Dash – An Introduction
Dash is a cryptocurrency that came into existence in 2014 as a result of a Bitcoin folk, offering distinct features and improvements compared to the Bitcoin. Evan Duffield, the founder of Dash, went on to build this cryptocurrency to tackle the issues found in the existing Bitcoin network such as transaction speed, privacy, and governance.
Unlike the other leading altcoins, Dash did not take considerable time to garner attention in the crypto community. In fact, it became popular among the investors from the moment it was launched as a privacy coin. Over the last three and a half years, Dash has managed to secure a place among the top 20 cryptocurrencies on the market cap.
At the time of writing, the market capitalization of Dash stands at $1,956,628,452 with its price set at $240.00. On the coin market cap listing, Dash stands on the 14th position, becoming one of the leading cryptocurrencies despite a highly competitive market.
As the company claims, Dash is a form of digital cash you can spend anywhere. This cryptocurrency can be used to make instant, private payments online or in-store using its secure open-source platform hosted by thousands of users around the world.
There are many distinct features that have played a vital role in making Dash one of the leading cryptocurrencies that it is today. Let’s quickly take a look at Dash’s history and its distinct features.
A Brief History
As already told above, Dash was the result of a Bitcoin folk. There’s a misconception attached to the privacy coins being illicit as they facilitate criminals in illegal activities such as money laundering. Due to the same reason, Dash, when it was first introduced, was notorious for being a coin for illegal transactions. Formerly, it was known as XCoin but soon the name was changed to Darkcoin, which further gave an idea to everyone that it could be used to hide vague transactions. In an attempt to put behind its association with illegal activities, the community went on to change the name to Dash, which, basically, is a mix of two words – digital and cash.
What Makes Dash Different?
The features and characteristics that distinguished Dash from the other altcoins is its unique two-tier architecture, facilitating quick transaction speeds (InstantSend) and the coin mixing for privacy (PrivateSend). Dash has also employed a decentralized governance system, allowing power users to vote on the development, marketing and infrastructure proposals for the Dash network so it could continue to develop and grow further. Let’s study these features in detail.
Two-tier Architecture for Blockchain
Dash comes with a two-tiered structure to its blockchain. The first tier is quite similar to that of Bitcoin which is the use of proof-of-work (PoW) consensus system. Miners are responsible for creating new blocks and adding them to the blockchain for which they receive 45% of the block reward compared to Bitcoin where miners receive 100%. The remaining 55% of the block reward is allocated elsewhere. The block time of Dash is 2.5 minute which is four times faster than Bitcoin.
Now comes the second tier in view. Apart from the PoW rewards for mining Dash, users also receive rewards for maintaining and running servers called as masternodes. These masternodes are used to process instant transactions (InstantX), facilitate coin mixing, and vote on various governance proposals.
Anyone can run a masternode on the Dash network but in order to do so, the user must prove that they own 1000 DASH. Basically, 1000 DASH minimum is a security measure that prevents sybil attack – an attack against the Dash masternode network. A sybil attack takes place when the majority of the user base is created on the basis of fake accounts under aliases, thus the threat to influence the network exists. When a user is required 1000 DASH to set up a masternode, it would be quite expensive for them to carry out a sybil attack against the network.
On running masternodes, people are incentivized by getting a portion of the reward when miners find new blocks. 45% of the reward goes to miners, whereas 45% goes to masternodes and remaining 10% is used for funding Dash-related projects through the decentralized budget system. Currently, the ROI is about 15% which means over the course of one year, you will earn around 150 DASH from running a masternode.
Facilitate Instant Payments (InstantSend)
Through its another key feature, InstantSend, Dash facilitates instant payments. For Dash, your time is valuable so it wouldn’t want you to wait longer for your transaction to be processed. Since Dash wants to be a form of digital cash, it seeks out to confirm the transactions in less than a second. The transactions in the Dash network are quickly verified by the masternodes, as a result, processing the digital currency transactions instantly.
Built-in Coin Mixing to Ensure Privacy (PrivateSend)
Since the role of privacy coins is to make your transactions private and anonymous on the blockchain, Dash successfully falls into that category. Dash is one of the first privacy coins available in the market offering a built-in coin mixing service which it calls as PrivateSend. This feature makes it nearly impossible to trace the transactions on the blockchain. Masternodes help in obscuring your transactions while mixing them with other transactions on the blockchain, making it difficult for anyone to snoop on them. After Monero and ZCash, Dash should be your choice if you’re looking for complete privacy in a digital currency as it provides a high level of privacy and untraceability.
Decentralized Governance System
Bitcoin has undergone various hard folks, resulting in Bitcoin Cash, Litecoin, Bitcoin Gold, and even Dash. With its decentralized governance system, Dash prevents hard forking within the community. Basically, what happens in this system is, anyone can recommend a new proposal, comprising of new features, changes, or marketing plans that could help improve the Dash network. The masternodes get to vote on each proposal then. For a proposal to get accepted, the number of yes votes should be more than the number of no notes by at least 10% of the total masternode number.
Once the proposal is passed, it received funding from the block reward (the 10% as we discussed above). This helps Dash to vote to get rid of its current development team if the entire community disapproves of the direction the team is taking.