Exploring Cryptocurrency Governance Model

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INTRODUCTION

The cryptocurrency network which was basically developed and introduced over a decade ago has proven to be a very successful and innovative technology and creation seeing as it has rapidly grown and led to the growth of the financial system of the world in general, one of the many factors responsible for the cryptocurrency networks success is its advance diverse governing models.

The cryptocurrency network method of governance, what ever model we might be talking about or discussing in this post today is decentralized and operates as such, this means that the process which the cryptic network and system adopts involving the way decisions, rules and guidelines are made and enforced is all done with equal authority.

Additionally, the many different cryptocurrencies and their networks adopt and implement different governing models, and in this post of mine I am going to be exploring and explaining many of the different cryptocurrency governance models and how they all have unique mode of operations.

• ON CHAIN GOVERNANCE MODEL

The first governing model which I will be discussing for this post today is known as the on chain governance model, this is a type of governing model whereby the rules and guidelines of the cryptocurrency network and its community is encoded and programmed directly into the blockchain technology and this decisions and guidelines are made by stakeholders through a voting process.

The on chain governing model basically facilitates and allows for transparent and automated decision making, owing to the fact that any decision concerning changes and proposition to the blockchains protocols, algorithms or any other key aspects of the cryptocurrency network is going to be decided and voted on centrally by all stakeholders on the blockchain network.

Furthermore, the on chain governing model offers to the blockchain network and its users an advantage of being transparent and as a result making every decision, vote and change to be recorded on the blockchain openly as a result ensuring accountability and deterring manipulation and malicious activities.

• OFF CHAIN GOVERNANCE MODEL

The second governing model of the cryptocurrency network which I will be exploring and discussing in this post today, is known as the off chain governance, this model of governance basically involves and depends on decision making processes that includes discussions, arguments and debates that basically occur outside of the blockchain.

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Additionally, the off chain governing model basically facilitates and allows the cryptocurrency and blockchain network to be more flexibile and adaptable, owing to the fact that decisions can be made through consensus building rather than applying strict voting mechanisms however, the offchain governing model unlike the on chain lacks transparency.

This lack of transparency can pose and serve as a significant disadvantage which would most likely result in the threat and risk of centralization and manipulation seeing as the power and authority to make important decisions and changes in the blockchain network is given to a small group of selected individuals and organizations.

• DELEGATED PROOF OF STAKE

The third cryptocurrency governing model that I will be discussing and exploring is known as the delegated proof of stake, it is basically a governance model that combines the elements and features of both the on chain and off chain cryptocurrency governance models,

in the delegated proof of stake consensus mechanism, the stakeholders elect a small group of delegates to make decisions on their behalf, these delegates basically have the responsibility of validating transactions and making suggestions for changes to the networks protocols, which are to is then to be voted on by the rest of the community.

Additionally, the delegated proof of stake consensus basically aims to create a balance between the decentralization by giving authority to small group of people and the efficiency it provides and ensures by still allowing stakeholders and the rest of the community to participate in the final part of the decision making process.

• DECENTRALIZED AUTONOMOUS ORGANIZATIONS

The fourth and last cryptocurrency governance model which I will be exploring and discussing is known as the decentralized autonomous organizations basically the decentralized autonomous organizations represents and facilitates a governance model that ensures that the decentralized nature of the cryptocurrency and blockchain network.

The decentralized autonomous organizations operate by or through implementing the smart contract so as to automate tha decision making process the, decentralized autonomous organizations run on code which basically are designed to execute the decisions and conclusions being made in the cryptocurrency and blockchain network.

Additionally, the decentralized autonomous organizations is a cryptocurrency governance model that provides and ensures the cryptocurrency and blockchain network with very significant advantages such as transparency and immutability owing to the fact that the guidelines and rules are predetermined and are encoded into the blockchain and are difficult to alter or change.

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CONCLUSION

In conclusion, with this post I have explored and discussed four different cryptocurrency governance models and I hope that you all enjoy reading and going through it, and with that I would like to end or conclude by saying a very big thank to everyone who have made the time and the effort to read and go through this post.