Similarly to Bitcoin, Dash is a digital currency that can be used to send or receive payments. Dash was built based on the blockchain technology that Bitcoin also uses, but it was significantly upgraded.
Dash… characteristics of the cryptocurrency.
Evan Duffield stumbled upon Bitcoin in 2010 and was very impressed of the technology, but wasn’t a big fan of the slow transaction speed and the lack of privacy.
He had many ideas about how to improve Bitcoin, but the Bitcoin core members never let him implement them, as it would mean changing the source code. Which is why he decided to use some of Bitcoin’s source code and create his own cryptocurrency.
Dash was first called Xcoin, which then turned into “DarkCoin”. Within the first two days after the premiere, 1,9 million coins were mined, which is about 10% of the total supply that will ever be distributed. Evan Duffield said it was caused by an error that was created when the Litecoin code was forked to create Dash.
Dash has an 16 million coins limit, while currently in circulation there are about 7,85 million coins. Every coin costs 697 USD, and the total market cap stands at 5,4 billion USD. The average mining time is 2,5 minutes, so 4 times shorter than Bitcoin.
Dash also has a changing block reward, which gets 7,1% smaller every year.
Dash in comparison to others
Bitcoin, despite its many advantages, also has a lot of downsides. One of these is a block size limit, which slows down the transaction time and the 10-minute process of creating a block, which in turn limits the actual use of Bitcoin transactions by users.
Being an open source project, Bitcoin has no financing model for programmers. It also lacks a consistent management mechanic that would allow for easy discussing and implementing protocol changes. Verifying the blockchain data is managed by lower class nodes on voluntary principle and there is no financial compensation that would encourage updating the hard- and software.
Bitcoin transactions are also lacking when it comes to privacy. Due to these and many other faults, Bitcoin is met with higher and higher entry barriers while trying to enter general market, and the dream of a true P2P electronic money was buried under the heap of neverending debates and slow updates.
The creators of Dash wanted to publish a new blockchain, which would be free of these faults. The Dash programmers created their blockchain as the first self-financing and self-managing protocol with immediate payments, working in the Masternodes network. Some of the key features introduced in Dash include:
- Masternodes. Unlike Bitcoin, Dash included Masternodes to encourage users to pay in order to secure the network and adding interesting transaction functions, like InstantSend. Masternode operators get 45% of the reward for mining a block.
- InstandSend. Instantsend uses the InstantX function of Masternode to send and confirm transactions within seconds. Distribution of Bitcoin blocks takes 10 minutes on average, and 6 typical confirmations of big transactions can take up to an hour.
- PrivateSend. Dash introduced the PrivateSend transactions, which allow a Dash user to choose full privacy with their transactions.
- Self-sufficient, decentralized device. Dash blockchain is also self-financing. A part of every block – 10% as of today – is dedicated to the network development and promotion budget. This means that Dash programmers and promoters will receive payment for their contributions, unlike with Bitcoin, where changes are voluntary and uninitiated.
The Instant Send function – how does it work
InstantSend is a function of the Dash protocol that utilizes transaction blocking and masternode consensus to enable instant Dash blockchain transactions. InstantSend allows Dash to compete with the existing centralized payment platforms like Visa, which offer fast transactions. The Dash InstantSend technology offers just that, but with a decentralized system.
The first part of the InstantSend function is transaction blocking. This mechanism serves to prevent double spending within the Dash network. Currently, for the sellers to protect against double spending in systems like Bitcoin, they usually have to wait for the block to be confirmed in order to ensure that the sent transaction is valid. The obstacle in this case is that one block on the Bitcoin chain takes about 10 minutes to be confirmed. Transaction blocking serves as a way to improve the way double transactions are currently handled in the cryptocurrency systems, which in turn allows for faster transactions.
In the case of transaction blocking, the client signals the intention of blocking the means from one entry to a certain exit in the whole network. It happens through sending a message with the transaction and the accompanying block request. When the blocking message gets distributed in the Dash network and delivered to everyone, a set of chosen in a deterministic fashion masternodes, which are the second element of the InstantSend function, create a consensus. After reaching consensus, another message gets distributed in the network, making all the clients obey the blockade.
The uniqueness, popularity, and perspectives of Dash
Despite its functions, Dash is still catching up to Bitcoin, who had 5 years of headstart. It is currently the 6th biggest cryptocurrency in total market cap.
Market capitalisation is just one of the ways to measure the status of a cryptocurrency. The fluctuation in cryptocurrency prices affect the market cap of crypto. The daily transaction volume – calculated in USD – is surely a more useful measure. The trading volume shows just how much the cryptocurrency is actually used. Today Dash’s trading volume takes 11th place with 61,27 mln USD.
Even daily trading volumes can’t provide the full picture, as most of them are transactions made on markets and not during paying in real life. It’s an important difference. Many markets use Bitcoins to trade, meaning you have to buy them first to then exchange it for other cryptocurrencies. This can distort the numbers, but it also goes to show the advantages Bitcoin has. However, looking at market limits and trading volumes it is worth noting that other cryptocurrencies that function similarly to Dash are sometimes even higher in rankings. Litecoin also generates blocks roughly every 2,5 minutes and has been maintaining higher capitalisation than Dash for a long time. Monero, another coin focused on privacy, published the same year as Dash has a higher daily trading volume. Ripple also offers fast transaction confirmations and has a strong position among the top 5.
As previously mentioned, Dash is aiming to become the currency for everyday transactions. It cast a wide net to realize this ambition. Aside from the United States it’s present in many other countries. For example, it already started initiatives in a few countries that are in dire economic straits and which experiment with cryptocurrencies.
Dash’s perspectives seem interesting. The government of Venezuela, which recently introduced their own cryptocurrency “petro”, already issued an order for government agencies to accept any cryptocurrencies. Dash was an early applicant in this country, organizing conferences with many members, to implement cryptocurrencies.