 Welcome to the Daily Decrypt, where currency competition is priority number one! I am your host, Amanda B. Johnson, and today's episode is brought to you by BitShares. Who's in charge when nobody is in charge? Or in other words, how are decisions in a network of people made when there is no Shah, or King, or CEO, or President in charge? This question has never been more relevant in cryptocurrency. So let's talk about the first governance model that ever came out of cryptocurrency, which is the Hashocracy, a democracy of hashing power. In a hashocracy, it is the majority of miners who decide the direction that a currency will go. Hashocracy is the current governance model of many top cryptocurrencies, such as Bitcoin, Ethereum, Litecoin, Dogecoin, and Monero. There are two other top cryptocurrencies, however, which are not pure hashocracies. One of them is a seeming evolution of hashocracy, and the other is a complete overhaul of hashocracy. The evolutionary one is Dash, and the overhaul one is BitShares. So put on your geek glasses, because it's about to get real geeky in here. Dash has a base layer of proof-of-work miners, just like the hashocracies Bitcoin, Ethereum, Litecoin, etc. It has an additional layer, however, which is incentivized to maintain the network, not through proof-of-work, but through what I call proof-of-service and investment. It's long, but there's not a better term that I know of. This second tier, called masternodes, must run hardware which performs services for the network, namely coin mixing and instant confirmations, which is their proof-of-service. They must also prove that they hold 1000 Dash as a proof-of-investment. As a reward, they get 45% of the block reward and get to cast cryptographically verifiable votes from within their Dash wallets on the direction that the currency will go. So with the base layer of proof-of-work miners and a second layer of masternodes, the governance model seems to be a mix of hashocracy and meritocracy. So that was the evolutionary model of hashocracy. Let's move on and talk about a complete overhaul. BitShares is a cryptocurrency which has scrapped proof-of-work entirely in favor of an infrastructure called delegated proof-of-stake. In this model, all stakeholders, that is, anyone who owns even one BitShares, can cast a cryptographically verifiable vote from within their wallet on the direction the currency should go. Similarly, all stakeholders can concurrently vote on how many miners, or in the case of BitShares, witnesses should exist for sufficient decentralization in their view. In both cases, majority rules, and as each BitShares counts as one vote, the more you own, the more voice you have. In this way, BitShares overhauls hashocracy completely and exists as a pure meritocracy. And so we begin to see two new governance models cropping up within cryptocurrency, Bash's hashocracy-meritocracy mix, and BitShares' pure meritocracy. But what is the point of any of this? Hey, good question. Well, as with any system of human interaction, the point of governance is to keep the most people, the most happy, most of the time. And will any of the models discussed today come to be more preferred or less preferred with time? I don't know. The market will decide, as they say, which is basically to say, you and me. Today's episode is brought to you by BitShares, a currency which seeks to incentivize developers and its ecosystem through the issuance of feature-backed asset tokens. BitShares also has a built-in decentralized exchange right in its own wallet, where user-issued assets can be traded without anybody having to give up their private keys. You can open your own BitShares' web wallet at openledger.info. Let's have a little poll, why don't we? Yes. Look around your screen now. You should see a little white circle with an eye in it. If you click that, you will see the question, which governance model do you think is the best? Hashocracy? Hashocracy with meritocracy? Or meritocracy? It's just for shits and giggles. Don't stress out about it. Have fun.