Interview: Cryptocurrency DASH - current and future

Below is the full text of the interview (December 2015), Mexico. I hope that my translation will be useful for many visitors of Habrahabr for one reason or another - many actual issues and problems in the field of cryptocurrency development have been raised (not only about DASH, but also about Bitcoin and a number of other promising projects).


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(X) Juan, a journalist.
(E) Evan Duffield, founder and lead developer of DASH.

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(X) Hello, we are at the LABitConf 2015 conference in Mexico. And I was joined by Evan Duffield, lead developer for Dash. By market capitalization, Dash is now ranked 5th among cryptocurrencies. How are you doing?


(E) Everything is great. The conference itself is very impressive.

(X) Great. There is a lot going on here at the conference and ... a big announcement is also expected from Dash. But before we proceed to discuss the announcement of the Dash "Evolution", I would like to ask you about one of the latest innovations that appeared in Dash. Namely, about the model of decentralized control. Could you explain how it functions, how the voting process takes place, how the reward system itself works?

(E) Yes, of course. In fact, the management model is based on the second level of our network and ... I think it is worth starting from afar and tell a little about these levels of the network, the Dash infrastructure and how it all works. So, in our Dash network there are full nodes with cash collateral. These are the usual full nodes of the network, but they are associated with the address where the thousand DASH is located as security. And this address actually acts as their identifier in the network. Based on this feature, we can realize interesting things. We can check the identifiers of all these nodes through the blockchain - which pledges are assigned to specific network nodes. So, it becomes possible to create, for example, a secure communication network. And you can implement a secure vote on the network. You gather community members together, a large group of all owners of thousands of nodes, and you can ask them questions on various topics, for example: “Should we do this or better?” This is the essence of our decentralized management model.

(X) It is also important that it also acts as a defense against a sybil attack. If you want to try to attack the network in any way, then you have to buy 1000 Dash to have the right to vote. And this is quite a significant amount of money. As for the management model ... I think I can explain, but at the very least you will correct me.
Speaking of the emission - predetermined inflation Dash - part of it is directed to the financing of projects that have been approved in the course of community voting. If the necessary number of votes is gained, if people support an idea, then the money goes to it. These can be the costs of marketing, legal support, special areas of development that will allow the development of technology and the network. All this happens decentralized within the Dash network itself, so as not to need funding from organizations that are associated with the government or with all big companies. Right? This is a very significant improvement. How does the voting process work now?

(E) Essentially, we secure for ourselves what I call Decentralized Sovereignty. As the project grows, we want to remain a decentralized organization. And as a cryptocurrency - Dash wants to maintain its independence and not get under the control of any of the existing forces. Therefore, its independence must be constantly protected so that the project does not go astray under external influence. You understand? And therefore we carefully think over this system so that it can adapt to the current situation and to changes in the alignment of forces. Our control system does not cause inflation in Dash. In particular, this concerns the financing system, since a fixed part of the reward of new blocks is allocated to it, and this part, the decentralized budget, cannot be exceeded. Every month we only have 10% of the reward for blocks that can be spent. If these means are not used completely, then the rest “burns down”. That is, these coins simply never will be created. So actually this is the deflationary aspect of the currency.

(X) Does it require a limited number of votes to allocate funds for development? For example, they should vote 20% of all network participants, or something like that, but if the project does not gain support, does it not receive funding?

(E) In fact, everything works like this - there are many different offers on the net. Suppose they are ten. And the network ranks them all according to the number of votes of support they received. Therefore, the first is a proposal, say, with the support of 80% of the vote. So, this proposal will definitely receive funding. Then comes the offer with 70%. Next, 65% and so on. And all of them are paid into the general budget until we reach a state where all the money in the budget is distributed. At this point, we stop funding subsequent projects. This is how it works.

(X) Clearly, that is, this is a predictable type of inflation, and there is no depreciation, since everything works according to clear rules. Let's talk about some of the ideas that you are going to
light up on this conference. This interview will not be published ahead of time ... So, the first is the decentralized API (DAPI). And I do not quite understand what it is. I suppose this is an interface through which customers can connect to the network and use technology ... Maybe you can tell a little more about it?

