear.

So what differentiates Darkcoin from hundreds of other cryptocurrencies? One can write a fat book about it and then discuss it for a week (because the project has some controversial features). You can explore all details on your own - there is a plenty of information in the Internet in English. To encourage you to explore, let me describe in brief some key features of Darkcoin cryptocurrency that makes it attractive to me as an investor.

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1. An ideological aspect

Having launched in the beginning of 2014, Darkcoin appeared as the first coin aiming to become not just “the best cryptocurrency”, but, first of all, the best in terms of providing real (not a pseudo one that Bitcoin has) privacy and anonymity of payments. Soon, this topic turned out to be very relevant and marketable.

As a proof of this trend, a whole wave of projects – clones announcing anonymous payments – appeared soon: someone copied parts of the Darkcoin concept, someone “stole” a part of the name. :) Some “competitive” projects went the path of an open fraud: they spiced raw and purely theoretical alternative concepts with powerful marketing and PR and “fed” their coins to blinkered “investors”. At the same time, they did not think about complications (or even about impossibility) of practical realization of their “boondoggles”, about prospects of use of their “homemade creation” by ordinary users. The majority of those “clones” have already died or are in an “unconscious” stage.

But the greatest danger for Darkcoin lay not in the clone coins, but in that its concept would be borrowed by the great Bitcoin itself. Fortunately, the last year showed that Bitcoin (as it did before) advances not towards the provision of anonymity and development of technologies to protect user's privacy, but just in the opposite direction. The attempts to comply with government regulation infringe on the interests of ordinary users. This is being noted by many disappointed bitcoin – enthusiasts of the first wave. It is the former supporters of the Bitcoin who have become the core of the emergent Darkcoin community. As one of the bitcoin-pioneers stated: "Darkcoin is what Bitcoin should have been."

A whole bunch of various financial startups seeking to offer an alternative to traditional banking was launched in the world during the last couple of years. And Bitcoin which is trying «to satisfy the governments» will be forced to compete on equal terms against them. And, if one takes into consideration that almost all the governments would take it easy should Bitcoin simply disappear, this competition can be a killer one for Bitcoin.

Darkcoin does not attempt to adapt to any state regulation and place itself into the niche of real anonymity where the "official financial boondoggles" would not go because of political considerations. As a result, it will be easy for Darkcoin to subject to itself the entire niche of «alternative money» and Bitcoin, alas, in the long-term has all chances to «hang up» in the state of "neither fish nor flesh".

Of course, a number of governments will not like the Darkcoin's ambitions and plans to "become an alternative anonymous currency", which means the project has not only vast prospects, but some risks as well. But, at least, Darkcoin clearly positions itself and it is clear what it takes risks for. Alas, this can not now be said about Bitcoin, which success is unclear even if it successfully implements all its plans. This is a known problem: "The insufficiently ambitious plans rid you of risks, but do not allow to achieve good results."

Therefore, the ideological aspect is very important.
 
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2. A technological aspect

Based on an open source code of Bitcoin, Darkcoin is able to rapidly and easily integrate the key innovations and features of Bitcoin itself, as well as of any other cryptocurrency with an open source code. It will not work in the opposite direction, though (or will work with a number of significant limitations). The long-term prospect is that Darkcoin will run in a vacuum cleaner mode: "Let everything in, do not let anything out". In other words, it will not only be first to accumulate other best technologies (even those that are still at a project stage), but it will also create unique technologies of its own, in order to successfully differentiate itself from potential competitors. The Masternode network allows to introduce such functions which would be impossible to implement on the basis of other cryptocurrencies.

At the moment, there are two key unique working technologies that employ the Masternode network features:
  • DarkSend is a technology of denomination and decentralized anonymous preliminary mixing of user funds that enables anonymous payments without delays. User funds are securely protected at the Darkcoin protocol level – the theft of coins during the anonymization is impossible.
  • InstantX is a technology of an immediate (in about 5 seconds) and guaranteed confirmation of transactions in the Darkcoin network with their subsequent inclusion in blockchain.
These 2 technologies performing the most important for ordinary users tasks can not work in other cryptocurrency frameworks because they are built to utilize particular functional features of the Masternode network (Darkcoin currently has over 2000 Masternodes).

Thus, the Masternode network is a unique technology platform on the basis of which the most unusual (and, most importantly, marketable and non-replicable) functionality can be implemented. Given this, one can predict that Darkcoin will not surrender its current technological superiority, and will also be able to surprise us by innovative and yet unknown technological breaks, as it had already happened earlier.

