A Look at Dash Coin

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Dash coin burried in the ground.
An analysis of the fundamentals of Dash’s technology to identify the key differentiators compared to other blockchain platforms.

Dash is a cryptocurrency that aims to be adopted worldwide, just like Bitcoin.

Over the course of its evolution, it has become quite different from Bitcoin. Dash has made its distinction through faster block rates, larger blocks and a masternodes system.

History of Dash

Dash was originally launched as XCoin in 2014. Soon after launch, it rebranded as DarkCoin.

After DarkCoin became associated with darknet markets, the cryptocurrency underwent another rebrand. In March 2015, it got its current name, Dash—which is short for Digital Cash.

Dash specializes in certain areas such as privacy, decentralization, innovation and transaction speeds.

The cryptocurrency has a whole ecosystem of stakeholders, right from wallet holders who send and receive the tokens, miners who run the network via proof-of-work, as well as a consensus system called masternodes.

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Dash’s masternodes provide additional functionality and governance. All stakeholders get a percentage of block rewards.

Technology & Features Powering Dash

Although Dash’s core code is based on that of Bitcoin, it has started adapting and evolving much faster.

Bitcoin faces the same challenges of scalability, speed and governance. But while Bitcoin has charted a path towards a second layer solution to scalability, Dash has focused on getting the governance right first.

Now, through new features mentioned below, they are trying to solve the speed and privacy issues plaguing the cryptocurrency space.

  • InstantSend

InstantSend allows the instant approval of a transaction by the masternode network. This makes sure a user does not have to wait for three to six confirmations.

The transactions goes through, as the name suggests, instantaneously.

This is an important bottleneck to be removed before any cryptocurrency can call itself digital cash.

Cryptocurrencies can hardly process a few hundred transactions per second while some of the largest payments processors like Visa handle 24,000 transactions per second.

To become the preferred digital cash of the world, a cryptocurrency like Dash will have to scale multi-fold.

The InstantSend feature seems to be a step in the right direction, although far from the ideal goal.

The way InstantSend works is by allowing the wallet to lock a particular transaction’s input until such a time that they get recorded permanently on the blockchain.

Bitcoin and Dash cryptocurrency.
Although Dash’s core code is based on that of Bitcoin, it has started adapting and evolving much faster. Bitcoin faces the same challenges of scalability, speed and governance

Such locking prevents double spending of transactions and helps the blockchain credit it in the recipient’s account instantly.

This is miles apart from Bitcoin’s scalability path—the Lightning Network, which is a second layer settlement solution.

  • PrivateSend

This allows a user to retain their privacy while performing a transaction on the Dash blockchain.

This is a nifty feature for individuals or corporations who may want to use a cryptocurrency but do not want the whole world to know about their transactions.

However, this feature has its limitations. User can send only a certain denominations like 0.5 Dash but cannot send something like 0.6 Dash.

This feature uses a mechanism called CoinJoin. It finds other users sending similar amounts of Dash and then tumbles the transactions just like a Bitcoin mixer would.

This process usually requires quite some time—sometimes a few hours to a few days—to make sure that the transaction data is private.

PrivateSend takes one transaction as an input and spits out several transactions that are untraceable to the original input, making it anonymous.

  • Masternodes

The nodes of the Bitcoin network are responsible for relaying and storing the transaction information and hence the blockchain ledger.

The node will distribute the information of every transaction to all the other nodes and keep the transaction immutable.

Everyone has the same ledger copy. This also makes sure miners confirm the transaction and create new blocks for which they are rewarded.

Masternodes on the Dash blockchain are similar to this but for one key feature. To own and run, one needs to pay a deposit of 1,000 Dash tokens. This deposit is locked-in to keep the masternode alive.

The idea is that the person or people running the masternodes are performing a crucial task of maintaining the sanctity of the blockchain.

If a masternode is found to be behaving against the interest of the blockchain—like launching an attack or trying to alter/modify/double spend any transactions, the deposit can be revoked and the bad actor kicked out of the network.

Dash coin masternodes.
The nodes of the Bitcoin network are responsible for relaying and storing the transaction information and hence the blockchain ledger.

This simply provides an additional incentive to keep the network clean and secure. In other words, users running these masternodes are staked in.

They have a financial stake in the network and hence will be less likely to act against its interest.

Dash tokens are currently trading at around $80. This means to run a Dash masternode, one has to stake in $80,000.

That is a good way of keeping out the bad actors and making sure the people who govern Dash projects have a sizeable stake.

This is not different from the way a corporation is governed today. Shareholders invest their money and they choose the board of directors who in turn govern the company.

So why would someone run a Masternode, you may ask? It is because they also receive a reward for running the Masternode.

As per crypto stats and comparison website masternodes.online, Dash Masternode provides a 7 percent return annually.

With this setup, Dash currently has over 4,000 active Masternodes. This is a good way to make sure the network is sufficiently decentralized.

Advantages

  1. DAO and Decentralized Governance

Dasch cryptocurrency on a gray background.
Dash is a cryptocurrency that aims to be adopted worldwide, just like Bitcoin.

Dash has a decentralized autonomous organization (DAO) that regulates how Dash is governed through a voting process.

Masternodes owners are not only responsible for securing the network, but also for governing the network. Each masternode owner will get to vote on various proposals.

The proposals are submitted by developers, designers, users and even non-technical folks. They are then voted upon.

Every proposal involves an improvement—big or small—that someone wants to see on the network. The proposals get accepted by the masternode owners’ votes and then they are executed by the team.

This structure makes sure everyone has an incentive to improve the Dash system. Dash DAO is known to use this money for technical development, design, meetups and sponsoring events and people who contribute to the Dash community.

Block rewards are split 45 percent for the miners, 45 percent to the masternodes and the remaining 10 percent to the treasury. The treasury funds all the projects that benefit and help build the Dash platform.

  1. Consumer and Merchant friendly

Dash has light wallet apps for consumers who wish to use the currency. On the other hand, they have a decentralized API for merchants to quickly integrate into their website or app.

  1. Confidentiality

Users either have a choice of using a reliable decentralized network like Bitcoin’s network or to choose a privacy coin’s smaller blockchain, like Monero. Dash provides the best of both these worlds.

  1. Reliability

Dash is a respected cryptocurrency that is accepted to be reliable and innovative. While most of the cryptocurrency projects are yet to prove themselves, Dash is perhaps one of the few that have a great track record of product delivery.

Disadvantages

  1. Risk of Stake Centralization

With the additional layer of power where masternodes can be bought, there is an increased risk of a big player with significant capital rigging the game in their favor. The system of governance has a dependency on people, which is absent in Bitcoin.

  1. Issues Surrounding Scalability

Dash has yet to directly address scalability issues as with other decentralized cryptocurrencies on the market.

Conclusion

Woman buyng or selling Dash coin over her smartphone.
Dash has a decentralized autonomous organization (DAO) that regulates how Dash is governed through a voting process.

Dash is a good mix of old cryptocurrency reliability and stability combined with an innovation-driven mindset that is needed to solve the problems persistent with cryptocurrencies.

It is a top contender to become the digital cash for the world without a doubt, though achieving this goal above competitors will take time.

C.M.

C.M.

With the urge to know more about everything around us, I am an enthusiast researcher and writer with keen interest in expanding my knowledge in a bid to be well versed. Through writing, I express and share my feelings, ideas, and thoughts for like minded individuals.
C.M.
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