(E) Of course. The concept of a two-tier Dash network is that there is a second level, which is based on collateral. It accounts for about 40% of all money, so the system is protected from a Sybil-attack. And based on this second level, you can vote, you can manage the system, you can finance projects. And then all the new ideas that we create come into play. We can do so much new that it is even difficult to imagine. And one of the ideas is a decentralized API (DAPI). In simple terms, we want to create a mobile interface through which you can communicate with the network. It works like a centralized API, but in the absence of centralization. There are processes in the network that are group actions. And when you send a request to the decentralized API, it actually runs simultaneously on 7 servers. Which deterministically are assigned on the basis of the “proof-of-work” hash, so it is impossible here to somehow cheat the system. They all perform the same task. They get the same result and sign it with their private keys. The result and 7 signatures are returned to us. Therefore, it becomes immediately known if something went wrong. Based on this, we can implement really cool things. Since we have a second level, you can create a storage on the server of each individual node, on the second level of the Dash network. And now we already have about 40 Terabytes of distributed disk space. And there we can store data like friends lists, transaction histories and the like that will be encrypted. You can log in to your account simply using your username and password, request information from the network like “Hello, who is on my friends list?”, Get your personal data, decrypt them and immediately become aware of all the cases. And now you can send money to your friends simply by their name. After all, if you and I were friends on the Dash network, we could exchange encryption keys: you would know my next 5 public keys, I would know your 5 keys, and you could send each other money by name. I would use one of the keys, and you would send me another new one, and all in the same spirit. This is how the next generation of our network will work.

(X) Personally, I think this is a significant simplification in the process of using cryptocurrency. I worked, more precisely, I received Bitcoin payments for two years, and I was constantly forced to update my private key or public address, and the like ... And when someone finds out your public key, you need to update it with a new one in order to preserve privacy. But there is no automated way to share a list of your public keys. And so your identification system is amazing - great. You are talking about “Friends Lists,” and there seems to be a certain trend that Dash adheres to. There are many companies that are eyeing a kind of commercial use of social connections. And here we see essentially a social network with an embedded financial technology, which seems to be specially created for using Bitcoin and blockchain technologies, such as Dash. Tell us about your vision of this.

(E) So, when you have a built-in list of friends, you have the same features that you are used to in Paypal. For example, you have contacts, and you can send money by email and the like. All this can be done in our network after the implementation of the plan. And then, say, I will invite ten of my closest friends, and then they will likewise invite ten of their friends, and as a result, all this will turn into a monetary social network. And everyone will be just connected with their friends. It seems to me that at first the network will be used for tasks such as debt recovery, selling a sofa and similar things. In such a system, it will be really easy to do.

(X) This is a kind of social network. Are you considering the integration of this technology into existing social networks, or maybe you want to create your own? How are you going to implement your plan?

(E) We have no plans to implement this as donation services work, such as ChangeTip and the like, where you can give monetary thanks to people on the Internet. There they assume the disclosure of the identity of the recipient, so that he can send money - this is a different social model. And our idea is to simplify the use of the system, allowing you to find friends by nick or e-mail, if they want it. If they want to remain incognito, then it will be so. Therefore, we provide
the right level of privacy. But the simplification also lies in the fact that you will not need to memorize and store all these encryption keys. And I think that the system will be so easy to use that it will attract ordinary people who have never had any experience in using cryptocurrencies. This is our main idea.

(X) Yes, I think that the transition to an identification system is a significant step towards simplification. Although identification is not a trivial task. It’s like domain names. That is, identifiers can be compared with domain names. It is important to observe the right balance. Namecoin has recently had problems with it. It seems even in the press was negative. I didn’t particularly follow this, but it seemed like one of the problems was that when you bought the Namecoin domain, it was assigned to you forever. And I suppose people have reserved most of the beautiful domains. What do you think about the shortage of identifiers that they encountered? That is, if I borrow the name "Evan Duffield", it will not be available to others? Or will it be possible to get another such identifier? Well, and related questions ...

(E) Our current plan is to implement a system in which you can log in using a normal login and create your account. Then you replenish it with money, and the process is complete. Now your id is assigned to you. And then there are options. For example, you can make it so that if you withdraw all the money from the Dash network and do not use this account, after a certain time it will again be available for registration. After all, we store these identifiers simply in a distributed database, this is not a blockchain in the classical sense ... which means that data can be deleted if necessary. The system can recognize obsolete and those accounts that no one uses.

(X) Great. So, we are talking about decentralized storage. This is an extensive topic. Many people like projects such as StorageJ, Maidsafe and other big names in this area ... Will Dash also become a decentralized repository?

