The Future of Finance and the Continuation of an Interest Based System

In a world where central banks lower interest rates into negative territory and the war on cash begins to escalate, one might ask - what is the solution? The solution to some may be precious metals, to others it may be bitcoin but to me the real solution is dash.

Dash (Digital Cash) is a privacy-centric digital currency with instant transactions, which unlike bitcoin make it perfectly fungible and great for retail use. It is based on the Bitcoin software, however it has developed a two tier network that improves upon the Bitcoin design. This second tier is where the magic begins to happen, so follow along.

With Bitcoin, the block reward is completely dedicated to the miners (first tier), however Dash has found a solution that trumps this by rewarding 45% of the block reward to the miners (first tier), 45% to Masternode operaters (second tier) and 10% to budget proposals. Through the distribution of the block reward, Dash avoids the problem that bitcoin is currently struggling with which is the ongoing full node decline. This is happening due to Bitcoins full nodes being charity based rather than incentivised, as Bitcoins full nodes become more expensive to run, volunteers remove their nodes from the network. By incentivising Masternodes (fullnodes with collateral), Dash turns Bitcoins problem of an ever decling full node count into an ever increasing full node count. One might now ask - What is a Masternode and how do I get in on that 45% of the block reward? We will get to that now.

A Masternode can be thought of as a computer that runs a dash wallet. This computer and wallet make decisions, such as locking transactions with InstantX (instant transaction protocol), coordinating mixing of coins (PrivacyProtect protocol), and voting on budget funding. Masternodes are required to have 1000 Dash collateral, a dedicated IP address, and be able to run 24 hours a day without a more than a 1 hr connection loss. Masternodes get paid 45% of the block reward on every block, this is distributed to masternodes one at a time.  Typically, around 2 dash is paid to each masternode every 7 days.

Now I know what you are probably thinking, 1000 Dash - that is over $6000, how could I ever afford to get in on this 45% cut of the block reward? The answer to this question is one that can be found by looking right next door - Bitcoin. Bitcoin mining was once something that everyone could do, it was cheap to set up and life was good, however 2013 changed everything. Mining became expensive and only people with large amounts of money could set up the mining rigs required to get a portion of the block reward. For the average person, the solution to this problem was not to find more money to compete, it was cloud mining. In late 2013 we saw cloud mining companies popping up everywhere and suddenly people were once again able to jump in on the mining game. Although you no longer directly owned the miners, you could still be apart of the mining industry (first tier). Jump forward to 2016 with Dash - for the average person, the price of participating in the masternode network is slowly becoming out of reach, just as mining did in 2013 with bitcoin. However just like bitcoin mining, there is a solution, welcome to the beginning of Masternode Cloud services. Masternode Cloud services are the equivalent to a Cloud Mining service, they operate by combining peoples resources or in this case dash to cumulatively meet the requirements of the Masternode network and then pay out individuals dependent on their contribution. Already we are seeing services such as “Splawiks shared Masternode Hosting Service” sprout up and soon I believe there will be many more, but they won’t be called Masternode Cloud services. Here is why…

The next generation of Masternode Cloud Services will be run by Online Wallet Providers, Casino’s, Exchanges and anyone that owns a centralised service where people hold their Dash. The way they will do this is by figuring out the amount that may be requested to be withdrawn on average and then ensure that they have an adequate amount of reserves to meet withdrawal amounts at any one given time. Once they have figured out how much dash they need to have in their hot wallet they can set aside the rest of the dash and use it to set up Masternodes, paying out over 11% per year. Below I will list a few examples of these next generation Masternode Cloud Services and how these new business models can revolutionise finance.

An Online Wallet Provider running a Masternode cloud service on their backend will allow them to provide interest to their users, just like a bank would (or used to). Coinbase once said this would be a bitcoin killer app, if someone could figure it out (you can find the post here). Already we have seen interested Debit Card providers begin to mix and mingle with the community and explore the options of what kind of business model they can pursue by utilising Dash (here and here). So I don’t think it will be long until someone realises that the next Coinbase is ready to be built and one that offers interest payments to its users, now thats killer.

If a Casino was to use this model it would allow them to either use the money made from the masternodes to reduce fees and margins for the users, or they instead could use the money to further prop up the jackpot payouts. Either of these methods would give them a large competitive advantage over their competitors.

By utilising this model, Exchanges will have the opportunity to find a revenue stream which is not fee based. I have delved into the idea of exchanges offering interest to their dash holders, but the model may become a little more complex when traders begin to trade their dash. None the less, what Exchange wouldn’t want a Dash market if they can tap into another revenue stream?

With such services coming onto the market in conjunction with the demise of interest rates provided by the banking sector, I believe we are about to see a mass transfer of wealth from the traditional banking system and Bitcoin for that matter, into the future of finance - Dash.

So before you begin to worry about accumulating the 1000 Dash required to start a Masternode, remember that 1000 Dash isn’t needed, patience is. The next generation of Online Wallet Providers and Casinos will be right around the corner and you too will be able to earn interest and explore other benefits of such a system without having 1000 Dash.