Sunday,26 May 2024

Dash’s Taylor: “Despite their volatility, cryptocurrencies offer real value”

5 min read

Interviewed By The Asian Banker Live

Ryan Taylor, chief executive officer, Dash, discusses the position of the company in the industry today, its differences to other crypto currencies, and its future plans.

Yeah. Well, as you know I think that there’s a lot of challenges with cross-border payments. There are so many different payment channels, corridors, and so many different ways of facilitating payments that have advantages and disadvantages. What Dash brings to the table, Dash is a digital currency similar to bitcoin, but we offer a number of improvements over bitcoin both in terms of how we function as an organisation and also the attributes of our currency. In terms of, some of the systemic issues of bitcoin and a lot of the early digital currencies, they really face a major government’s issue; it’s really difficult apparently for those networks to come to a consensus and a decision around key attributes of the way that their currency is supposed to work. There is also an issue with funding; most of these are dependent on donations from folks that would do the development or host some of the infrastructure and servers that host these networks and that doesn’t work very well, it tends to be short of resources for that and also, there is an issue with the usability around these currencies and so were addressing all of those issues. We’ve introduced the first explicit government’s model, we basically have a voting mechanism on the network so that network simply votes to make changes. In terms of self-funding, a portion of the transaction fees on our network and a portion of the new coins that are created they’re called the “block reward” are set aside for all these other functions that are needed besides securing transactions. Developers, business development, marketing, legal work, all of the things that you need to operate much more like a business. And so, at this point our self-funding is generating about $25,000,000 a year that is going into the development of our own ecosystem. We are able to help businesses that are looking to integrate Dash, offset their cost and actually help them grow their top line by co-investing in marketing with them or helping them to develop a new product.

So, we’re very unique structure. The Dash network itself hires or allocates a portion of its funding to my organisation which is called Dash Core Group Inc.  - essentially access the business arm for this decentralised network and so we give a business voice to the network and represent the network in business dealings. So, we developed a software that people download and run; we developed a marketing campaign, we go out and sign-up with businesses to integrate with the network and really act in the network’s behalf; and all of our funding comes from the network so our revenue if you will, it comes from the network.

So, anyone is free to join the Dash Network just like anyone is free to join the bitcoin network. All you have to do ---

Yes. All you have to do is download the software and you have an integration into the network. The main differences with Dash is you can actually participate as an owner of the network itself. The way that works is, if you purchase one thousand Dash and can prove ownership over one thousand Dash you essentially become a shareholder; we call them “master note owners” and it enables you to upgrade your server or your instance of the software from a regular one to a master note; and it gives you several rights and privileges, you get to vote on the proposals that are put forward to the network, you get a portion of the network fees and a reward so you essentially act like a shareholder and the more shares you have, the more voice you have in the decisions being made.”

Yeah. So, Dash is really borderless; it allows any user to facilitate transactions instantly around the globe and so it’s really unique in that transactions occur in about one to two seconds and so it’s actually viable at the point-of-sale even where other digital currencies are not.

Correct and there are plenty of different points at which you can get in and out of your local currency; so, there are brokers on our network, there are exchanges where you can facilitate and exchange to US dollars or to yen. There’s some of around 15 different currencies that you can get in and out of as well as just keeping the Dash as a store of value and using it later to transact.

Yeah, so, last quarter we facilitated nearly $15 billion in transaction volumes; $14.9 to be precise

And we’re growing quite rapidly. Our year on year growth rate at this point is in the quadruple digits, we’ve outgrown the bitcoin network as well as the rest of the digital currency market every single year since we were founded in January of 2014 and this year has really been a landmark year. And at this point, we are producing so much excess in terms of transaction fees and block rewards that are going towards the development of our own ecosystem that we really – It’s a network effect that’s growing on itself, snowballing and were seeing record investments into our network right now in terms of new capabilities.

So, on money laundering side, similar to other digital currencies, the points at which you get in and out of the currency and into your local currency is typically the entities that are going to be subjected to KYC and AML requirements and they are going to have to have closed programs where integrated with a service called “coin firm” that provides analysis of our block chain and helps determine whether or not a particular transaction is risky for those entities or not. And in terms of, for users, I know that this is a big concern with all of the initial coin offerings that are going on in the world of digital currency—

They banned it outright. And so, I think that we fail the – What’s called the “Howey Test”. This is the SCC’s task to determine whether or not an asset is in fact a security. We failed three of those tests. At no point does anyone in the Dash network actually selling Dash to collect money for a pool of investments. In fact, all Dash that’s in existence today was created as compensation for some service to the network whether that the minors that were securing transactions to the network or master note owners that were facilitating the services that they provide to the network and the infrastructure that they provide to the network or even the Dash core team. We received newly minted coins, if those are authorised by the network in order to pay for the services that we provide to the network in terms of software development, business development, and conferences like this one that will ultimately benefit the network.