(E) I would say no. The idea here is more to store only the metadata of Dash users and some personal information that they want to keep encrypted in our network. And the bottom line is that I can log in through my Android device, and then come home and log in to my account already through the browser, using the same name and password. And my Dash account on both devices will be synchronized. As if I added a friend on the phone, and it would automatically appear on my computer too. Therefore, here we get rid of unnecessary difficulties - no need to transfer the wallet from here to there and so on. Everything works automatically. It is like a centralized system, but it is not.

(X) Files are split up, encrypted, creating the necessary redundancy. Then they enter storage facilities at Masternod. That is, everything is stored on Masternod servers, which provide the system with disk space. In my understanding, about the same trying to implement StorageJ or Maidsafe. They aim to create a decentralized repository. Do you see any obstacles that will prevent the development of Dash in the direction of creating a decentralized Internet, decentralized hosting, decentralized storage? All these things are of interest to people ...

(E) The technology could be used in this way. I foresee that someone will make his fork of the Dash project and go in that direction, competing with StorageJ and similar solutions ... But I do not think this is the right way for Dash as a currency - we already have many options for using this technology in relation to finance , with lists of friends, API and so on. Dash Drive is another story. And I don’t think we should keep erratic data on our network. There are data that are especially important for people. This is like personal data on the phones - they are very important for specific people. This, for example, is such information that they store about their payment transactions and similar personal items. That is, it is not about a regular file that you want to save on the network.

(X) So, access to these capabilities involves interacting with your technology through a decentralized API. Let's talk about managing the resources of this API. You mentioned the possibilities of preventing fraudulent activities on the network, while anyone can interact with the API, even without Masternoda or a full node ... What are the requirements for sending requests to the API and for transmitting information to the network?

(E) This is a very interesting question. A full-fledged security model works here. It all comes down to the fact that you have an identifier in the network - this is your username, which corresponds to a 64-bit number, which is your real identifier. And you can use what we call “blinded keys” that hide the real ID. When you conduct any activity on the network, it causes delays in responses to network requests. And since it is the MasterNods that actually process all these commands, we can determine the average amount of time spent and then correlate them with the account of the corresponding user. Therefore, all Dash accounts can be used without commissions, but only up to a certain limit. We assume that 90% of users are located in this zone freed from commissions, and then only those 10% who create them will have to reimburse expenses for mass payments. That is, if you do a lot of transactions, then you will pay a commission, offsetting the network processing. And all the rest will use Dash without any commissions at all. This works because a two-tier Dash network is encouraged. Thus, we transfer the cost of maintaining the system to those users who actually load the network.

(X) This is impressive. Providing 90% of users with free access is one of those strategies that work very well for many companies. For example, WhatsApp is one of the largest instant messengers and IP telephony service. They just made the service free for everyone and only a year later they start to take a small fee. It worked - the popularity of rolls over. Let's talk a little about anonymity, since Dash is best known for this. Protecting the privacy of users is one of the key elements of Dash, and it is very much in demand. How does the identification system and the procedure for interacting with it correspond to the issues of confidentiality and the expectations of human rights activists, and ordinary Bitcoin users?

(E) Yes, privacy is ensured in our network, and we value it highly. A weighty argument in favor of privacy: monetary units should be interchangeable. We do not want our users spied on. Therefore, in the development of currency, we have resorted to the distinction. We have separated user IDs from payments that they make in our network. Therefore, when payments are recorded in the blockchain, there is no connection between them and the users. And the network itself cannot follow you. When you connect to a network, you actually connect to only a few servers. Only 7 to 15 nodes participate in your connection. And every time you connect to the Dash network, you find yourself in random quorums of the network.Thus, your "footprints" are blurred throughout the Dash network, the nodes of which are scattered all over the world, and no one can know what you were doing. So users get privacy, but at the same time the network remains protected from possible manipulations, because all your operations ultimately pass under a single identifier that you use during all communication sessions.

(X) You mentioned the concept of "Quorum." As far as I understand, this is a randomly selected group of servers that will serve API requests and other processes. Let's talk about quorums ...

(E) If we consider Bitcoin and its “proof of work done,” we can create a random number generator and link its work to “proof of work”, that is, to the found blocks. Then, if each network participant operates according to the standard algorithm, all of them will get the same number from this random number generator, since in fact the numbers are predefined. But their consistency provides powerful protection. Then you need to take a list of all Masternodes and sort them according to the “proof of work done” hash using this randomization method. And then we take from the sorted list of Masternoda numbered from 1 to 10 - and get the first quorum. Then from 11 to 20 - the next quorum. And so on ... We get protected Masternod groups, the composition of which no one can predict and forge.The master teams of each group perform a joint task and then return the results to the user, signing them with their own hashes.

