The Ethereum co-founder, Vitalik Buterin, came up with seven difficult and reflective questions for the cryptocurrency community to examine its progress and path forward.
The questions were posited in a WeChat group, Mars Finance, and are listed below
- “Bitmain and affiliated pools now have ~53% of all bitcoin hashpower. Isn’t this a really big problem?”
- “Why aren’t there any useful large-scale applications yet?”
- “Why are there not yet good solutions to account security? When will the problem of account hacks and thefts be solved?”
- “How can decentralized apps work well even with 5-10 second blockchain latency?”
- “PoW is burning billions of dollars per year, even more than all scams and thefts combined. Isn’t this a big tragedy?”
- “What are the centralization risks in proof of stake?”
- “Given how EOS governance has turned into an epic fail, doesn’t this mean that all on-chain governance including DAOs is fundamentally flawed? How can any DAO deal with bribe attacks, plutocrats and other risks?”
Members of the chat group responded to his questions with some highlighting the importance of the questions and proposing solutions, while others disagreed. One user pointed out related details such as the fact that the “[i]nternet is also burning many dollars, it is all about benefit and cost,” in reference to Vitalik’s question about Proof of Work using a lot of energy and money.
Overall, Vitalik draws attention to important subjects within the cryptocurrency space in order to continue a sustainable path of innovation. This further adds to Vitalik’s previously statements, when cryptocurrency prices were at all-time highs, that he “will leave” the community “[i]f all that we accomplish is lambo memes and immature puns about ‘sharting'”. He wants to focus on actual innovation to benefit the overall cryptocurrency community and the larger population.
Innovation occurs through cooperation
Vitalik’s constructive criticism highlights the fact that the cryptocurrency community is still very young and still innovating through difficult problems. As is a fact with any new sector, there has to be trail and error by many entrepreneurs to discover what does and does not work, but a cooperative environment speeds up that testing. A cooperative environment allows for knowledge spillovers, which has led to numerous innovations and economic prosperity over the last couple centuries. Previously, knowledge spillovers were limited to individuals located within close physical proximity, but the internet and the online nature of cryptocurrencies have allowed these knowledge spillovers to occur between many more individuals located around the world.
Vitalik, with his questions, is pushing the community to discover better ways to keep cryptocurrencies true to their original goals of being a peer-to-peer digital currency to help people achieve financial and monetary freedom. Vitalik’s questions solicits thoughts about how centralization of mining power, lack of mainstream applications, energy use, poor governance, and more has impeded cryptocurrencies from reaching those goals. A good example is the Bitcoin scaling debate that caused the Bitcoin and Bitcoin Cash fork, which does allow consumers more options, but however, did fracture a community and thus will slow down future knowledge spillovers between the great minds in each space.
Nevertheless, each part of the cryptocurrency sector is continuing to innovate with a plethora of new hypotheses, technologies, and integrations emerging everyday. However, based on economic theory of knowledge spillovers, communities that are cooperative and share information have a higher likelihood of success.
Dash uses a successful DAO to incentivize cooperation
Dash has been able to leverage its unique Decentralized Autonomous Organization (DAO) structure to not only govern itself, but to also encourage cooperation and innovation in a decentralized manner. Contrary to what Vitalik questions, Dash has found a way to successfully implement a DAO that governs Dash in the best interests of its users. The Dash DAO has been able to leverage its treasury to professionally pay developers, community outreach specialists, and entrepreneurs. Paid developers are better able to service Dash’s code so it can consistently innovate and maintain low transaction fees, fast confirmation times, and security. Paid community outreach specialists are better able to educate the public about Dash and how to use Dash so it lowers the switching costs from fiat currencies. Paid entrepreneurs are better able to create new partnerships and integrations with Dash to give consumers more real-world applications.
The features mentioned above have been possible because of the incentives that the Dash DAO utilizes in its structure. Individuals compete for treasury funding, but community members very often provide help to each other to better their own positions, as seen on the many Dash discussion pages. Treasury funding proposals are voted on by Masternodes, whom have staked 1000 Dash, and are thus incentivized to vote for proposals likely to help the overall community and network. Dash has structured its DAO to ensure that the best way an individual can improve their financial situation is to positively help other community members, which makes Dash a very cooperative community that is well positioned for future innovation.