Yes, so, similar with bitcoin we started out where you could mine it with your computer. At this point, it is open source and anyone is free to mine it. At this point you really need specialised equipment in order to mine it efficiently otherwise the cost of the electricity will exceed whatever you happened to mine, it’s at the point where you need that specialty hardware. As the network grew people began to make investments in making that equipment much more efficient. And so, at this point it would be pretty hard to mine it on your own computer.

Exactly, specialised equipment designed especially for that task. So, you do fund raising by issuing a Dash to the network, something like ICO. We never had an ICO, and we will not have one. The protocol, just like bitcoin authorises the creation of certain number of coins, over certain period of time. In the case of bitcoin, it’s twenty-one million but by the time all coins are created in the case of Dash, its eighteen million. Yeah, so there’s a maximum number of coins, and in order for those to be created, it has to be authorised by the network and so… Every month there’s a budget cycle, we apply for funding; and if we’re doing a good job the network will continue to fund our operations. If we do a poor job the network itself can cut off our funding and provide it to a different team that would do better.

The value of a Dash is about $280 right now.

Since the beginning of the year a Dash it was $11 dollars. The beginning of the year before, I believe, it was at $7, sorry $3.

No, we exceeded the growth of bitcoin for four straight years, by at least double.

there are particular payment corridors where it makes more sense than others where there are owners requirement is to facilitate the transaction or you need government approval, and bring that to the bank and get authorisation three weeks later. For owner’s regulation like that, can actually make transacting internationally much more seamless for a lot of businesses. We’ve seen a lot of used cases where… yes so for I think Bolivia is like that, in order to get a license to be able to send in an international wire, you need business contracts, that are signed, you need an application process through the government in order to see those transactions, and often times business transactions don’t have the luxury of that time. In order to deal with those regulations, they need a transaction now or they will miss the deal, and in that case business owners are heavily incentivised to seek out incentives that are going to meet their needs very quickly and so that’s one example of these types of transactions, another is certain routes that might have very expensive transfers because the options are limited or there’s a monopolistic situation. I’m trying to think of a country right now.

Basically, I think digital currencies have provide a great deal of financial freedom to individuals and to merchants. To transact more freely. It’s freedom from fees, it’s freedom for owner’s regulation, and it’s freedom to do the transactions or to facilitate the transactions that are going to benefit their business. I think that, with the right use cases, paying employees internationally can be especially difficult, along certain routes, or in certain countries. Paying them a pre-paid debit card, that’s been funded with a digital currency, they can top it up at any time and pay their wages. There’s just many, many use cases that are beginning to emerge, literally, no other payment method can address. So, that’s where these things derive their value, that’s why people seek to use them, despite their volatility they offer real value and, as they grow that volatility will begin to tamper down.

Well, I probably differ from a lot of the people in the digital currency that are looking to wholesale or replace the banks. I don’t think that’s realistic nor a desirable goal, because cryptocurrency doesn’t fully replace all of the services that banks provide; but it does provide some alternatives on some of the services that banks provide. And I do believe that they constitute some sort form of competition, and so, I view it as a competitive, but we also need the banks. The banks, at this point are critical for people to be able to get in-and-out of their own local currencies, and so I think it’s a lot like PayPal, and Visa MasterCard.

They need each other, and they both develop from the relationship, and so I call them frenemies. It’s like they’re competing for the same market but they also help each other to grow. So, I think we can find mutually beneficial ground. I don’t think that banks see this at the same way. I think they are at an early stage of understanding what we represent as an industry, and the fact that there may be opportunities for them, and the fact that this is going to happen one way or another. So, they can either participate or find ways to benefit, or they can forego that benefit to another bank that is looking for those things. So, I think the ones that are most open-minded about it will benefit the most.

There are no banks per se, but there are banks partnered with services that are integrated with our network. An example of this is Coinable – they are brokers that allow you to convert to US dollars instantly at a fixed fee; and they are sister companies with a bank called “Crypto Capital”, and so you can instantly transfer your fund into the bank.

They are based in Panama, and Panama’s national currency is the US dollar. From there, you can wire money anywhere in the world, using the SWIFT network and have money to a local bank account very quickly and that’s one example where there is a bank that’s benefitting from this and they actually grow as these networks grow.

Well, I think that digital currency has unique attributes, it will carve out a niche or better…it may carve out a substantial portion of payments. No payment method ever dies. Fiat currency is probably not going away in our lifetime, even if we are successful because they have different attributes. And so, I think it’s a matter of carving out a market share in the payments ecosystem. We still have cheques, and we still will have cheques by the time I’m dead, so, I think that we really should be looking at this as, how can this compliment the rest of the payments ecosystem.

Keywords: Cryptocurrencies, Cross-border Payments, KYC, AML, ICO, Bitcoin
Institutions: Dash
Country: USA
Region: North America
People : Ryan Taylor
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