(X) Let's talk a little about scalability. Right now, when we are having a conversation, a conference is being held in Hong Kong, and Bitcoin's scalability is being discussed at it, and how to overcome the fundamental limitations in blockchain technology, which, I think, still have to face. There are organizations that claim that they probably have a solution. How do you look at it from the position of Dash?

(E) I think that the reward structure we use is great for a system that has to scale to a very large number of users. The fact is that when you give part of the promotion of new units to support the infrastructure, this creates a market. And this market provides equilibrium at the second level of the network. The market itself determines how many servers it can hold in the current state of the currency. And it turns out that as the currency grows, this market also increases. New users bring extra money into the ecosystem. And part of them goes to the infrastructure market. As a result, the number of servers increases or their parameters increase. This is a self-regulatory solution for scalability, and we have proven that it works. I think the Dash project is worth taking as a sample,as an example of a two-tier strategy for solving the problem of Bitcoin scalability. And I believe that if they implemented a variant of this technology, they could remove the block size limit and scale the system - and it would work really well.

(X) As far as I understand, there are three main enemy camps on the issue of block size, right? Some advocate for small blocks, for leaving Bitcoin as the global level for basic transactions. Others advocate large blocks and believe that all transactions must be recorded. And there is another group of people in the middle who are rarely mentioned and discussed. I think the idea was first voiced by Justus Ranvier. He talks about creating ... a kind of free market within the blockchain. That is, both the block size and the range of commissions - all this should be determined by the free market, and not by some kind of top-down regulation, where someone dictates what the size of the block should be. The market itself must resolve these issues. Whose side would you take in these disputes?

(E) I think that the debate over the block size is really interesting, and I would be inclined towards the camp that is against increasing right now, since the problem with the number of full nodes is not solved. Today, I'm sure ... I watched the question for several months and looked to see if there was an inverse relationship between the average transaction volumes and the number of full Bitcoin nodes. And what I found out ... I did a statistical simulation that showed the presence of a correlation. That is, when you change one of these numbers, you inevitably affect the other. Therefore, if you increase the block size, this leads to a corresponding increase in traffic on the network, and an increase in traffic leads to a decrease in the number of full nodes. So I think that we definitely need to find a solution to this problem, and the solution could be something similar to what we implemented in Dash.We need some kind of market that would reimburse people on a permanent basis and could scale up.

(X) Great. Let us now touch the questions sent to us through Facebook. Patrick Wade asks: “Compare Bitcoin sidechains with Dash. How do you feel about sidechains and potential cloning of Dash with their help, by analogy with the upcoming possible cloning of Ethereum?

(E) Yes, the sidechain situation is really quite interesting. Ethereum clone is a well-developed idea, in my opinion. And Rootstock is also interesting because it is supported by one of the leading Bitcoin developers, which is also a big plus. Therefore, it will be interesting to me to look at what they will get as a result, because the result may differ from the Ethereum itself. As for sidechains and Dash, it is difficult to reproduce Dash, because you need a full-fledged blockchain, separated from Bitcoin itself, and having its own monetary value. After all, it is necessary to encourage people to support the work of nodes - you need to compensate their costs, right? Therefore, I have no idea how to implement Dash on the basis of sidechains, which are part of the Bitcoin network and do not carry their own value, but simply act as a side token.

(X) Interesting opinion. I wrote an article about how Dash works and your management system for Coin Telegraph, and also communicated with people from Ethereum and Rootstock. It seems we also discussed this topic with you ... Speaking about the fact that people from Rootstock are beginning to reflect on the possibility of introducing something similar to the Dash control system. What do you think about the possibility of doing this? What are all the thoughts on this matter?

(E) They have a very interesting approach, and they consider different solutions. Over the past few days, we talked to them about the implementation of something similar to our decision, but in a completely different way. And it will be interesting to see what they will come to in the end.

(X) Kristov Atlas asks: "Does Evan monitor the privacy situation on the Bitcoin network and what he thinks about the development of this topic over the last couple of years."

