Is there an end in sight to the dash bear market?

Chart shows dashbtc with log price scale, on poloniex exchange, which gives one of the largest timescales to look at. We can see how Dash entered a downtrending channel in the second half of 2017. And has been there ever since, currently mired near the bottom of it.

Looking at technicals Dash is now near levels not seen since 2014 and 2015 This is pretty much a complete retracement of the whole of dash's trading history.  I am hoping that these levels will mark the end of the bear market and support can be found here. (Horizontal dashed line).

Chart

This is depressing stuff. There is a lot of angst in the community. Ryan Taylor of Dash Core group has even suggested penalising miners, taking away yet more of the miner share and giving them the blame for the sell pressure on the market. (really) He points to increasing hash rate coupled with falling price and creates a correlation with no further evidence needed. I would instead consider how much worse price would have fallen if not for the miner hash rate supporting the coin.

Other far less innovative proof of work coins, such as litecoin and bitcoin cash and bitcoin sv do not give portion of block reward for wasteful treasury spending and have benefited by falling less than dash in the bear market.

Even more worryingly some people are calling for Dash to move to a proof of stake or hybrid proof of stake model, to reward (or is that bribe) ordinary users. This will not work, proof of stake is even more prone to centralisation than proof of work. Users will not value their free dash, it will be valued according to free money and sold while it has value, not seen as an investment to hold on to.  

Amanda of Dash Investment Foundation suggests merging with bitcoin cash! While the idea of merging two decentralised communities and blockchains sounds impossible. This is again symptomatic of the soul searching that goes on in the depths of a bear market.

Through all this Dash Core have given dash instant secure, 'on-chain' transactions to the network. Dash still aiming for payments market,to be like paypal. What has been acheived is amazing, and unique in the crypto sphere. Dash now considered a proof of work coin which is 51% attack proof and has respendable after only a few seconds.

But one problem as I see it is dash is hard money, like bitcoin or gold. Maybe payments is not the right goal for hard money? Would you like to spend your gold or your bitcoin or dash on a new gadget? Or just use your credit card and save your precious assets? And, do you want to pay capital gains tax when you buy a coffee?

What is the use case for what we have? The cream of the crop of on-chain transactions unrivaled by other proof of work blockchains? I think the soul searching may have to come up with the answer to this. We are in the same boat as other hard money crypto assets in this regard. Bitcoin has all but ditched payments. Even though Dash has achieved so much maybe  we still don't have the right goal?

There must be some areas of finance that need quick settlements?

Thank you for these charts (weekly, monthly) and very neutral overview with them.

Such opportunity to buy very cheap DASH only occur each every 3 or 4 years. It is hard to say but what a pity for anyone who still hesitate and fear about the benefits of taking 'risks' with very cheap DASH, in BTC pair, at the moment. If they hesitate this time, they will do turn into deeply regret about their missed opportunities in next one or two years, or sooner, in next few months.

Whats GNSP ?


Ryan Taylor reckons masternode owners are hodlrs and its the miners that are dumping coins

Analysing things on the basis of trying to guess which demographic is more or less prone to send coins to order books is kind of hopeless.

Hashrate always gets paid for. Work from there. The coins that result as a reward from mining therefore always have a buyer (the primary buyer).

 • if the miner holds then the miner is the buyer
 • if the miner sells as they mine then the trade partner is the buyer

So the whole concept of whether miners "dump" or not is moot. What's far more significant is how the hashrate cost is rewarded. Dash is unique amongst POW coins in that the "buyers" of the new supply only receive half the supply. The other half is given away (to masternode holders) who receive the coin at zero cost. There is therefore potentially a wholly distinct price-discovery mechanism at work there since masternodes are at a profit al the way to zero. (Less hosting costs which amount to a paltry amount).

So who bears the cost of those masternode margins ? That is one question. The other question is can that party reduce those costs to itself ?

The answer to the first question is that the primary market bears the cost (the market that pays the mining cost of all rewards). The answer to the second question is that the market can mitigate its overhead (the cost of mining the masternode coins) by devaluing Dash in dollars.

This happens most acutely when marginal demand for masternodes reaches its minimum I imagine (MN count tops off) because then the selling pressure is immense from 2 sources:

 • the primary market migrating to other coins where it gets 90%-100% coin for its hashrate and does not have to cover the cost of expensive "holder" margins

 • masternodes dumping their "free money" and never being at a loss no matter what the price of Dash

The way to resolve this IMO is to MDGA ("Make Dash...") by returning it to its original mission: Bitcoin with Masternodes. That means restoring the mining reward to as high a possible level, say 80%-90% and bring Dash back to competitiveness. Although MN margins will be less in terms of Dash, the business model will be viable again and the project can grow. MN dollar-denominated rewards will then turn around IMO and start to grow as well.

