🤔 What is Dash ?
Dash is a cryptocurrency that was forked from Bitcoin to become digital peer-to-peer cash.
It’s designed to allow fast, easy, and affordable online payments without going through the traditional financial system.
💡 What role does DASH token play ?
DASH is the native cryptocurrency of Dash blockchain. It is used for:
- Transaction fee: Users pay DASH tokens as transaction fees to include their transactions on the Dash blockchain.
- Masternodes(explained later): Users have to stake 1000 DASH tokens to run masternodes.
📝 Origin of Dash
Dash was launched in January 2014 as “Xcoin” by Evan Duffield. 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(around 10% of total supply) DASH coins within the first two days.
After this technical error, Evan Duffield offered to relaunch the coin, but the Dash community disapproved the proposal, and so the project continued as is.
Later, it was rebranded as Darkcoin, which received press for being used in darknet markets. Darkcoin was rebranded as Dash in 2015 in a move to shed the token’s negative reputation and emphasize token’s efficacy as a payment system and a currency suitable for daily use.
In early 2017 Duffield, who lived in the Phoenix area, and some other people working on Dash took space in a business incubator at Arizona State University. The Dash DAO later funded a blockchain research lab at ASU.
As of April 2018, Dash’s market capitalization was around $4.3 billion and it was one of the top 12 cryptocurrencies.
👴🏻 Evan Duffield - Founder
Early in his career, Duffield was a Software Developer for Warped AI, Wells Fargo, and iAcquire. In 2014 he launched the Hawk Financial Group and is their lead Software Developer.
Duffield was an early user of Bitcoin in 2010 and wanted to add another layer of anonymity to it. Duffield claims that Bitcoin Core developers would not have merged such code. In response, Duffield launched Dash in January-2014 as a privacy-focused Cryptocurrency.
🤖How does it work ?
How is Dash different from Bitcoin ?
X11 minning algorithm
When Duffield created Dash he wanted to use an algorithm that wasn’t exploitable by the powerful ASIC mining rigs that control Bitcoin mining.
As a result, he created an algorithm known as X11. The X11 algorithm is a proof-of-work algorithm, just like Bitcoin’s SHA-256, and it uses the processing power of computers to solve a cryptographic problem, thus proving work has been done, validating transactions, and preventing abuses on the network.
X11 is different from other proof-of-work algorithms because it uses 11 different hashing processes. That made it extremely difficult to create an ASIC rig capable of mining Dash, which kept the distribution of mining and coins more equitable.
Dash wasn’t able to block ASICs forever, and by 2018 an ASIC capable of mining Dash was released.
Masternode quorums check whether or not a submitted transaction is valid. If it is valid, the masternodes “lock” the inputs to that specific transaction and broadcast this information to the network, effectively promising that the transaction will be included in subsequently mined blocks and not allowing any other transaction to spend any of the locked inputs.
This ensures that the transaction is confirmed in less than a min as compared to regular transactions.
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.
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.
Dash Platform is a technology stack for building decentralized applications on the Dash network. The two main architectural components, Drive and DAPI, turn the Dash P2P network into a cloud that developers can integrate with their applications.
Drive is Dash Platform’s storage component, allowing for consensus-based verification and validation of user-created data. In order for this to occur, developers create a data contract. This data contract describes the data structures that comprise an application, similar to creating a schema for a document-oriented database like MongoDB.
Data created by users of the application is validated and verified against this contract. Upon successful validation/verification, application data is uploaded to Drive, where it is stored on the masternode network.
DAPI – A decentralized API
DAPI is an HTTP API exposing JSON-RPC and gRPC endpoints. Through these endpoints, developers can send and retrieve application data, as well as query the Dash blockchain.
DAPI provides developers with the same access and security of a full node, without the cost and maintenance overhead. Unlike traditional APIs which have a single point of failure, DAPI allows clients to connect to different instances depending on resource availability in the Dash network.
Developers have the option to connect to DAPI directly or use a client library. This initial client library, dapi-client, is a relatively simple API wrapper developed by Dash Core Group to provide function calls to the DAPI endpoints.
🏛️ Governance model
The Dash network is the longest-running decentralized autonomous organization, utilizing on-chain governance to allocate network resources toward projects and organizations that support the network.
Proposals generally begin life as simple pre-proposal forum posts on the Dash Forum, where feedback and suggestions are solicited from the general community. Once the proposal owner decides they have a reasonable chance of passing their proposal, it is created as a governance object on the blockchain.
A fee of 5 DASH is associated with this action to prevent spam and ensure only serious proposals make it to this stage.
The net total of yes votes must exceed 10% of the total masternode count at the time votes are tallied in order to pass. If there are more passing proposals than the available block reward can provide for, the proposals with the most yes votes will pass first, creating a cut-off point for less popular proposals.
Dash DAO funds:
- Dash core group, a company contracted to maintain and update Dash protocol.
- Marketing operations of Dash newsroom.
- Dash investment foundation that provides loans and funding to startups building on Dash.
😨 Risks and challenges
- Limited privacy: Dash uses a variation of coin join to hide transactions to maintain privacy. Hence, the level of privacy depends on the number of users opting in to use the private send feature. The users will stand out and can be easily tracked if only a handful of users are using private send.
- Government regulation: Most governments treat Dash like other private cryptocurrencies like Monero etc. As a result, Dash has been delisted from many exchanges.
- Competition: Dash is not the best in anything:
- Its privacy feature is not foolproof like Monero. It is not appealing to the users who want private cryptocurrencies. However it it taking all the backlash as other private cryptocurrencies, being delisted from most major exchanges.
- It can support up to 56 transactions per second which is not sufficient to scale to become global digital cash.
- There are many alternative cryptocurrencies that are a better fit for becoming digital cash.
Within the first 48 hours of Dash’s launch, approximately 2.0 million coins were mined, which significantly exceeded the planned emission schedule.
Dash was originally forked from Litecoin, and although Litecoin suffered a similar issue at its launch due to a bug in its difficulty adjustment algorithm, this was not widely understood at the time of Dash’s launch.
While it is well-documented that Dash inherited the bug from Litecoin, there has nonetheless been widespread speculation about whether the resulting instamine was intentional to benefit early miners.
Dash uses a block reward system to incentivize miners, masternodes, and protocol development.
- 45% of the block reward goes to the miner who finds the next valid block
- 45% goes to the masternode network
- 10% is reserved in a pool for future protocol development
Block rewards are reduced every 210,240 blocks (approximately 1 year) by 7.14%. The supply is capped at 18,900,000 DASH.
🧐 Indicators to watch out for
- Minning difficulty: new miners are not joining the network.
- YouTube channel is not growing:
- Twitter following is growing at a very slow pace: