Last Updated on: 12th February 2021, 12:12 am
Dash (DASH) is a cryptocurrency based on Bitcoin software but has anonymity features that make it impossible to trace transactions to an individual. It was created by Evan Duffield in 2014 and was previously known as XCoin (XCO) and Darkcoin.
Dash describes itself as digital cash that aims to offer financial freedom to everyone. Payments are fast, easy, secure, and with near-zero fees.
Built to support real-life use cases, Dash aims to provide a fully-decentralized payment solution. Users can purchase goods at thousands of merchants and trade it at major exchanges and brokers around the globe.
How does Dash work?
It was created as a hard fork of Bitcoin in order to enhance privacy an element that the Dash development team found lacking in Bitcoin’s system and for the most part, has similar functionalities and use cases as Bitcoin’s peer-to-peer electronic cash.
What makes Dash so unique is the second tier in its system composed of Masternodes. A Masternode is an individual who holds enough Dash (1000 Dash) to have a “stake” in the ecosystem, Masternodes also enable dash-specific functions like InstantSend and PrivateSend.
Think of these Masternodes as something like voting shareholders. They vote on things such as what should happen with new projects, who should get funding from the treasury, and which direction development should go.
And thanks to Masternodes, Dash doesn’t need to reach unanimous community consensus to make significant changes to its codebase, so it’s not at risk of hard forking due to changes in the core code.
Instead of the forking model, Masternodes vote on community proposals, and if the number of nodes who vote ‘yes’ outweighs the number of nodes who vote ‘no’ by at least 10%, then the proposal is approved.
For supporting the network, Masternodes receive 45% of the block reward miners receive the other 45% of the block reward, and 10% of the block reward is withheld and goes to a fund that distributes wealth for approved community-proposals and initiatives.
What did Dash improve?
Governance, privacy, and speed are cornerstones of the Dash network; each of these elements is crucial to any decentralized community.
However, these features are riddled with inefficiencies on many existing decentralized systems–which is why Dash set out to provide solutions to the sub-optimal networks with weak offerings that existed in the market.
Unlike most blockchain networks, Dash has a governing body the Masternodes responsible for voting on network proposals, as well as facilitating the operations PrivateSend and InstantSend that happen in the second tier of their network.
For facilitating these transactions, Dash Masternodes are rewarded with 45% of the block reward for their work.
To become a Masternode, an individual must own at least 1,000 Dash.
Privacy is one of, if not, the central pillar in Dash, as a matter of fact, privacy is such an important feature of Dash, that Dash coin is often referred to as a privacy coin.
To achieve the level of privacy that decentralized network advocates are comfortable with, Dash mixes the coins within their network together to muddle their ownership and then redistributes these coins back to wallet addresses, so it becomes unclear who’s coins belong to who.
In the Dash network, this feature is called PrivateSend; when a user PrivateSends a tx, all of that transaction inputs previous histories are cleared, making it impossible to distinguish one Dash coin from another. This lack of history makes Dash relatively fungible, which is a significant characteristic that makes
Dash more like a feasible payment method than other cryptocurrencies with little to no fungibility like Bitcoin–where the price of 1 Bitcoin is not the same in every location, and therefore not entirely fungible (equally interchangeable at a global level).
As mentioned above, Dash’s InstantSend feature makes the Dash coin a more feasible payment method than other cryptocurrencies such as Bitcoin.
When a Dash transaction is sent using InstantSend, the network of Masternodes is able to lock the transaction funds and only unlocks them for their specific purpose.
In other words, the Masternodes act as escrow agents, which effectively allows a transaction to be instantly sent and finalized over the Dash network since the nodes lock those funds and only allow them to be used in a particular, pre-specified way.
Dash’s InstantSend feature is a major improvement over Bitcoin’s lengthy 6-confirmation-before finality-rule that many individuals abide by–the difference is a transaction that is finalized in about 1.3 seconds (Dash) opposed to a transaction that is finalized in about an hour (Bitcoin).
Why use Dash?
If you care deeply about anonymity and privacy or maybe Bitcoin’s 6 confirmation rule puts a dent in your lifestyle or payment settlement process then you might want to consider using Dash.
With Dash’s PrivateSend, an emphasis is placed on anonymity and privacy when transacting with your peers, and through Dash’s InstantSend, transactions are sent and finalized within 1.3 seconds.
Both of these features are likely to eliminate any privacy and transaction speed issues you were experiencing on other blockchain networks.
Also, if you are interested in supporting a network in return for a generous portion of the block reward, then you might be interested in becoming a Dash Masternode, and the Dash network may be the perfect fit for you.
Vincent Nyagaka is a Professional Trader, Analyst & Author. He has been actively engaged in market analysis for the past 7 years. He has a monthly readership of 100,000+ traders and has taught over 1,000 students since 2014. Vincent is also an experienced instructor and public speaker. Check out Vincent’s Professional Trading Course here.