Dash

What is Dash (DASH)?

Dash, short for Digital Cash, is a cryptocurrency network positioned as a fast, low-fee payment network that grants users increased privacy.

Dash aims to be a user-friendly, scalable, payments-focused payment network. To accomplish this, it combines instant transaction confirmation, double-spend protection, and optional privacy. The end result is a self-governing, self-funding model driven by incentivized full nodes.

Dash is based on Bitcoin but makes several protocol-level changes. These include the use of a two-tier network structure and on-chain scaling that dramatically increases block size.

Today, Dash can be considered far removed from Bitcoin, given its many architectural changes. The original Dash whitepaper is maintained in a purely historical capacity. Dash is the product of multiple iterations and significant evolution, known in the past as XCoin and Darkcoin.

When Was Dash Launched?

XCoin was the first name given to the project during its conceptual stages around 2012. Rebranded soon after to Darkcoin, the project’s early name points to the original vision of adding more anonymity to the extremely transparent Bitcoin.

Finally rebranded as Dash, the project launched on the 18th of January 2014, with a post by one of its founders on the bitcointalk forum. This launch announcement detailed the vision of Dash and the use of a second-layer network of masternodes to facilitate instant transactions (InstantSend).

The launch positioned Dash as a next-gen cryptocurrency with instant transactions and privacy, low fees, no premine, and a fair launch.

Dash Force and Dash Labs were created to manage the project. Dash Force is responsible for managing community-related issues, including the Dash DAO (decentralized autonomous organization). Meanwhile, Dash Labs is responsible for the promotion of the ecosystem.

Dash was created as a fork of Litecoin, which in turn was previously forked away from Bitcoin. During the Dash fork, a bug referred to as the “Instamine controversy” resulted in the mining of 1.9 million, or over 10% of the Dash supply, within the first two days.

A relaunch was proposed, but the Dash community voted against a relaunch and kept the project moving forward. This way, it embraced the spirit of blockchain immutability.

What is a Fork?

Hard forks are permanent changes that take place when a new version of a blockchain splits from the original. It creates two distinct chains that are entirely separate from each other and don’t communicate anymore.

Bitcoin hard forks have given rise to several other cryptocurrencies, including Bitcoin Cash, Bitcoin Gold, Bitcoin SV, and Zcash.

Meanwhile, soft forks are changes to the protocol that are backward compatible. This means that the old nodes of the system won’t recognize the new protocol, which doesn’t launch a new cryptocurrency as a hard fork does.

Project forks, however, happen when developers take a copy of the source code of one project and start development that is independent of the source code. This category of fork describes Litecoin’s fork from Bitcoin and Dash’s fork from Litecoin.

Who are the Founders of Dash?

Dash was founded by Evan Duffield, a software developer with finance and PR experience. Duffield worked at Hawk Financial Group and developed machine learning algorithms and search engines.

He also authored the Dash whitepaper alongside Kyle Hagan. Hagan played a pivotal role in helping compile Dash and its network infrastructure and running the then-official pool. Still, he eventually departed the project. As per the announcement of Hagan’s departure by Duffield, the split was due to personal issues between the pair. Evan Duffield also stepped down from a leadership role in the project, with his place at the head of the Dash Core Team taken by Ryan Taylor. Taylor became CEO of the Dash Core Team in April 2017, with the Dash Core entity playing a supporting role to the Dash DAO.

How Does Dash Work?

Like cryptocurrencies in the mold of Bitcoin and Litecoin, Dash uses wallets with a public key and a private key. Public keys operate as addresses, and users “sign” transactions by using private keys in the way they would use a PIN code.

When a transaction between two public addresses is signed by the sender, Dash miners add it to many similar transactions to make up the next block of the Dash blockchain.

Dash divides this commonly used system into two layers—miners and Masternodes. Masternodes are special servers that perform the main functions on the Dash network. These include processing private transactions (PrivateSend), instant transactions (InstantSend), and the governance and treasury systems.

