I love Dash and may be back as an investor at some point, but I the last few weeks I have had to sell all my holdings and look to greener pastures. Part of the reason can be seen in this thread here: Dash needs to implement Shadowcash technology and truly be anonymous.
Sorry for this long-winded post, but this post is meant to summarize Dash's benefits, economics, and direction as I see it. I definitely welcome alternative viewpoints.
I may definitely be back if Dash grows and gets on a better path compared to alternatives.
The three killer features of Dash have issues:
1) Governance - This was an important idea and could have been very interesting. However, this governance model is unproven and thus far the results are lacking. It has been little more a grants system. The few large projects done with it have all been failures (PR, website design, ATM integration). More importantly, it does really reflect the community (look at the vote coints in the Shadowcash thread compared to the development direction of Dash).
In reality, it may even be creating negative value for the community. The reason is because it makes people not perform tasks that they would have done for free under different circumstances, but with the governance system they are unwilling to do it unless they are funded and paid. When there is no grants system people volunteer. When there is a grants system no one wants to work unless they are getting a grant. Volunteering while others get paid just feels wrong, psychologically.
As a result of this effect, the malinvestments of existing grants, and the lack of real control of development or direction despite the governance model, I would say thus far the governance system benefits are dubious.
2) Fungibility / anonymity - Dash anonymity is severely flawed. People can just mix bitcoin if they want Dash-level anonymity. For people who want real anonymity they can use Monero, which is already has more network than Dash, or Shadowcash.
This is important because there is no market room for a transparent coin. The reason is because people who want public transactions can already use Fiat money. In fact, using a credit card they have protection in the case of not receiving goods, so there is negative incentive to use a crypto. For people who need to transact in a crypto and who also do not care about priivacy, they already have bitcoin. Bitcoin has far higher market acceptance, ecosystem, network size, and liquidity. So, there is really no need for Dash at all as long as it is a transparent coin.
3) InstantSend - This is a great feature, but other coins essentially have this feature due to lower block confirmation times or they outright have or are adding this feature. Dash has not gained from this feature nor will it because it has failed to gain network size before others implement the feature.
Dash has issues with its economic model:
More importantly, the Dash economic model has issues. Some 60% of all coins are tied up into masternodes. That in and of itself is not an issue. The issue is that these masternodes exist in order to create a return on investment. These owners are, by and large, not actually invested long-term in the coin, but are looking for a quick ROI.
The effect of this means is that there is a feedback loop when there is dash price changes. Let me explain:
When Dash price rises it increases the ROI of running a master node. This encourages investors to buy more and more Dash to create more masternodes, which in turn causes the Dash price to rise due to increased demand and removed supply of coins. This feedback loop will continue driving up the price and locked coin supply until some equilibrium is found and it finally stops. That is how you get 60% of all coins in masternodes.
Is what I described really a bad thing? Not necessarily. However, it creates huge future investor risk and uncertainty because the same feedback loop I described also works when the price goes down, but in the opposite direction.
Let's pretend for whatever reason the price goes down 20% tomorrow. Those shrewd, investment-return-oriented masternode operators are going to see the ROI of their masternodes go down. They will say "I have other investment opporunities that produce higher returns, so time to exit my node". The result will be is they will be breaking down their masternodes, freeing up 1000 Dash at a time, and selling it on the market. Further causing the price to decline creating a feedback loop until some equilibrium is met.
As a result, Dash has risk for large and quite sudden price declines. This can happen seemingly randomly due to market forces or for instance it could be when the block reward (and therefore masternode share reward) gets decreased.
The brilliance in Dash as an investment vehicle was the Master nodes:
The reason why Dash has done well in terms of price was due to Evan's shrewdness in reducing supply. He did this in several ways:
1) He literally reduced the total Dash available from 80 million to 20 million. This benefitted early adopters / miners greatly as it reduced future competition for coins.
2) He created masternodes collateral system to tie up coins and take them out of tradeable supply
3) The brilliance of masternodes versus mining nodes is that the ongoing expenses of mining nodes is much higher. A bitcoin miner will be selling > 95% of its mined coins to cover expenses related to mining. A master nodes on the other hand has much less overhead, so even given the low inflation of Dash this inflation impact is reduced even less because the coins are going to people who are not forced to sell them (which keeps them out of tradeable supply).
These "price tricks" that Evan implemented were good for investors and I liked them. I am not saying they were bad. They were good ideas to earn money for early adopters. #1 was a 1 time benefit though (unless he further convinces the community to reduce it even more). #2 and #3 are ongoing benefits, but their ability to support price has been exhausted in my opinion and the probability of a negative feedback loop starting as previously described is becoming higher.
What about Evolution?
Evolution looks like an interesting concept. However, the development timeline is too far out. Look at how long 12.1 has taken to develop. It is far overdue according to timeline. The official Evolution timeline is about 18 months I believe. If that is the official timeline you have to imagine the actual timeline will be far longer. Let's say 2.5 years.
By that point I am not sure Dash will have any relevancy given the fast paced development of other coins. In addition, what Evolution provides end-users is not really that much different than service providers already provide for Bitcoin. I can already have a wallet in bitcoin that is the same on all my devices (using BP 39 wallet).
Making it easier to use such as paying by username or email versus using real addresses is useful. However, this could be done by central services in bitcoin. Of course decentralized method is better, but in terms of getting adoption I am not sure it matters that much if that aspect of the payment ecosystem is completely decentralized or not. Certainly not enough to have a stagnating coin for 2.5 years while it gets developed.
