Dash has solved two critical issues with cryptocurrencies: funding and governance. In other words: how to pays for things and make decentralized decisions.
How to make decisions when no one is in charge?
Governance is a challenge in decentralized systems with no central authority. How to make decisions when no one is in charge? In Dash, decisions are made by a network of masternode owners. There are 4848 of these nodes spread all over the world, and each equals one vote. If you remember the lessons from Dash School or Dash 101 video series, masternodes are required to prove ownership of 1,000 DASH as collateral to be allowed to do services for the network. Anyone with 1,000 DASH can become one; the process is entirely permission-less.
Why Governance is important.
When a coin does not have decentralized governance, the only way to resolve disputes is by forking. When the sides strongly disagree, they fork to start their own crypto (and severely damaged the original chain in the process). Just in the last two years, we have seen two real examples of how damaging the lack of governance can be. On August 1, 2017, Bitcoin hard-forked into Bitcoin and Bitcoin Cash, after a scaling debate issue that lasted two years. On November 28, 2018, it was Bitcoin Cash’s time to split into Bitcoin ABC and Bitcoin SV.
Lack of governance is the No. 1 reason why we believe Bitcoin may not remain the dominant coin. The community will continue to fracture and lose its network effect, each time a controversial decision needs to be made.
— Leon Fu (@leoncfu) November 13, 2018
- The system allows each masternode to 3 options when voting for each proposal: yes, no, or abstain.
- Votes are done via DashNexus, DashCentral, Dash Masternode Tool (DMT), or via the Dash Core wallet
- Votes propagate across the network and are computed by the network itself. There are no centralized parties involved.
- Dash Masternodes have 3 separate keys: one for ownership, one for voting, and one for operations (server maintenance). That means a masternode owner can delegate both voting and maintenance to third parties while retaining full ownership.
- Full documentation on Dash Governance