Since these Masternodes improve the network security and perform crucial functions, they are given 45% of the rewards from mining DASH. The miners themselves also receive 45%, and the remaining 10% goes toward ecosystem funding.

Because Masternodes play such an important role and receive significant rewards, users have to make a minimum deposit of 1000 DASH to become a Masternode.

What Makes Dash Unique?

The original vision of Dash was to bring greater privacy to Bitcoin. That being said, PrivateSend and InstantSend are the two main innovations that set this network apart.

PrivateSend allows users to make transactions that cannot be traced, and the identities of involved parties are not made public. Enabled by Masternodes, it makes DASH fungible.

Fungibility is another key difference between Dash and trackable cryptocurrencies like Bitcoin. Transactions made on the Bitcoin network can be traced, so certain coins can also be traced back through their history until when they were mined.

As such, coins that pass through a certain address can be blacklisted for various reasons. These coins are thus ‘tainted’ and tend to get frozen when they hit centralized wallets, even if the current or recent holders haven’t engaged in a prohibited activity. This isn’t possible with Dash.

Meanwhile, InstantSend is a function that allows users to instruct Masternodes to clear specific transactions immediately. These InstantSend transactions settle in seconds, which is a major improvement compared to the normal two-and-a-half minute wait times on Dash.

Finally, Dash is also self-funding by way of the 10% of block rewards that go towards network improvement. While this reduces the income of miners and Masternodes, it is decided democratically with proposals hosted on Dash.org.

How is the Dash Network Secured?

The Dash network is a proof-of-work (PoW) blockchain. This means it depends on many nodes called miners and Masternodes to perform complex computations to create blocks.

PoW mining is based on decentralization and network effect, with the network getting stronger as more miners join it and operate distinctly. This reduces the risk that miners will collude and make decisions in their own interests rather than those of the community or protocol as a whole.

Mining and being a Masternode are incentivized. The miner who solves a cryptographic puzzle can create a block, which the other miners validate as long as 51% of them agree. This block is added to the blockchain, and the miner receives 45% of the DASH block reward.

After that, miners on the network try to solve for the next block, with each one being mined at two-and-a-half minute intervals.

Meanwhile, Masternodes use a proof-of-service consensus algorithm where they receive a rating based on their past history of service. A rotating group of masternodes observes and confirms all new blocks added to the blockchain. This way, they protect against 51% of attacks in a process called ChainLocks.

The Dash proof-of-work algorithm is called X11, which is a custom hashing algorithm using a sequence of 11 further hashing algorithms. It was created by Dash founder, Evan Duffield.

What is the Use of DASH?

DASH is, like Bitcoin, a peer-to-peer electronic payment system that seeks to circumvent the traditional channels and eliminate slow and costly intermediaries.

However, Dash does improve upon Bitcoin when it comes to speed and privacy. It is fundamentally faster than Bitcoin when it comes to standard transactions, with a block time of two-and-a-half minutes compared to ten. InstantSend engages Masternodes to cut transactions down to mere seconds.

PrivateSend then enables anonymity, making Dash fungible and putting it firmly in the category of “privacy coins.” You should note that some other privacy coins, like Monero, are considered to have more robust privacy features. Still, Dash certainly beats Bitcoin in this regard.

Who Controls Dash?

The Dash community controls Dash via the Dash DAO. Often referred to as “the original” DAO, Dash allows anyone to propose changes to its protocol.

Masternode owners host monthly votes on proposals tabled to the network. The issues range from marketing and community-based decisions to direct modifications to the network and its fundamentals.

Uniquely, Dash DAO is funded internally, with 10% of DASH block rewards going toward project funding.

How Much Is DASH In Circulation?

Dash has a total maximum supply of 18,921,005 DASH. Out of this figure, 10.9 million DASH are already in circulation.

