Dash Solving the Challenges of Instant, Private Payments

Dash Solving the Challenges of Instant, Private Payments

Dash is a cryptocurrency based on the Bitcoin and Litecoin code base, but with various changes and improvements that have differentiated it since its debut in 2014. Dash’s creator, Evan Duffield, built Dash to address three key issues he saw in the existing Bitcoin network: privacy, governance, and transaction speed. Over the past three years, Dash has risen to become one of the top global cryptocurrencies, with its market cap consistently placing in the top ten cryptocurrencies despite a highly competitive market.

The main goal of Dash is to make digital cash more usable. Currently, you can send Bitcoin for online transactions and value transfers. However, the wait time for transaction confirmation on the Bitcoin blockchain makes it infeasible to use Bitcoin for in-store transactions or other value transfers that require near-instant confirmation.

Bitcoin’s high fees also make it a poor choice for smaller transactions, limiting its general usefulness as a digital currency for purchasing goods and services. As we’ll see, Dash seeks to solve these issues with its innovative architecture.

Dash began as a fork from the Bitcoin/Litecoin codebase. With its emphasis on privacy and transaction speed, Dash originally had a reputation as a coin for illicit transactions. In the early days it was known as XCoin, but that name soon changed to Darkcoin, further playing into the idea that Dash’s privacy features could be used to hide sketchy transactions. Wanting to pivot away from the dark coin association, the community underwent a final name change to Dash, a portmanteau of “digital cash.”

The early days of Dash were characterized by the design and building of the currency’s unique two-tier architecture that facilitates fast transaction speeds and the coin mixing necessary for privacy. Shortly thereafter, Dash implemented a decentralized governance system that allows power users to vote on development proposals for the network.

In the corporate world, three and a half years is still a company’s infancy. However, in the rapidly growing and emerging cryptocurrency space, Dash is now one of the old guard. It represents one of the most stable and established cryptocurrencies currently on the market. This stability comes, in part, from Dash’s highly active community of users. These users have generated thousands of threads and comments about Dash on Reddit and BitcoinTalk, and they’ve shared the project far and wide. Since creation, Dash has consistently added nodes to its network, increasing reliability and security with this growth.

Dash’s innovation was a two-tiered structure to its blockchain. The first tier is familiar to anyone who has studied Bitcoin, Bitcoin Cash, Litecoin, and other standard proof of work cryptocurrencies. On Dash, miners are responsible for creating new blocks and securing the blockchain. In exchange for mining blocks, miners on Dash receive 45% of the block reward. This is in contrast to Bitcoin, where miners receive 100% of the block reward. The remaining 55% of the block reward is allocated elsewhere, as we’ll see shortly.

Dash has an average 2.5 minute block time, four times faster than Bitcoin. For the mining, Dash created a proprietary hashing algorithm known as X11 that requires sequential, repeated hashing. The X11 algorithm has been shown to use 30% less wattage than Litecoin’s Scrypt algorithm.

The second tier of Dash’s architecture is for servers set up by power users, known as masternodes. These masternodes process Instant Pay transactions, facilitate coin mixing, and vote on governance proposals. In exchange for these services, masternodes receive 45% of the block reward. Anyone can create a masternode on the Dash network, but you’ll first need to prove that you own 1,000 DASH (currently equivalent to over $1.1 million).

The 1,000 DASH minimum is a security measure that prevents an attack against a peer-to-peer network known as a sybil attack. Sybil attacks involve creating many fake accounts under pseudonyms, enough fake accounts to constitute a majority of the user base and therefore influence the network. By requiring 1,000 DASH to set up a masternode, it would be prohibitively expensive to carry out a sybil attack against the Dash masternode network. The 1,000 DASH minimum has the added benefit of keeping the price of DASH stable, and it ensures that when masternodes vote on governance proposals that they’re invested in the success of the Dash network.

Dash has a strong track record and incredible community. Over the course of the past three and a half years, Dash’s decentralized governance has produced impressive improvements to the unique two-tier architecture of the network. As a result, Dash has seen steady, consistent growth that has kept it near the top of the pack of many altcoins. Keep an eye on Dash over the coming years, and expect consistent growth.

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