You may or may not have heard about the cryptocurrency called DasCoin. If not, you will soon. While it is one of the newer players in this space, it is going to take the world by storm. It will be the new sheriff in town.
If you haven’t heard about DasCoin, you probably have heard about Bitcoin. Bitcoin is a cryptocurrency meant to bring down the power base of governments’ control over money. While Bitcoin did a great job towards this end, it is not without its problems. The fully decentralized nature of this cryptocurrency has led the way for money laundering on a large scale, among other problems.
Problems with Bitcoin
The Bitcoin infrastructure is a decentralized architecture. This is a fancy way of saying there is no one person or group who controls it. Contrast this to a fiat currency of governments. Each government body via their central bank sets the rules for the currency of its respective government and its citizens. When there are improprieties within the system, the government tries to step in and enforce the rules. In the banking world, there is a concept known as Know Your Customer (KYC). Essentially, this requires bankers to get to know their clients so that when certain transactions seem out of place, the bankers should question them. This helps to catch any inappropriate activity early on. The banks are required to alert these activities to the central bank or the government.
Bitcoin has no KYC. This means there is a black hole of sorts in the architecture. While it was set up in this manner by design, the tradeoff is no governing body can step in and police the actions of its participants. Money laundering via the Dark Web has proliferated due to this.
Bitcoins mining practices have come under fire of late. The mining is done by individuals who can solve mathematical equations. Each time an equation is solved, bitcoins are mined and given to the programmer responsible for solving the equations. Each time an equation is solved, the next equation becomes a bit more complicated to solve. In the early days, anyone with a standard PC or Mac could solve these equations.
Due to the growing complexity, mining currently requires high-end computing with building-sized rooms to solve. This requirement has led developers to pool together. While on the surface, this may seem both logical and practical, it has led the Bitcoin community to suspect collusion among developers. Once this collusion occurs, it eliminates the advantage of a decentralized architecture. The collusion has no one to police it, making it somewhat worse than fiat currencies.
Contrary to what many bloggers and media outlets claim, bitcoin is not universally accepted. While the number of establishments accepting bitcoin is growing, it is not growing quick enough to become the ubiquitous replacement of fiat currencies. It does have the advantage of being the early adopter of the concept. However, due to the decentralized architecture, there is no group making a push to gain worldwide acceptance. Any establishment that signs on to accept bitcoin does so without suggestion from a sales force or group wishing to spread the concept.
Should We Revert to a Gold Standard?
Several countries were on a gold standard. This means that each dollar printed had to be backed by a certain amount of physical gold. This was certainly an improvement from earlier periods where gold coins were minted as a currency. These coins were prohibitively heavy which made transporting problematic.
Pegging paper-based currencies to gold took away the need to lug around carts of gold to make big purchases. However, these paper currencies were still on the gold standard. This prevented governments from frivolous spending with little regard for the consequences. In other words, they needed to be accountable for their spending.
One downside to a gold standard is there is a finite supply of gold in the world. While that may seem ideal to curb government spending, it suffers as populations grow and the needs of the government to serve these populations get squeezed.
The biggest problem with not having a system such as the gold standard is that governments can print money like it’s going out of style. This action debases the currency and decreases the purchasing power of citizens. This concept is inflationary and is one of the main reasons cryptocurrencies are proliferating.
Another subtle ramification of inflation is that it benefits debtors. The value of the loans is repaid with inflated dollars. In the modern world, most governments are huge debtors. For them, inflation is a godsend.
The creators of DasCoin took all of the above factors into consideration when they developed their cryptocurrency. The infrastructure of DasCoin is what is considered a hybrid. The blockchain is a combination of decentralized and permissioned. Essentially, this means that the users of the system still have the benefits of decentralization. However, those users must be given permission to use the system in the first place. This permission-based system is done through a central body, and allowable actions are codified into the system.
This centralized approach allows DasCoin to satisfy KYC, which means governments are more likely to support the concept. When you gain government support, you can use that benefit for enforcement should the need arise. The governments are also less likely to pass laws that will adversely affect the DasCoin movement.
DasCoin has a large financial backing, and it is happening on a global scale. The creators are setting up the system to be accepted by millions of establishments right from the start. This acceptance removes the chicken-vs-egg problem that plagues other cryptocurrencies, i.e., vendors won’t adopt the currency unless they have enough consumers on board. Consumers won’t adopt the currency if there are no vendors. Having millions of vendors from the beginning will help consumers make up their minds faster.
The design of DasCoin will not allow for it to mint unlimited currency. It will end after minting a predefined amount of it. This helps to keep inflation of the currency in check.
DasCoin supports a referral system which serves to spread the word about DasCoin. Referral or affiliate systems are a great way to get others to do the selling of your product or service. It is low cost, too. The referrers spend money to drive traffic to the website of participating vendors. Vendors give up a percentage of sales in exchange for the potential customers. New customers can participate in the referral system, which can help DasCoin expand its reach.
It’s not likely that DasCoin will replace other cryptocurrencies or even fiat currencies. In fact, it will accept both as payment with other currencies planned for the future. However, the current plan is for it to be the new sheriff in town in the cryptocurrency world, and DasCoin management is on track for this to happen soon.