Ryan Taylor, CEO of the Dash Core team, believes that instant cryptocurrency confirmations, such as those provided by Dash’s InstantSend and ChainLocks, can help solve the persistent issue of market volatility as expressed on a recent episode of the Abra Money 3.0 podcast.
In a recent interview with Abra founder and CEO Bill Barhydt on the Abra Money 3.0 podcast, Taylor elaborated on the issue of market volatility, which affects Dash more significantly than Bitcoin due to its smaller market capitalization, saying that he believes that instantly-confirmed transactions can balance out the issue of volatility:
“The volatility issue is real. It’s even more real for a smaller cryptocurrency like Dash, which has about 25% higher volatility than Bitcoin does. One of the advantages that Dash has is its speed, however, because volatility over time can be reduced if the time itself is compressed. When we have exchanges that honor InstantSend transactions, or honor one confirmation, it can allow them to only take cryptocurrency fluctuation risk for a period of a couple of minutes. Over the course of an hour, the price of Bitcoin or any of these assets can change dramatically. Over the course of two minutes, not so much. One of the answers we have to the volatility issue is if you’re really just getting in and getting back out, Dash’s speed offers advantages.”
Dash’s InstantSend functionality locks in transactions immediately, taking an average of under two seconds to effectively finalize a payment, which has been implemented as the default for all transactions since April. Dash additionally activated ChainLocks in July, locking in blocks as permanent immediately. These two functionalities drastically increase the security and trustworthiness of Dash transactions, both immediately and after the first confirmation in a block (roughly after 2.5 minutes).
Cryptocurrency has struggled as both a medium of exchange and a store of value due due to its present high market volatility. Both volatility statistics and opinions by key analyst concur that Bitcoin may not make a good store of value at this stage of its development as an asset. Cryptocurrencies with lower market valuations can typically expect this to be the case to an even greater degree.
The hurdle of onboarding exchanges to recognize Dash’s instant transaction technology.
Despite the significant advantages Dash offers in combating market volatility through fast transactions, Taylor sees a current issue in not enough exchanges and similar services recognizing, and therefore benefiting from, its features:
“Now that’s dependent on the exchanges themselves supporting these features. They don’t all support it. Some of them are still in the mentality of “you need six confirmations” regardless of your security model. And so we have to go out and educate the exchanges, answer questions about different scenarios: “What happens if I don’t see a ChainLock?” “What happens if I don’t see the InstantSend lock?” “How do I manage risk in certain edge cases?”
Regardless of technical hurdles to be overcome beforehand, Taylor nonetheless sees the advantages of instant confirmations in combating volatility as attractive enough to entire more and more exchanges to provide explicit support:
“We have to go out and educate them on how to accept these, how to recognize the InstantSend locks and so on, and recognize the benefits to them. Exchanges that honor InstantSend, it’s probably obvious, see higher volumes. They see higher trading volumes.”
At time of writing, the full list of exchanges and brokers on Dash.org shows 20 exchanges supporting InstantSend deposits, with others such as Coinbase recognizing Dash significantly faster than other cryptocurrencies due to ChainLocks after just two confirmations, or about five minutes’ time.