Blockchain-based decentralized control

In the world of cryptocurrency, everyone is talking about the "Civil War", and not about the one that has been unleashed between Captain America and Iron Man. They talk about the civil war in the Bitcoin project, which has been going on for a year now. This is a fierce battle for scalability control.

On the one hand, there are Core developers who want to keep the block size limit of 1 MB. They expect the budding Lightning Network to solve any overload problems.
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On the other hand, there are supporters from the Bitcoin Classic camp who want to increase the block size limit to at least 2 MB. So far, Core is winning, since most of the Bitcoin miners follow their project implementation options.

These differences have raised some fundamental questions about the nature of a decentralized project like Bitcoin. Who in the end sets the direction for the development of the decentralized project? Who makes the final design decisions? In other words, how should a similar project be managed?

Management need

Before looking at management itself, it is important to ask whether there is a need for it. For most people, the word "governance" evokes associations with some official, perhaps from Washington, Moscow, London or Brussels, who are trying to rule the world.

Some normally perceive this thought, while others have a similar picture causes a shiver. But it is important to note that management in this case is not related to the state.

Management simply indicates how decisions are made. For example, each person has self-control. This is the power that allows you to make your own choices. Each family also has a management system — there is a decision-making path that relates to the direction of family development. Each group of people (baseball team, hacker club, small business) has some form of management: official and recorded in writing or without words understood by its members.

Most enthusiasts in the world of cryptocurrency reject control not by itself, but imposed control or, in other words, decisions that are made without the participation of those who are affected by the choice being made.

Moreover, supporters of cryptocurrency want to have a decentralized management, which extends the right to make decisions as widely as possible.

Yet in practice, cryptocurrencies are managed a little differently.

The general model is the “benevolent dictator”, where one person, usually the creator of a project, makes the final decision.

Bitcoin itself initially followed this model, since Satoshi Nakamoto set the direction for the development of cryptocurrency at an early stage. Today Ethereum is a great example of such a model.

This model has some advantages, but it is not decentralized. It has one critical point, and the success or failure of the project depends on only one person.

Another model changes the “benevolent dictator” to a small group of developers. Much so Bitcoin did. Now only the Core team is responsible for the direction of software development.

Of course, the team retains this right only because it is allowed to it by a small group of miners, which controls the overwhelming part of the network capacity for hashing.

But this model has the same strengths and weaknesses as the “benevolent dictator”, since all control is in the hands of a small group of people.

But another model could be the solution, where management is embedded in the blockchain. The democratic model is a true decentralized management approach that works everywhere.

Decentralized transparent management

In recent years, an innovative management model based on the blockchain has been created in the framework of the Dash cryptocurrency project.

It is based on the masternode network. Masternody - full nodes that provide network operation. So that they work for the network, they are stimulated by payments from the reward for the unit.

Masters must have a security deposit of 1000 DASH. This means that Masternode owners invest in the network and receive regular income from it.

Unlike Bitcoin miners, who have no real reason to keep their money in Bitcoin, Masternodes are interested in the success of their platform. Masternod Dash owners can be different - developers, marketers, artists, writers or builders, but they all share one thing: they have a vested interest in the success of this cryptocurrency.

Today, the network has more than 3,700 Masternodes. They are owned by hundreds, maybe thousands of people - one person can have more than one Masternoda (the right of ownership can be kept secret).

This decentralized group of owners is investors and income recipients. But they play another important role for cryptocurrency. Each Masternoda has a voice in the Budgeting System, which distributes funds for the development of the project.

Anyone who has at least a little business experience will tell you that whoever controls financial resources sets the direction for the organization. Through the Budgeting system, the development team is paid a regular salary. Moreover, anyone can submit proposals that will go to vote. These proposals may relate to individual development projects (such as mobile applications or payment terminal systems) or advertising projects (for example, developing a business or increasing awareness of Dash).

How does it work in practice? First, it is worth noting that the Dash development team is still responsible for the development of the project. They set the short-term direction of the project and update the code as necessary. It would be ridiculous if the owners of more than 3,700 Masternodes made decisions regarding the code every day.

But the development team is paid for by the blockchain based on the masternode vote. If the development goes in a direction that is contrary to the wishes of the masternod owners, team funding can be curtailed. Funding can also be directed to other developers who hold the prevailing opinion.

In addition, when considering important changes to the project, for example, increasing the block size limit, these decisions can be put to a vote by masterno owners. This is exactly what happened in January 2016, when lead developer Evan Duffield proposed to increase the block size to 2 MB.

This proposal was put to vote in the Budgeting System. For several hours, it received the support of the majority. What has been a stumbling block in the Bitcoin community for over a year now was finally decided at Dash in less than a day.

This process is not only decentralized, but also transparent. The proposals put to the vote and the results are publicly available on the blockchain. They can be tracked in real time on the website www.dashvotetracker.com , which shows the results of the latest polls, as well as the history of voting for each project.

All fears about a centralized, closed management structure (as it actually happens in Bitcoin) are overcome by the innovative, democratic Dash system. This is a powerful argument in favor of a progressive approach, namely, a decentralized, transparent and blockchain-based approach.