We do not want to go down the route of trying to become a utility token, POS "bribery" token or any kind of cooked up hybrid IMO. Bitcoin with masternodes is a very strong proposition and we should make it work.

Most Altcoins are of course down 90% or more from ATH, something trolls like podpod conveniently leave out with their trollish focus on just Dash :

That is indeed not bad at all. Dash price is currently in a little pump phase it seems :



Lets see where this leads...

Its strange not to be on the same page as you qwizzie as I normally always am. But all of your proposed solutions to improve store of value run the risk of taking away value as I see it. It is a risk I don't feel at all comfortable with. Proof of work ensures the authenticity of the blockchain because it would take too much energy to rewrite it (among other things). This has stood trial by fire for over a decade. Even centralised mining pools are powerless to rewrite the blockchain except for maybe attempting to rewrite the last block or two. The market values proof of work very highly. Look at bitcoin, litecoin, bitcoin cash and bitcoin sv, all 100% proof of work and in the top 10 on coinmarket cap. By contrast Dash which on paper is proof of work with more innovations and enhancements has slumped down the rankings.

In the case of Dash 55% of these authentic mined proof of work tokens are given away for free (as toknormal has said) to masternodes and treasury. The market revalues Dash lower to account for that. If the free 'given away' portion is increased even more then the market will act seemlessly to revalue dash even lower. As I see it these proposed ideas will have the opposite effect to improving store of value. You don't get a free lunch. The treasury spending was meant to compensate for this by increasing value more than if there was no treasury. So far the evidence shows this has not been a success. The market has judged that masternodes and treasury are not worth as much as proof of work. At least as things stand in the marketplace today. To take away more proof of work could be heading in the complete wrong direction.

All correct except it isn't so much the miners that carry the cost of masternode margins, its Dash's primary market. That's to say the market that buys the mining supply. Difficulty adjustments can keep miners at a profit but the net result is that the external market (not Dash holders) is ultimately having to carry the cost of the masternode/proposal margins and getting nothing in return, while in other coins they get a part of the coin supply (Proof of Work) in return. This is losing Dash market share on a chronic basis.

Note: There is always a primary buyer.

 • If the miner holds, then the miner is the primary buyer (they paid the cost of the mined coins, both the ones they themselves received and also the cost of the ones that masternode holders receive)

 • if the miner is simply running a business (rather than "investing in Dash") and sells as they mine, then the market trading partner is the buyer

MINING AT A PROFIT/LOSS
It also doesn't matter (when you do a bookkeeping audit of the process) whether the miner mines at a loss or a profit. If they mine at a profit then the mining/masternode reward cost is paid for by the primary market. (As stated previously, the miner themselves may adopt a dual role as miner + buyer in this regard or they may not)

If they mine at a loss then the miner/masternode reward cost is borne by a combination of the primary market (trading partner to which the miner sells) and the miner. i.e. the reward costs are made up from external market revenue and mining losses

Either way it represents bad value to the external market compared with other mined crypto where much more of the supply is returned to the primary market in exchange for covering the mining costs. This loses us market share.

Think of it this way. Bitcoin charges transaction fees, but at least that's all they charge. Dash charges half the new coin supply to the external market and gives it nothing in return. It's like charging 100 times the transaction fee of bitcoin, yet we appear to congratulate ourselves on being a "low fee" currency ? Something is slightly twisted here.

I'd put a lot more value in Ryan's arguments than mine as well if he had managed to explain in what sense hashrate is a cost to the Dash community/holder.

The "cost" of securing the network as I see it, isn't borne by Dash holders. It's passed on to the market which pays for the hashrate. Nor are miners "contractors of the network" IMO as he asserts. That's merely a metaphorical/philosophical perspective. A cryptocurrency network doesn't need hashrate for security, since as RT himself has noted that can be done in cheaper ways. Rather the market needs hashrate to discover increasingly scarce coins.

Commercially therefore miners are (by definition) in the role of contractors to the primary market which is outside of the network, buying in. (Bear in mind that there is an enormous, sustained and increasing worldwide demand for hashrate and Dash is now proposing to limit even further its exposure to this demand). That market receives a portion of the new coin supply in return for financing the mining cost. As such, it already receives 50% less from Dash than it does with other POW coins and this competitive handicap will become even more acute by persuing Ryan's solution, losing us even more market share IMO.

