What Is Dash?
Launched in 2014, the cryptocurrency Dash was originally known as Xcoin. After being rebranded as Darkcoin, it landed on its current name, Dash, in March 2015. When it was initially created, it was designed to ensure user privacy and anonymity. The cryptocurrency’s whitepaper, co-authored by Evan Duffield and Daniel Diaz, describes it as a privacy-centric cryptocurrency based on Bitcoin founder Satoshi Nakamoto’s work.
- Dash aims to become a medium for daily transactions as a digital currency that can be used as cash, credit card, or via PayPal.
- In 2018, the digital cash company expanded into Venezuela, the cryptocurrency's first foray into an economically-distressed country.
- Dash is run by a subset of its users, which are called "masternodes."
- All masternodes have a starting stake, which is equal to 1,000 DASH in their systems.
While it still features strong encryption features, the company has since recast its ambitions. Dash now aims to become a medium for daily transactions as a digital currency that can be used as cash, credit card, or via PayPal. Dash is an open-source project which includes a decentralized payment network.
In August 2021, Dash is the world’s 50th most valuable cryptocurrency by market capitalization ($2.6 billion). The value of Dash cryptocurrency is $251.68.
Dash aims to become a medium for daily transactions, and it has cast a wide net to realize that ambition. In 2018, the digital cash company expanded into Venezuela, the cryptocurrency's first foray into an economically distressed country.
Demand for cryptocurrency—and the number of Dash users—has rapidly increased since the virtual currency was first introduced three years ago. The reason for this is the need for a transactional currency; Venezuela is currently experiencing a period of significant civil unrest and hyperinflation to such a degree that the local currency (bolívar) has been essentially rendered valueless.
In an interview with CryptoSlate, Ryan Taylor, CEO of Dash, said that cryptocurrency is “critical” for “survival” in Venezuela. Citizens of the country have turned to cryptocurrencies, such as Bitcoin and Dash because they can be transacted quickly and cheaply.
Dash has also invested in research, funding a blockchain research lab in partnership with Arizona State University (ASU). Through this lab, Dash funds research that is "designed to accelerate research, development, and education in ways that advance blockchain transaction speed, efficiency, security, and expand its uses."
The Dash-ASU agreement also provides scholarships for undergraduate and graduate research fellowships.
How Is Dash Different From Bitcoin?
The main difference between Dash and Bitcoin lies in the algorithm that each technology uses to mine coins. Dash uses the X11 algorithm, a modification of the proof-of-stake (PoS) algorithm. It also uses CoinJoin mixing to scramble transactions and make privacy possible on its blockchain. Bitcoin uses a proof of work (PoW) algorithm.
The two cryptocurrencies have different systems for handling transactions. Transactions on Bitcoin’s blockchain need to be validated by all nodes within a network. The process, which is designed to ensure consensus without authority, requires substantial investment infrastructure for full nodes (full nodes are nodes dedicated to mining). In this system, Bitcoin miners running full nodes commit to increasing amounts of time and money to ensure optimal operations. With the scaling of Bitcoin’s network, this is increasingly becoming an impossible task.
This process is time-consuming and fails to prevent clogging. Slow processing results in a backlog of transactions within Bitcoin’s memory pool. And in turn, this can lead to high transaction fees, making Bitcoin unsuitable as a cryptocurrency for daily transactions.
Dash uses a different system for handling transactions. Dash is run by a subset of its users, which are called "masternodes." Masternodes simplify the verification and validation of transactions. All masternodes have a starting stake, which is equal to 1,000 DASH in their systems. In the cryptocurrency's whitepaper, the cofounders state that this allows the users to pay for the services and earn a return on their investment.
It also solves a scalability problem for transactions. This is because the number of nodes required to successfully approve a transaction is reduced to a manageable number. Masternodes are responsible for approving transactions from the miner network and providing services, such as payment and privacy, to the Dash network.
As of August 2021, there are 4,614 masternodes in Dash’s network.
The second innovation within Dash’s ecosystem lies in its governance model. Bitcoin and Litecoin, two cryptocurrencies with similar aspirations as Dash, grew out of academic institutions. To a large degree, the future development of these cryptocurrencies is dependent on largesse from these institutions.
Unlike Bitcoin and Litecoin, Dash has pioneered a self-funding model by splitting block rewards between three stakeholders—masternodes, miners, and treasury. The first two get a 45% share each. The 10% share accruing to the treasury is used to finance future development projects at Dash. Masternodes play an important role here as well: their votes determine future development directions for the cryptocurrency.
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