The rapidly proliferating cryptocurrency ecosystem has brought its own set of problems of choice for investors and traders. There are coins that claim to be true inheritors of bitcoin founder Satoshi Nakamoto’s vision. There are privacy-focused coins.
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The cryptocurrency Dash was launched in 2014, and has a total market cap of $920 million. I’m sure that you will also be surprised to find out that the name of this coin was changed twice before deciding on its final name — Dash. But more on that later!
In this guide, I will explain what the Dash cryptocurrency is, what makes it so special, and how Dash transactions work. Not only that, but I will also talk about how secure the Dash cryptocurrency is, and how it can be bought, stored and used.
So, by the end of this guide, you will have a good understanding of the Dash cryptocurrency, as well as its uses and features.
What is DASH?
Dash cryptocurrency, like Bitcoin, is a digital currency that can be used to send or receive payments. In fact, Dash was built on top of the blockchain technology that Bitcoin uses, however, some significant improvements have been made to it.
Dash has gained popularity because it offers better privacy and higher transaction speeds than Bitcoin. It can achieve this with the help of a unique model that involves “Masternodes”.
I will elaborate more on Masternodes later as they form the backbone of the Dash network.
Not only does Dash cryptocurrency provide these benefits, but it also operates on a self-governing and self-funding model. Unlike Bitcoin, Dash’s network can fund itself to make further improvements on the DASH technology.
Dash, where ‘Dash’ is a mixture of the words ‘Digital’ and ‘Cash’, was released on January 18, 2014, as “Xcoin (XCO)” by Evan Duffield. On January 28, 2014, the name was changed to “Darkcoin” before finally being renamed “Dash” on March 25, 2015.
Dash was forked from Litecoin, and Litecoin was forked from Bitcoin. A bug got introduced when the fork happened, resulting in the mining of 1.9 million DASH coins within the first two days. 1.9 million is about 10% of the total Dash coins that will ever exist!
After this technical error, Evan Duffield offered to relaunch the coin, but the Dash community disapproved of the proposal, and so the project continued as is.
Since its launch in 2014, the DASH cryptocurrency was priced at less than $10 until the end of 2016. As you can see from the chart below, the price of Dash started to increase at the beginning of 2017, and reached a high of $1540 on the 20th December 2017.
So, now you know how it all started for the Dash cryptocurrency. Next, let’s look at each of the above-mentioned factors in detail to understand what makes Dash so unique.
How Can DASH be Used?
Dash has many features that provide it an edge over other cryptocurrencies like Bitcoin and Litecoin. Dash can be used to make transactions in a more private and speedy manner because of these three features: Masternodes, PrivateSend, and InstantSend.
Let’s have an in-depth look at each one of them.
On the Bitcoin blockchain there are miners who verify transactions that take place on the blockchain, and in turn, get rewarded for their work. Similarly, on the Dash cryptocurrency blockchain, there are also miners, but the system is divided into two parts — Masternodes and miners.
A user must make a deposit of a minimum of 1000 DASH in order to become a Masternode.
Masternodes act as special servers that perform the critical functions on the Dash crypto network. They are responsible for Private Transactions (PrivateSend), Instant transactions (InstantSend), and the governance and treasury system.
As you can see below, there is a strong and growing network of Dash Masternodes.
These Masternodes improve the security of the network and make sure that the transactions are as quick as cash transactions. This costs money and effort from the Masternodes, so they are rewarded by the network.
A Masternode gets 45% of the total reward received from mining DASH coin. So, suppose 1 DASH coin gets mined by the miners, it will be split in the following manner:
- 45% rewards (0.45 DASH cryptocurrency) goes to miners;
- 45% reward (0.45 DASH cryptocurrency) goes to Masternodes;
- 10% (0.10 DASH cryptocurrency) goes towards funding for further network improvements.
As shown in the snapshot below, this unique system of Masternodes is what helps Dash to provide two great benefits which we will look at next.
One of the problems with the Bitcoin blockchain is that it is completely public. What this means is that if you make a Bitcoin transaction, anyone in the world with internet access can find out the following things about it:
- The public address of the sender and receiver of each Bitcoin transaction;
- How much the transaction was worth;
- Previous transactions in which that Bitcoin was involved.
Can you see the problem? It is not like fiat transactions where the details of each transaction are known only to the parties involved.
However, Dash offers a service called PrivateSend which adds privacy to transactions. Because of this, Dash transactions cannot be traced back, nor is the identity of users revealed to the world. As mentioned before, private transactions are facilitated by Masternodes.
Even if all your transactions are legal (which I hope they are), would you really want the rest of the world to know all about them? Let me guess, your answer is “no!”. So, this is a huge advantage that the Dash cryptocurrency offers over Bitcoin.
This advantage is what also makes the dash crypto “fungible”. Ever heard of fungibility?
Well, traditional fiat currencies (such as USD, EUR, JPY) are all fungible. This means that any two $10 bills can replace each other. Just like 1 oz. of gold of the same grade is worth the same as another 1 oz. of gold of the same grade.
This concept is not true for Bitcoin. Since Bitcoin transactions can be traced back, someone can refuse to accept a Bitcoin which has been used in illegal trade in the past.
Since Dash cryptocurrency transactions cannot be traced, their history is unknown. This makes all the Dash coins equal and fungible.
On average, it takes about 10 minutes for a Bitcoin transaction to get confirmed. On the other hand, it only takes a few seconds for a transaction using Visa or Mastercard. That’s a huge difference, right?
Bitcoin Transaction Confirmation Time | Source: blog.bitaccess.ca
This has raised many questions on the scalability and mass adoption of Bitcoin. Dash solves this problem by providing a special service called “InstantSend”. Using InstantSend, Dash transactions are almost instantly confirmed by the Masternode network.
There is an extra cost for the InstantSend service over a normal Dash transaction. A normal Dash transaction gets cleared in about 2.5 minutes, which is still an improvement over Bitcoin.
But who wants to wait for 2.5 minutes at a grocery store just to make a payment? No one. So, by paying a small fee, you can ask Masternodes to clear your transaction within a few seconds.
These 3 useful features provide tremendous benefit to the Dash cryptocurrency over many others like Bitcoin and Litecoin. In addition to these features, there is one more thing that differentiates it from others.
Self-Governing and Self-Funding Protocol
In Bitcoin, when a block gets mined, 100% of the reward goes to the miner(s). However, with Dash, 10% of all the mining rewards go back to Dash.
It basically gets added to the budget which is then used to fund the growth and advancement of the Dash crypto. This means that Dash cryptocurrency can fund its own growth and adoption.
So, who decides the usage of this fund? Again, it is done in a democratic manner in which the Dash network participants vote on the various proposals as described on dash.org.