Dash — what investors are missing (part 3— the chicken and egg problem)
Welcome to my final article of the three part series about “what investors are missing about Dash”. If you missed my first two posts you can find them here and here.
In this post I am going to explore the implications of Dash Platform and more specifically Dash User Accounts/Dashpay and how they will help solve the chicken and egg problem that plagues the crypto industry.
To get started we first need to understand that Dash, along with every cryptocurrency are marketplace protocols. They have a demand side (users) and a supply side (businesses/apps). In order to grow any marketplace you need to address both demand and supply at the same time.
Cryptocurrencies in general have really struggled to date with this problem and there are a few reasons for it. Firstly, no cryptocurrency has delivered a consumer facing product that grabs, retains and encourages engagement from users. If you don’t have this stream of retained/engaged users bubbling around in your ecosystem, then how do you convince an app or a merchant to integrate your cryptocurrency into their business? The short answer is — you try really hard and you often get told “no”.
My point here is that without addressing demand (users), you have a really hard time gaining supply (apps/merchants).
The second reason why crypto projects are struggling with the chicken and egg problem is that most aren’t constraining the marketplace. Constraint is another critical aspect for any marketplace product to have success. Marketplace products often find greater success by constraining the marketplace, this enables them to reach that inflection point of saturation in any one market. You can constrain a marketplace in two ways, either by Geography (e.g. Venezuela) or Category (e.g. Gaming). Thankfully Dash Core Group already seems to understand this and are extremely focused on five category pillars; Countries with Currency Issues, Gaming, Remittances, Exchanges and High Chargeback Industries. They are also constraining the marketplace Geographically e.g. Venezueala>Caracas>Malls and Parking lots.
As you can see, there are a few reasons why cryptocurrency lacks marketplace saturation. I do however think that Dash is doing a good job at addressing them but they are still falling short on the demand side which in turn effects the supply side, so lets see how they are about to address this issue.
To address the demand side you need to build a product that is going to attract users, retain users and give them reasons for engaging with it. So how is Dash doing this? Well firstly they are not only building a product (Dashpay) but they are building a platform that will help address this. This Platform is called “Dash Platform” and it is basically a data layer that is stored across the Masternode Network and made accessible to developers via an DAPI. As discussed in my first article, this data layer can store all sorts of data and will lead to users being able to create Blockchain User Accounts that store all their user data across the network, accessible from any Dash Platform compatible application.
Dashpay looks to be one of the first Dash Platform applications to launch and this application looks mighty fine. Dashpay is basically the crypto version of Venmo and completely decentralised. I need to emphasise decentralised as I have been banned from using Circle for sending money to a poker website when online poker is legal here in New Zealand. They wouldn’t let me withdraw my money for weeks, so I understand that decentralisation is important. Anyway, back to it. Dashpay will allow you to create a Blockchain User Account, store your username, profile photo, bio, contacts lists etc on the network. It will also have a search function to find and add friends to your contacts list — see here. These are only the features that I know of as an outsider but I have heard that they are looking to gamify it too.
Dashpay and the many more apps built using Dash Platform’s functionality should help solve the demand side issue. I am confident that Dashpay or one of these Dash Platform apps will gain a virality factor of +1, leading to that bubbling demand side that I mentioned earlier. When you create a product that is useful, fun and engaging, people will generally refer their friends/family to these products and the growth begins to go viral. No crypto product has been able to do this yet as public/private keys, lack of social connection etc have hindered the user experience.
With a virally growing demand (users) side it then becomes a lot easier to grow the supply side (merchants/apps) and with more supply side you get more demand and with more demand you get more supply — you get where I am going with this. The demand/supply feedback loop has formed and all of a sudden you have traction, traction that can allow you to dominate Geographies/Categories and then expand beyond them once saturated.
Dash is about to have the foundations it needs to solve the chicken and egg problem and create cryptocurrencies first demand/supply feedback loop. This is something that most investors don’t yet understand but they will soon. Dash Platform is going to change everything!
If you enjoyed this 3 part series then please feel free to follow me on twitter as I may be inspired to put some more thoughts to paper soon :)