One of the best use cases for Bitcoin and cryptocurrency is its use as a ‘crisis’ currency. A crisis country with hyperinflation, like Venezuela, has a currency (the Bolivar VEF) that is a ‘softer’ form of money than harder forms of money like fixed supply cryptocurrencies. Gresham’s Law is an economic law that states that bad money (soft) drives out good money (hard). Venezuelans are trying to fight off the hyperinflation with Bitcoin, and more recently, with DASH. DASH is very popular with the Vens. According to Ryan Taylor, the CEO of DASH Core Group (DCG), Venezuela is the #2 market of the number of wallets downloaded and overall adoption. Taylor explained that his partnership with Kripto allows 10,000 Vens a month to get a new phone with a preloaded DASH wallet enabling easy adoption.
Venezuela is a popular topic in cryptocurrency and it’s been popular here, where I wrote my case study about Bitcoin adoption way back in late 2016, and it’s only worse now. Instead of the VEF at 2504 to 1 like it was in 2016, now it’s at 248,000 to 1. This is crippling to the everyday Venezuelan on the street where milk and eggs are now unaffordable.
Dash is a Proof of Work cryptocurrency, like Bitcoin. Many believe PoW cryptos are more secure than Proof of Stake (PoS) cryptocurrencies. DASH incorporates features of both. Their fixed supply is 18 million coins with around 8.2 million issued. Unlike Bitcoin who cuts their block reward in half every 4 years (next in 2020), DASH cuts its block reward by 7.14% each year. But everyone doesn’t love DASH, here is a proposal to change some of the governance rules and demote Taylor, whose DCG the primary development team on the project. This link shows the specs for DASH and here are a couple more features in detail.
Inflation + Petro
The hyperinflation in Venezuela is legendary and projected to hit over 1,000,000% before the end of the year. What’s new is Petro, the centralized Venezuelan currency backed by the country’s oil reserves. Petro is issued by the Maduro government and completely centralized and government controlled. Considering how they manage the VEF, people aren’t optimistic about this digital currency being successful. However, along with the VEF, banks in Venezuela now have to use the Petro as a unit of account.
Petro is a baby step into cryptocurrency/digital currency adoption in Venezuela/ It’s an introduction for those who don’t know or haven’t adopted Bitcoin, yet. Petro will act as a gateway for many Vens into crypto and DASH is a good choice as a medium of exchange for Vens, especially with its privacy features.
Privacy is one of DASH’s principal features. DASH uses anonymization along with the encryption already in the coin to keep your business private. The anonymization is a mixing service whether used in PrivateSend or InstantSend mode.
Self Funded w Masternodes
DASH is a completely self-funded cryptocurrency. Every block produced goes to a 45/45/10 model. Here’s how that breaks down:
- 45% to the miners, who are finding the blocks and creating the encryption just like Bitcoin miners do.
- 45% to the Masternodes, who confirm the transactions (more info on them below)
- 10% to a Treasury for Marketing, Development
A masternode performs specialized transactions. A masternode, like a Bitcoin node, is a computer or server that’s hooked up to the network. DASH has nodes and Masternodes. Masternodes earn 45% of each new block created so there is an incentive to run one. More nodes=more decentralization. However, there is a cost. A masternode costs 1000 DASH to set up. The funds are not locked but when the balance gets below 1000, the masternode stops running. There are currently 3400 masternodes in 22 countries so there is decentralization despite the costs. There are self-hosted, cloud-hosted like Amazon Web Services, and Cloud node services.
DASH issues a new block every 2.5 minutes or 4x faster than Bitcoin’s 10 minutes. This enables more transactions to get confirmed sooner, contributing to its reputation as a medium of exchange. There is an instant send feature called InstantX or InstantSend, allowing you to send your transaction instantly, anonymously.
Another huge advantage for DASH as a medium of exchange even over Bitcoin is the fees. For the last 6 months, as you can see from the chart above, the fees for sending DASH are around 10c per transaction. So DASH is cheap and DASH is fast. When your country has hyperinflation, an unsteady currency, and a not well established digital currency or payments market, you can see why DASH is getting popular.
The 3 main principles of money are that they are a unit of account, medium of exchange, and store of value. Vens still LOVE Bitcoin and are holding it as a store of value against the Bolivar. No cryptocurrency other than the government issued Petro will ever be a unit of account in Venezuela. When it comes to a medium of exchange, for more day to day transactions, business transactions, and private transactions, more and more Venezuelans are turning to DASH. They like the speed, privacy, and low fees. DASH benefits from this growth and so do the Vens who preserve or improve their purchasing power in a hyperinflation environment.