Contributing an entire block reward “blindly to mining” to secure transactions is an act of stupidity says Ryan Taylor, head of finance at Dash, an open source peer-to-peer cryptocurrency.
His reference is a clear shot at the world’s leading cryptocurrency by market capitalization, Bitcoin (approximately US $10.5 billion), and its policy of directing all financial rewards by way of new coins to miners.
Taylor’s position is of course one biased by his affiliation to Dash. However, the facts offered remain stalwart realities that Dash’s governance structure and budgetary system are an industry-leading example.
“[Bitcoin is] facing centralization on a couple of different fronts,” says Taylor, “[but] the bigger issue is why on Earth is it optimal to devote 100 percent of the network’s resources to a single task out of many that are needed? It’s ridiculously wasteful.”
It is no secret the Bitcoin Foundation — the organization founded in 2012 by then Bitcoin lead developer Gavin Andresen to “foster education, engage in advocacy, increase adoption and encourage development of bitcoin and blockchain technology worldwide” — fell on hard financial times last year.
Taylor explained that Dash’s network, in contrast, “allocates only the amount we feel is needed toward transactional security and mining.”
The “we” above is in reference to Dash’s decentralized governance structure where Masternode owners — Dash’s second tier of incentivized nodes — vote on proposals.
“These can be needs that the community proposes and it can be needs that the core team proposes to the network,” says Taylor.
Forty-five percent of overall funds are contributed to mining, 45 percent to infrastructure, and 10 percent is devoted to network needs.
“Ultimately those funds have to be approved by the Masternode owners through voting and that 10 percent is allocated toward a variety of different needs.”
There are powerful network effects at play with this, says Taylor.
“Since that budget system has launched,” which was last August, “the price has gone up significantly, .............