DASH coins are mined every two and a half minutes as miners create and validate new blocks on the network. Yet, the rate at which DASH coins are issued via these blocks isn’t constant.

Instead, the emission rate of DASH decreases by a fraction of one fourteenth every 210,240 blocks, which is an interval of around 12 and a half months.

How Do You Buy DASH?

Dash is a well-established and, by cryptocurrency standards, old coin that spent plenty of time in the very highest echelons of the market.

With this sort of reputation, you can expect to find DASH listed on almost all the top exchange platforms. Still, that may change, as many regulated platforms come under pressure to delist any coins offering privacy features.

You can use various currencies to buy DASH—top cryptocurrencies like BTC and ETH, stablecoins like USDT, or fiat currencies like the U.S. dollar.

Is It Possible to Buy Dash Instantly?

Buying DASH on an exchange is an instant process. Yet, actually withdrawing it off the exchange platform and into your own custody may not be.

You should expect withdrawal delays because regulated exchanges must carry out KYC (Know Your Customer) and AML (Anti-Money Laundering) procedures. This is particularly necessary when sending you coins with privacy features like Dash.

Once the withdrawal is authorized, you shouldn’t have to wait more than a few minutes before your DASH settles in your wallet.

How Do You Store DASH?

DASH is stored in a cryptocurrency wallet, and given how long it’s been around, Dash is compatible with plenty of wallets out there. The official supported wallets page on the Dash website details some of the different options, such as Exodus, Coinomi, DashDirect, and Dash Core.

Some wallets, such as Dash Core, have a full selection of features, including InstantSend and a p2p client. They may download a full copy of the blockchain, so keep some hard drive space free!

However, most third-party wallets are “light” and can store multiple assets, but they can’t download the entire blockchain. If you prefer using a physical hardware wallet that doesn’t connect to the internet, Trezor and Ledger also support Dash.

Dash Energy Consumption

Dash is a proof-of-work cryptocurrency, which means it’s reliant on the computing power of a large network of computers. While nowhere near as demanding as Bitcoin, Dash has the potential to become a major energy hog if the network grows to a similar scale.

Yet, Dash is a payment system that competes with payment processors and the banking system. As per Galaxy Digital’s estimates from 2021, the banking industry consumes a conservative 260 TWh each year. This far exceeds the consumption of crypto’s leading power guzzler, Bitcoin. A 2020 report by researchers at the Technical University of Munich put Dash’s rated power at just over 37,000 kW. For comparison, Zcash was rated at 49,000 kW, Dogecoin at 157,000 kW, Monero at 210,000 kW, and Bitcoin at 4.2 million kW.

Is DASH a Good Investment?

Dash shares a similar codebase to the ‘OG’ cryptocurrency Bitcoin, and several of Satoshi Nakamoto’s ideas when creating Bitcoin are very much at the fore with Dash.

Dash is an open-source, community-driven project whose economic fundamentals are also similarly attractive. There is a total possible supply of less DASH than BTC if lost and forgotten Bitcoin wallets aren’t taken into account.

Dash’s masternodes, while they provide several advantages over Bitcoin, could also become a point of failure. If a coordinated effort were made by a sufficiently capitalized bad actor, it is not inconceivable that a majority of masternodes could be taken over and the protocol compromised.

The privacy that Dash offers is also a two-sided coin. While optional privacy and fungibility of coins should perhaps be considered basic elements of a modern currency, the same features could also bring Dash under the microscope of regulators.

With many of the world’s governments hard at work developing their own digital currencies, cryptocurrencies with privacy features like Dash present a significant threat to their ambitions of control. As such, many regulated exchanges could crack down (and, in some cases, already are cracking down) on the likes of Dash. Leading independent researchers have proved that privacy coins aren’t necessarily a go-to for the criminal class. This market segment appears to still be dominated by leading banks. Many of these giant financial institutions tend to have their own novel approaches to ensuring privacy. Having said that, even when they are caught, the punishment rarely seems to fit the crime.