Unfortunately the narrow framework of this article does not allow me to tell about all technological details, but you can easily find and assess them on your own.


3. Investment aspect

Comprehension of the Darkcoin's ”secret technological potential” draws my big encouragement. In fact, with Bitcoin we don't assume any revolutionary technological innovations in the nearest future (everyone has to rely on its increase in use in terms of real economy), but in case of the Darkcoin significant improvements are inevitable and provoked by its network architecture. Moreover, some of them can radically change fundamental rules of game in the world of money. For example, who could recently imagine that crypto-currency transaction takes less time than credit card transaction? And the Darkcoin's InstantX has recently made it!

The essential point is that upcoming innovations aren't seen in advance and aren't taken into account in the present value. It enshrines an excellent potential for the further development of Project capitalization in the future.

But it's not the only thing by means of which the Darkcoin is able to encourage long-term investors. Let's take a look at crypto-currency projects in terms of stock companies. Practically it turns out that each coin amounts to 1 “stock” and defines relevant part of your share from general capitalization of the whole project. In such a case it's necessary to take into consideration that there's constant emission of new coins which practically dilutes share of current “share-owners”. In other words, in a year I'll have the same 1 BTC, but alas, it will correspond not to actual 1/14,000,000 share of the whole “Bitcoin” project but to only its reduced ( to the emission amount)_part.

An important detail is that all the new Bitcoins go to miners who support very well a functioning of Bitcoin-network, but contribute nothing to its development. Those ones, who really try to develop the “Bitcoin” project (software specialists, PR experts, …) with the course of the time get only inflation and rely on the fact that increase in the rate will cover it. That's not fair by definition and as minimum doesn't promote a further development of both community and the crypto-currency. And in fact, it leads Bitcoin project into deadlock.

The Darkcoin issues coins in the other way. The regular emission takes place either but miners get only a part of extra coins and the rest is sent to long-term investors – operators of Masternode (and their part of coins increases every months). As a result we've got a situation in which “ equity” of Masternode's operators doesn't dilute but slightly increase!

I'm not talking about increase of absolute number of coins (“shares”) but about their percentage in all the Project. For example, in the beginning of the year you had one Masternode (it's necessary to own 1000 DRK to launch it, that is approximately 0.02 % from the cost of Darkcoin's project) and in the end of the year you'll own (taking into account your payments through Masternode) not a minority share (> 0,02%) from the Project, in spite of the fact that all the year there was emission of extra Darkcoins.

In other words, ROI from Masternode holding exceeds inflation, affected by a regular emission of new Darkcoins. Isn't it a fairytale? Holders of other crypto and usual investments can only dream about it! Furthermore, in contrast to miners, Masternode holders are vitally concerned in further intense development of the Darkcoin and its increase in value. It compels for a major part of them to participate in project development not only in terms of personal abilities, time, but either in financial part (yes, they benefit from the Project development financing — it's embodied in general activity and efficiency of Darkcoin's community).

There's a planned increase of new coins percentage which go to Masternose operators (if in October 2014 it was 20 %, in March 2015 it's 40 %, and by the March 2016, the ratio will be increased up to 60 %). It ensures effective and forecast increase stimulation of unique decentralized Masternode network, and it becomes a reliable base for implementation of all the key functions of the Darkcoin.

Apart from it, increase of Masternode rates (one of each is during the operation “chains” 1000 owner's DRK ) launches inevitable deflation mechanism which leads to increase of the Darkcoin's value. And increase appeals for investments in additional Masternodes that again launches a new round of a perfect chain reaction on increase of the system value. From technological point of view this constant increase of value for your own Masternode launching, makes expensive to attack the networks and helps to put a reliable barrier in front of any efforts to discover anonymous Darkcoin's transactions. All this leads to a new round of involvement in the Darkcoin and widespread use and investment.

Briefly speaking, as a result we've got a perfect self retaining system which is capable to bring itself to new levels and seriously please everyone, including investors. :)

So, attraction to launch your own Masternode encourages big investors personally to participate in this process. It's not difficult from technical point of view and available for any person who's got a computer competence. All the server part support of Masternode can be put trust in other technical specialists. At that, the owner of 1,000 DRK doesn't have to confide in them his moneys not even for a second and has to keep a total control in his local wallet (so his investment isn't in danger of risks).
 
4. Speculative aspect

However not all are inclined to the long-term investment. It's always been so that the traditional volatile market of crypto-currencies draws attention of dozens of stags. There's conventional wisdom: “Why would I need these 20 % ( the last months everything settled down just at this rate) ROI from Masternode, if right now not for a year but for a few days I'll gain the same 20 % on the exchange». It's all about risks. Using Masternode, you barely take any risks. But on the exchange, as you know, one day you pull a fast one on someone the other someone does it on you. For you to get a coin, someone has to lose it. It doesn't ensure your being on the ball.