(E) An interesting question. Progress in Bitcoin, let's say, is always slow. And this is especially true of privacy - this is a sensitive topic for the Bitcoin community. But I think that the main thing for them now is the problem of scalability. This is the main problem of Bitcoin at the moment, because they have already reached the limit, that is, too often the blocks are filled completely. And it is already tight. Interchangeability can be addressed when the
issue of scalability is resolved. However, the problem of privacy also exists, and it is not solved.

(X) In continuation of the previous question: there are a number of companies that are engaged in Bitcoin blockchain analytics. Do you know anything about the techniques they use? Do you have concerns that they will be able to use them for surveillance and for Dash?

(E) I’m more concerned about the fact that they monitor the Bitcoin ecosystem, because its blockchain is much more vulnerable than ours. In Dash, coins are randomly anonymized, and observers will not be able to overcome this line. Therefore, deep surveillance will not be released. If you identify someone, you can track only a small part of his transaction history. On the Bitcoin network, if you have tracked down several key points, then you will be able to recreate the actions of a person that he performed even a few months ago. And this can be a problem. Some of these companies use statistical methods, while others use truly advanced algorithms. And I believe that they will be able to collect rather detailed database, trying to identify and track down the identities of Bitcoin users. And then start selling it.This is what we want to protect our users from. I do not think that such information should become a commodity and be sold or transferred to someone.

(X) I must say I agree with this. But ... I am a journalist, and I should not have an opinion. Continue, Ruben asks: "Name 3 of your favorite cryptocurrencies, and explain your choice."

(E) I would say that it is Primecoin, Quark and Litecoin. And there are reasons for this. At Primecoin, I got the idea of ​​the complexity adjustment algorithm. My algorithm also worked well, but they were a little better. At least one idea I took from them. I chose Quark because of his idea of ​​linking several algorithms during hashing - this idea was borrowed from them. And Litecoin, because this is the fork that started the Dash project. These three currencies helped me launch the Dash project.

(X) Great. Is the specific release date of the Dash Evolution already known, and at what stage of development are you now?

(E) At this time we are going to try a completely new approach to development, which previously hardly anyone used. We do not have a clear plan. There is a very structured idea about how things should work in the end. And now we want to combine our efforts with the community - we are going to open the source code with all the documents and realize with the active members of the community what we really want to get. This in essence will be a huge conference with the participation of thousands of people, with the aim of finding a way - the best way that most of us will arrange. After all, we do not want to create what people will not use, right? Therefore, we want most users to be satisfied. This is the primary goal. As for the expected launch date, we plan to prepare a prototype for about 2 months,and something more specific will appear in the next 12-18 months. It will definitely take a lot of time, since the project itself is very, very ambitious.

(X) What is it like for you to be in the center or rather close to the center of what might be called a kind of cybernetic organism? It differs from conventional projects that have external funding and management takes place centrally. It seems to me that Dash is the best example of the so-called Decentralized Autonomous Organization. It has an internal
financing mechanism based on the value of its own coins. How does it feel to be part of such a decentralized community and such a rapidly developing project?

(E) It is quite interesting - you don’t have to miss here. I mean, the things we do are really exciting! The implementation of only one decentralized system
voting, financing and managing, and observing how all this is used by the community is absolutely fascinating. And then the community begins to accumulate a lot of new interesting ideas. In my opinion, in general, it resembles a giant organism. And I definitely agree that we are the first Decentralized Autonomous Organization, because Dash is fully funding itself on its own. This means that Dash will survive, even if we all leave the project. We have eliminated the problem of the "founders", which is very critical. Crypto projects have “founders” who receive cheap coins at the start. They work motivated by this. But the second wave of followers, the third and so on, does not have this stimulus. Who for exampleWill it continue to do a really laborious and difficult work on the development of the Bitcoin core? You essentially give people a project and declare: “If you don’t manage, you’ll ruin billions of infrastructure dollars. Go ahead, good luck. " And who will pay them for it? This problem is difficult to solve, and I think that we in Dash have found a good solution. All this is very inspiring, and I am inspired by how it all develops.

(X) Would you like to add something else or share something with your audience?

(E) yes. We open the source code of the Dash “Evolution” - they are available for discussing the directions of our development, priorities and so on. Therefore, I invite everyone to take part and express their thoughts, judgments, suggest improvements, and so on - so that we can do everything in the best possible way. And I invite everyone to visit the site dashevolution.com and see the documentation - what we are working on and take part in, join our work.

(X) Great, thank you very much.

www.dash.org/ru