You don’t have to hear it from me to know that cryptocurrency is exploding. Over the past month, over $100 billion has flowed into the space, passing the quarter trillion mark. Notably, this has all happened with Bitcoin only maintaining around half of the market, meaning the space as a whole is growing at an incredible pace. However, through all the price surge mania and jubilation, there’s something that most casual observers have missed, a success metric that can make all the difference, yet is rarely talked about.
The crypto surge makes it easy to get distracted from its true purpose
The sharp rise in valuation across the whole crypto field has been impressive, and has made a lot of people happy. That, however, could turn out to be an issue. In a free market system, profits come as a result of performance, incentivizing products that fulfill the needs of consumers. Right now, much of this increase is irrespective of results, even irrespective of particular coin. The market is rewarding cryptocurrency for being cryptocurrency, and this acknowledgement of the greatest technology of our time coming to fruiting ends up dragging a lot of questionable projects along for the happy ride.
What are practical use metrics?
This is the big blind spot in any price mania: is the increase truly reflective of an increase in use? Several metrics point to a growing global user base, including Coinbase’s 13 million users, however that leaves out part of the story: sure, this means millions more people are likely to own Bitcoin, Ethereum, and Litecoin, but does this translate to more purchases and payments for services with Litecoin and Bitcoin, and more average folks using Ethereum to fuel smart contracts? If so, is it keeping pace with the price mania? With Dash there’s a relevant metric of 500 and growing Dash-accepting businesses worldwide, as well as BitCart.io’s monthly sales numbers, but even that still leaves a large gap in commercial use statistics.
The $4.2 million elephant in the room
In terms of measuring the viability of a project, market cap is deceptive, since it only indicates the market rate for a unit of the coin multiplied by the purported circulating supply. This could be a vibrant and well-run project with hordes of users eager to promote it, or it could be a barely-run coin that sees use from thousands of speculators who have zero interest in development the infrastructure or long-term viability of the project. Number of contributors is a good stat, but that can also be misleading, as a team can sign up hundreds of volunteers and still make very little progress. There’s one metric that’s harder to fake: recurring operating budget. How much money is consistently available to hire developers, buy sponsorships, and any other task necessary to grow the coin, beyond a simple initial dump of money generated by an ICO? Most people in the cryptosphere seem oblivious to the fact that Dash’s monthly recurring budget is a whopping $4.2 million and growing. This number grows every time the price increases, and can be used to fund development, news (like this publication), integrations, conferences, sponsorships, anything else that’s deemed valuable to the network. By contrast, Bitcoin Cash has amassed over $85,000 for a marketing budget, which is impressive considering it’s by donation. Dash, however, has a recurring 10% of the block reward set aside to grow the coin, and this number has grown to be truly massive.
Before long, the dominance factor will be overbearing
It’s easy to get bogged down in the crypto news hype cycle or watch the market cap rankings all day long, and forget about the implications of that $4.2 million number. Back in August, Dash sponsored the Great American Pilgrimage, a show by Stephen Baldwin and Max Keiser, to the tune of $500,000, at that time a significant portion of Dash’s budget. This month, the budget can shoulder eight proposals of that cost, and still have over double Bitcoin Cash’s marketing budget left over. The network is still in key growth stages figuring out what to do with all this money, as well as tweaking accountability mechanisms, but that raw funding power is still there. What won’t be possible in the near future?
There are many metrics of a project’s success, and to keep up with every single cryptocurrency intimately is a daunting task. Instead, I would encourage you to simply follow the Dash Vote Tracker, which keeps track of Dash’s monthly budget as well as every project the network is considering funding. You will be in for a wild show in 2018.