One would think: “ I wish I had a mega deposit so, I could win the market over. Pump and dump and it's in the bag.” In practical terms it can turn out that your mega-deposit comes across supermega-deposit — keep in mind as in the very cartoon about fishes, where a bigger fish eats a smaller one. I'm not saying that it's not possible to gain on the exchange – I mean that any gain has a corresponding risk level. Be careful with the exchange and keep your hair on.

In speaking of short-term speculation tries in Darkcoin at the moment, it's necessary to take into account a long-term deflationary trend because we'll have to monitor all the upcoming fluctuations. In other words the plain-vanilla schemes “pump and dump” and “dump and pump” will work out but …with some particularities. Peculiarity for 2015 is that it's more than likely possible to make a pump at the small volumes and the following dump at the big ones. But other way around – it's not, in most of cases. It means that everyone wishing to “drive down” a price on DRK and after to put it at the “lower levels” - plays a hazardous game because there aren't enough seats for all.

A price of Darkcoin can get down very slowly and only on the big volumes, on the other hand it can jump off on the small ones. Someone gets lucky to benefit but a lot bigger percent of the speculators will be left without cheap coins. The other analogy is that DRK price go well up on the way : explosive growth — gradual pullbacks - explosive growth - gradual pullbacks. But with every step it's going to get upper and upper. Understanding of this speculative aspect will let long-term investors forecast better a situation and choose optimal points for entering the market.


5. Marketing aspect

If you followed the Darkcoin in 2014, you should have been fascinated with almost completely absence of marketing materials and PR promotions. Major part of other new crypto-currency projects focused their efforts on creation of sites, videos, presentations and participation in conferences. A real project work to be done, has been given a secondary role and all their beautiful and intriguing promises were remained on the “paper” as a rule. Within this framework “modesty” of the Darkcoin could deceive an outside observer in the way that the Darkcoin had nothing to present.

And only those from the “Inside” who followed the project evolution, could estimate a scope of events. Indeed, the results which have been obtained for today can't be kept in the dark. General audience can observe them but in 2014 it was different. For personal ends I was observing a series of tries of some Darkcoin's activists to release their own presentations, videos and so on, but by the time of their readiness, the promo materials needed updating and they became irrelevant due to rabid development speed which pushed the Project much forward.

But now, with a full-rate of start-up options such as DarkSend and InstantX, the Darkcoin takes a form of complete, ready and applicable product which finally can be marketed as an entire and fully functional solution. Of course, the Darkcoin is going to be developed but even now the users can avail of all its key benefits. Apart from development, at last the community planned to pay attention to Marketing aspect.

The first systematic step on its way was the Darkcoin Foundation registration, in terms of which, more active and competent community representatives could push forward the Project worldwide and coordinate join efforts of the Darkcoin's followers in all the aspects, including involvement of a real business in the Project.

The next following step was the opening of the Darkcoin Ambassadors Group (DAG) – group of world-wide volunteers dedicated to educating the general public about the benefits of Darkcoin. Now, there are organized video conferences in which the participants get acquainted, learn, plan and coordinate joint efforts.

Also in the business of the day there are issues on production of professional promo-materials, participation in specialized offline events, development of collaboration with key cryptocurrency players and so on.

Implementation of Darkcoin's marketing opportunities which weren't involved undoubtedly will increase awareness and will provoke interest among the general audience. It will positively impact on investment potential.


Conclusion

Finalizing review of the Darkcoin's advantages I would like to point out again an important moment: in order to become “the best crypto-currency”, it's not enough for the Project to have one cool characteristic or another. To reach success, the Project needs to be the best at all the key characteristics - as Darkcoin does. Besides that, all the aspects have to be perfectly balanced for convenient practical use by end customers.

At the moment, for me Bitcoin looks like stable (as far as it's possible for crypto-currency), but Darkcoin is high-potential. As minimum it deserves to be at the center of your attention and requires the study of the Projects details.

Take care of yourself and your Darkcoins! Good luck!

P.S. This English translation isn’t perfect so everybody feel free to get any parts and ideas from here - and make your own articles and so on. :)


My other articles:
№2 Anonymous payments: DASH or Bitcoin+Mixers?
№3 Dash ("Digital Cash") - Decentralized Startup
 
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Alex if I was new to crypto world after what I've read here I'd start collecting the coin.
Thumb up!
 
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