- Dash (DASH) is a cryptocurrency designed to function “Digital Cash“. It allows “instant transactions with micro-fees”.
- Launched in January 2014, Dash relies on these three features: speed, privacy, and usefulness .
- Dash may be a Proof-of-Work cryptocurrency (X11 hashing algorithm) and relies on a network of Master Nodes (requiring 1000 DASH). Its supply rate of inflation is decaying: it’s sure to reach 0 in 2150.
- Dash was the primary cryptocurrency to incorporate built-in privacy functions. Specifically, it introduced an extension of CoinJoin: PrivateSend. it’s almost like a decentralized mixing service. Built at the protocol level, it’s designed to stay coins fully fungible.
Dash is Digital Cash, a user focused cryptocurrency, which you can spend anywhere, anytime and any amount for fees less than 1 cent. Users may decide to take advantage of the optional privacy Dash offers.
History of Dash
In January of 2014, Evan Duffield created XCoin, which then became DarkCoin and finally Dash. He created the cryptocurrency due to privacy concerns in the Bitcoin network. He wanted to create a supremely private cryptocurrency with faster confirmations.
Dash is completely decentralised, which means that it doesn’t require a third party (such as a bank) to operate. A record, or ledger, of all transactions and account holdings are kept on thousands of individually owned computers around the world, which constantly check each other for corresponding activity. This effectively disintermediates (in this case, we mean that power is removed from a single authority – technologically) the network and ensures fair play.
The Dash network is distributed, transactions are verified by people who contribute their computer power towards keeping the whole system running. These people, called miners, are rewarded with newly created Dash for their work. The rate at which Dash is created decreases over time in a process known as disinflation. Although Dash has a constant inflation rate over a short period of time, due to the protocol, this rate decreases at a rate of roughly 7% every year. Eventually, this will mean that Dash has no inflation anymore, which is a monetary policy that is termed disinflationary.
Besides miners, the Dash network has a system of Masternodes, which are a group of users who run masternodes – they have a complete copy of the blockchain. Masternodes have put 1,000 Dash
into a wallet which acts as a form of collateral, although it can be moved at any time, doing so disqualifies the full node from being considered a Masternode. By facilitating network activities such as InstantSend, PrivateSend (more on these later), preventing 51% attacks (which means someone or a group of people controlling the network for selfish purposes), masternodes receive payments from the network (45% of newly created coins) and are allowed to vote on proposals.
Besides paying masternodes and miners, 10% of newly created coins go to the Dash treasury, a community fund that pays for continued development, marketing, employment and more. Only masternodes are allowed to vote on proposals. In this way, masternodes do hold a lot of power, but their collateral incentivizes them to act justly. The treasury system is only one of the things that makes Dash so special and anyone can apply!
Dash runs on two consensus systems (confirmation) – Proof of Work (blockchain) and Proof of Service (masternodes).
Proof of Work are by miners, while proof of service are by masternodes, where certain people are willing to stake a certain amount of Dash in the network to show their commitment to the network and run specific tasks.
What does Dash allow us do?
By utilizing a distributed protocol, we can send money cheaply and quickly anywhere in the world. As long as you have the internet, you can use Dash no matter which country you’re in, what time it is and regardless of how much you want to send. The internet allows us to send information quickly, easily and ubiquitously (anywhere in the world); Dash allows us to send value quickly, easily and ubiquitously.
Cryptocurrencies like Dash have value not only because they are sending information, but they’re also mathematically guaranteeing that information is correct, i.e. no double-spends.
Dash is a payment system that exists only digitally and works differently than the systems we are used to.
Dash is a global payment system. Are you trying to send money to Aunt Jane in Russia?
To an astronaut on the ISS? Don’t sweat it, you can still use Dash. Sending money to your next door neighbour is the same as sending it halfway around the world.
Dash removes third parties (like banks and credit card companies) from transactions. No one but you can control your funds.
Dash was designed to have low transaction fees and quick transaction times.
The Dash network protects your identity. It does not use names to identify accounts – instead, they are identified by random strings of numbers and letters.
Features of Dash
Like many other cryptocurrencies, Dash uses a blockchain to record transactions over time. It has two features layered on top of that which are interesting to discuss.
In a retail situation, merchants and customers need hyperfast confirmations. Some cryptocurrencies have a confirmation time of over half an hour! That’s just too long to be usable for merchants for instance.