So since you were so convinced by Ryan's presentation qwizzie, perhaps you could explain here the mechanics by which that "cost saving" ends up as a more buoyant coin value for the Dash hodler  

Here is the basic problem I imagine as seen by the non Dash-holding market when presented with the option of investing in Dash (ignoring any mining profit/losses which are negligible compared to non-mining margins who's costs also need to be covered):



Finally, under the latest proposals...

I can't really do any better than toknormals excellent post above about primay market. So trying to be devils advocate and arguing firstly from Ryan Taylors point of view. (as I understand it)

• Miners (or mining pools) are seen as contractors who are paid in dash for services to the network, mainly for creating blocks of transactions. They are paid (by the network) 45% of the block rewards for this service.
• Masternode operators are contractors too who provide services to the network, namely providing a reliable, fast network of nodes which are utilized to provide coin mixing, and instantsend/chainlocks, soon the dash platform aswell. They are paid 45% of the block rewards.
• The treasury provides funding for development (and leadership?), and other things which 'hopefully' benefit the network. They are paid 10% of the block rewards.

Technically the miners mint the whole 100% of the block reward. It is a competition to receive that block reward, those with the best hash power take most the earnings. As a miner you have to constantly find ways to increase your hash power to achieve some earnings. This also means you have to pay more in energy terms in your electricity bills if you are mining. This causes 'difficulty' adjustments to increase, (it also causes miners to become more cost effective in areas of cheap electricity). If miners leave the network the difficulty drops and it becomes slightly easier for miners to achieve earnings with less hash rate.

High or increasing hash rate generally means the network is considered much more secure than low or dropping hashrate. The energy cost to rewrite the block chain or reverse transactions or do any other malicious thing on the network is all that much more 'expensive' to achieve. It is a sign that miners are willing to pay more (in terms of increasing their hardware capability and their increased electricity bills and their time) in order to earn more dash rewards. This may be because they are in profit, or a speculative bet that they think dash will go up in value. One can only guess the motives of any investor category.

(I think) Ryan Taylor  sees it this way... If you decrease the miner share, and miners leave the network. Then the hashrate will drop. But that wouldn't matter because chainlocks secure the network after 1 block anyway. He thinks that chainlocks has made hashrate less important for dash than other PoW coins. Regardless of the hashrate the supply is designed to stay constant.  With that portion of the block reward that came from the miners share you can distribute that to ordinary users who will be 'stakers' rewards for holding dash. So Ryan Taylor thinks that decreasing miner share won't have a negative impact  on security. And then there will be increased demand from stakers who may want to try and earn dash by holding it. He is trying to influence the supply versus demand dynamics of the market to increase demand without affecting supply.  

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I think where I start to disagree is viewing miners as contractors. To me it seems they do the 'work', meaning work in the sense of physics and thermodynamics, using time and energy. Masternode owners do not do any comparable work in that physical sense. Who pays the miners? No-one? The network? They earned the dash with real time and energy. But who pays the masternode owners and the treasury? Is it the network that paid them? Or it is the miners that paid them isn't it? Maybe this is just some question of semantics and does or doesn't matter, but to me seems an important distinction. I see miners as the ones who really create and maintain the blockchain. The masternodes and treasury as more like contractors providing services to the network. The masternodes are paid very lucratively really. With no 'work' they receive a very large share of the spoils.

I also do not think dropping hashrate will definitely not be seen as unimportant by the wider market even with chainlocks.  Hashrate is synonymous with network security. Hashrate is often viewed as a leading indicator of price. Maybe I am underestimating the impact of chainlocks I don't know. I did expect a bit of a positive reaction in the market when it was released. So far that didn't seem to occur. You can move to a complete proof of stake model and get rid of hashrate completely. There are many coins that have tried that or similar. I dont see many of them in the top 10, unlike bitcoin, bicoin cash, litecoin and bitcoin sv. The proof of work is all. Just like it takes work to dig up gold. The mining metaphor is very accurate. These things are valuable because of the work that went into it.

Markets are all about supply and demand but it is far too easy to dream up reasons for who is behind the supply and who is going to be in demand and then think you know the reality. Will staking increase demand? Maybe it will attract a category of investor  ? Maybe it will deter another category of investor, like those who value high hashrate? Maybe the 'earnings' of staking will not be held or spent on ways to benefit the network but go on food, wine and fast cars. Ryan Taylor is only guessing and making assumptions about the market. But that is a risky business. What if he is seriously underestimating the 'work' in proof of work?