As a result, I want to see Evolution have more meat to it and I might re-invest when evolution has more meat to it. Btw, the evolution white people still has left the area blank that addresses better privacy / fungibility / anonymity. That is concerning.
Sorry for this long-winded post, but this post is meant to summarize Dash's benefits, economics, and direction as I see it. I definitely welcome alternative viewpoints.
I may definitely be back if Dash grows and gets on a better path compared to alternatives.
The three killer features of Dash have issues:
1) Governance - This was an important idea and could have been very interesting. However, this governance model is unproven and thus far the results are lacking. It has been little more a grants system. The few large projects done with it have all been failures (PR, website design, ATM integration). More importantly, it does really reflect the community (look at the vote coints in the Shadowcash thread compared to the development direction of Dash).
In reality, it may even be creating negative value for the community. The reason is because it makes people not perform tasks that they would have done for free under different circumstances, but with the governance system they are unwilling to do it unless they are funded and paid. When there is no grants system people volunteer. When there is a grants system no one wants to work unless they are getting a grant. Volunteering while others get paid just feels wrong, psychologically.
As a result of this effect, the malinvestments of existing grants, and the lack of real control of development or direction despite the governance model, I would say thus far the governance system benefits are dubious.
2) Fungibility / anonymity - Dash anonymity is severely flawed. People can just mix bitcoin if they want Dash-level anonymity. For people who want real anonymity they can use Monero, which is already has more network than Dash, or Shadowcash.
This is important because there is no market room for a transparent coin. The reason is because people who want public transactions can already use Fiat money. In fact, using a credit card they have protection in the case of not receiving goods, so there is negative incentive to use a crypto. For people who need to transact in a crypto and who also do not care about priivacy, they already have bitcoin. Bitcoin has far higher market acceptance, ecosystem, network size, and liquidity. So, there is really no need for Dash at all as long as it is a transparent coin.
3) InstantSend - This is a great feature, but other coins essentially have this feature due to lower block confirmation times or they outright have or are adding this feature. Dash has not gained from this feature nor will it because it has failed to gain network size before others implement the feature.
Dash has issues with its economic model:
More importantly, the Dash economic model has issues. Some 60% of all coins are tied up into masternodes. That in and of itself is not an issue. The issue is that these masternodes exist in order to create a return on investment. These owners are, by and large, not actually invested long-term in the coin, but are looking for a quick ROI.
The effect of this means is that there is a feedback loop when there is dash price changes. Let me explain:
When Dash price rises it increases the ROI of running a master node. This encourages investors to buy more and more Dash to create more masternodes, which in turn causes the Dash price to rise due to increased demand and removed supply of coins. This feedback loop will continue driving up the price and locked coin supply until some equilibrium is found and it finally stops. That is how you get 60% of all coins in masternodes.
Is what I described really a bad thing? Not necessarily. However, it creates huge future investor risk and uncertainty because the same feedback loop I described also works when the price goes down, but in the opposite direction.
Let's pretend for whatever reason the price goes down 20% tomorrow. Those shrewd, investment-return-oriented masternode operators are going to see the ROI of their masternodes go down. They will say "I have other investment opporunities that produce higher returns, so time to exit my node". The result will be is they will be breaking down their masternodes, freeing up 1000 Dash at a time, and selling it on the market. Further causing the price to decline creating a feedback loop until some equilibrium is met.
As a result, Dash has risk for large and quite sudden price declines. This can happen seemingly randomly due to market forces or for instance it could be when the block reward (and therefore masternode share reward) gets decreased.
The brilliance in Dash as an investment vehicle was the Master nodes:
The reason why Dash has done well in terms of price was due to Evan's shrewdness in reducing supply. He did this in several ways:
1) He literally reduced the total Dash available from 80 million to 20 million. This benefitted early adopters / miners greatly as it reduced future competition for coins.
2) He created masternodes collateral system to tie up coins and take them out of tradeable supply
3) The brilliance of masternodes versus mining nodes is that the ongoing expenses of mining nodes is much higher. A bitcoin miner will be selling > 95% of its mined coins to cover expenses related to mining. A master nodes on the other hand has much less overhead, so even given the low inflation of Dash this inflation impact is reduced even less because the coins are going to people who are not forced to sell them (which keeps them out of tradeable supply).
These "price tricks" that Evan implemented were good for investors and I liked them. I am not saying they were bad. They were good ideas to earn money for early adopters. #1 was a 1 time benefit though (unless he further convinces the community to reduce it even more). #2 and #3 are ongoing benefits, but their ability to support price has been exhausted in my opinion and the probability of a negative feedback loop starting as previously described is becoming higher.
What about Evolution?
Evolution looks like an interesting concept. However, the development timeline is too far out. Look at how long 12.1 has taken to develop. It is far overdue according to timeline. The official Evolution timeline is about 18 months I believe. If that is the official timeline you have to imagine the actual timeline will be far longer. Let's say 2.5 years.
By that point I am not sure Dash will have any relevancy given the fast paced development of other coins. In addition, what Evolution provides end-users is not really that much different than service providers already provide for Bitcoin. I can already have a wallet in bitcoin that is the same on all my devices (using BP 39 wallet).
Making it easier to use such as paying by username or email versus using real addresses is useful. However, this could be done by central services in bitcoin. Of course decentralized method is better, but in terms of getting adoption I am not sure it matters that much if that aspect of the payment ecosystem is completely decentralized or not. Certainly not enough to have a stagnating coin for 2.5 years while it gets developed.
As a result, I want to see Evolution have more meat to it and I might re-invest when evolution has more meat to it. Btw, the evolution white people still has left the area blank that addresses better privacy / fungibility / anonymity. That is concerning.
