One coin to rule them all? A concern regarding Dash/BTC pair

[Carlh]

Hi! A friend of mine started investing some in Dash after my recommendation. Today he asked me a good question.

"What happens if Bitcoin drops to one third of it's current value? Won't that basically drop all other coins to similar lows, as most of the currencies are measured as a pair to the BTC? Or that it have to be transferred with BTC to for example Coinbase for withdrawal? Could this become a problem?"

The close ties of Dash/Bitcoin pair are a bit troublesome. I'm sure you have some good answers here that can ease my worries for a Bitcoin hard fork and tumble I'm in Dash for the long run, but I'm still very curious. What WOULD happen if people start running away from Bitcoins?

 

[akhavr]

That's why dash business team is focused on getting more fiat-dash exchanges.

 

[jimbursch]

What WOULD happen if people start running away from Bitcoins?

Depends on the reason people are "running away from Bitcoins." If people are exiting BTC because they don't find it useful (e.g. long confirmation time), they my run to Dash because it is useful (e.g. short confirmation time). If they are running away because of some sort of bug in the BTC code, they may exit cryptocurrencies altogether.

If there is a speculative panic in BTC, meaning that people are exiting BTC for no other reason than the price is going down, then it could go either way for the price of Dash. There could be a panic rush out of BTC and into Dash, or the panic in BTC could also cause a speculative panic in Dash.

That's the thing about panic; you have no idea in what direction people will run -- they may run in all directions.

 

[Carlh]

Depends on the reason people are "running away from Bitcoins." If people are exiting BTC because they don't find it useful (e.g. long confirmation time), they my run to Dash because it is useful (e.g. short confirmation time). If they are running away because of some sort of bug in the BTC code, they may exit cryptocurrencies altogether.

If there is a speculative panic in BTC, meaning that people are exiting BTC for no other reason than the price is going down, then it could go either way for the price of Dash. There could be a panic rush out of BTC and into Dash, or the panic in BTC could also cause a speculative panic in Dash.

That's the thing about panic; you have no idea in what direction people will run -- they may run in all directions.

Yes. You're right, jim. It all depends on what's the cause. Either running away from Bitcoin and probably to other alternative coins (probably towards the most popular ones), or away from the whole currency market. Only time will tell.

What I'm thinking of currently are the way Dash value are measured. Mostly it's tied to BTC. So, if Bitcoin were to do a hard fork to 2-3 coins, BTC would probably fall substantially. Not that I am or will likely be, but what if I had to sell at that exact point? It would loose a lot of value as well.

What needs to be done for it to not being tied to BTC? Is it enough with one exchange pricing it to USD? Probably not. It would likeley have to follow the pricing that other does in BTC. Does the majority of volume have to go through such an exchange to have an impact? Are there a number of exchanges needed with a Dash/USD pair needed for Dash to stand on it's own feets so to speak?

And how do we get to that point? Dash need to gain so much popularity that services will offer to trade directly in Dash with USD? Or is this more of a job the Dash team needs to do? To promote their currency and to convince exchanges to trade in a DASH/FIAT pair?

I'm pretty new to this. So, I'm kind of clueless. It would be good to know some more about a possible road map or strategy before I start preaching Dash to everyone

 

[jimbursch]

I think you are catching on -- for the most part, the answers you gave to your own questions look right to me.

but what if I had to sell at that exact point?

It's always a bummer to "have to sell" an asset at a low point. It's up to you to plan accordingly. Can you afford to ride out the low points? If not, then maybe you need to change your investment strategy.

Are there a number of exchanges needed with a Dash/USD pair needed for Dash to stand on it's own feets so to speak?

You really only need one exchange offering Dash/USD pair to get a price independent of BTC. Arbitrage traders will make sure the BTC/Dash/USD price is in sync, because out-of-sync is a profit opportunity, assuming of course there is adequate liquidity at the exchange. More exchanges, more liquidity, more better.

Personally, I don't preach Dash, Bitcoin, or any cryptocurrency. I find it useful as a medium of exchange. I have my own project that is currently denominated in Bitcoin, and I am seriously thinking of switching to Dash.

I'm not an expert, so caveat emptor.

 

[Carlh]

Yes. I suspect that I have the rough idea of how it would go down. It's kind of a predicament being tied to other coins at all. Be it fiat or digital currency. The latter being pretty unstable, and the fiat to be inflated, pumped and dumped at will of the governments.
It would be nice(r) to be more tied to a fiat currency like the dollar for now though. Even though I do not have my complete faith in that one in the long run either. As Bitcoin is such a high target for investors and speculators, it will most likely be volatile for a while longer. Same goes for all other digital currency. Let's hope dash can do something about that. Bringing usability, simplicity and security to a broader market.

I'm a bit nervous of the value of other currencies being pulled down in case of a crisis with Bitcoin. I think we'll just have to hope for the best and to root for Bitcoin as well. There's certainly space for more than one.