With Dash, you can send money in only one second, powered by
InstantSend. A small group of randomly selected Masternodes expedites, confirms and sends your transaction immediately. This function is only performed by Masternodes and takes about 1 second to complete.
If you tightly guard your privacy, PrivateSend is for you. Though no names are used on Dash’s blockchain, consistent ‘account numbers’ (addresses) are used. That means when you send Dash somewhere, everyone can see where you sent it to. This is because, as mentioned previously, addresses are like public mailboxes whose contents are visible to all. Unless you use PrivateSend in Dash, or CashShuffle in BCH, or Wasabi wallet in BTC. This is another masternode feature for those who want their transactions to be private. Masternodes will take the Dash you want to send and mix it in a group of Dash from other people using PrivateSend. The masternodes then distribute the Dash to the final addresses. This way, the final destination of your transaction is concealed.
This is one of the best features about Dash, an average fee for a Dash transaction is just 12 kobo, yes I mean just 12 kobo #0.12, very much less than a cent. This is super cheap and it means you could do over 100 transactions a day with just #12 spent as transaction fee. You can send Money in Dash to your friends and family in far locations such as China, Russia, Zimbabwe etc. with the same transaction fee you’ll use to send to your neighbour, this is freedom of money in the purest form.
Another unique feature of Dash is the treasury system. With most other cryptocurrencies, all newly mined coins go to the miners. In the Dash network, 45% goes to the Miners, 45% goes to the Masternodes and 10% of the newly mined coins go to a communal treasury, which funds development of Dash.
Let’s take a look at why this is so important. Most other cryptocurrencies had a large pot of their coin when the coin launched and have sold off their stores over time in order to continue development work. Dash, on the other hand, is one of the only projects with a sustainable revenue stream. The treasury is well funded and is able to support projects and hire contractors that benefit the network. Anyone is allowed to submit a proposal to the network for a fee, used to disincentivize spammers. Masternodes vote on proposals and reach a consensus to either approve or disapprove. Every expense in the Dash network is voted on in this way, even the salaries of contractors and employees!
A Masternode, a concept originally pioneered by Dash, is simply a full node or computer wallet which keeps the full copy of the blockchain in real time. Aimed at solving different issues which have left cryptocurrencies such as Bitcoin daunted.
Masternodes differ from other single nodes in functionality as they perform special functions such as: Instant Transactions, Private Sending and Decentralized Governance and Voting.
There are 3 types of nodes in blockchain: the ordinary node, the full node and the masternode. Each of these nodes has different responsibilities and functionalities.
Ordinary nodes for example are regarded as the backbone of any cryptocurrency. Their main function is to secure the blockchain and also prevent double spending.
Full nodes on the other hand differ from ordinary nodes in functionality as they hold an entire copy of the blockchain in realtime. They also can connect to the over 124 other nodes whereas other nodes can only connect to 8.
The Masternodes stand out in functionality and responsibility and as a result of this, they are becoming popular among crypto investors today. Masternodes as earlier mentioned provide special functions such as InstantSend, PrivateSend and storing the entire blockchain. Masternodes are also allowed the privilege of voting on governance and funding proposals, with each masternode receiving a vote on each proposal submitted to the system.
On May 25, 2014, Dash introduced Masternodes, making it the first cryptocurrency to adopt masternodes. Now a lot of cryptocurrencies have adopted masternodes on their blockchains. Some of these cryptocurrencies are ION, Bata, PIVX, Zcoin, Bitsend, Neutron, Amsterdam coin, ColossusCoinXT, Bulwark and so forth.
Masternodes are computers that enable processing of transactions within a blockchain and in return earn a reward from the blocks created, while miners confirm the transactions ultimately. As a bonded validator system, miners are series of servers that underpin a blockchain’s network, while masternodes provide other services. Every service that miners’ proof of work cannot accomplish is enabled by masternodes.
Apart from the mentioned benefits that come with running a masternode, it is also a good source of passive income.
There are several ways to make money with cryptocurrencies, the most common being trading on exchanges such as binance. However, running a masternode is also an interesting way to make money in the cryptosphere.
For example, running a masternode on Dash blockchain earns a reward of 45%, while miners get 45%, and 10% is for the treasury of the DAO. A Dash Masternode requires 1,000 DASH as collateral. However, the collateral isn’t permanently locked in. It can ultimately be withdrawn or sold whenever the investor wants. According to Dash’s website, this translates to 2 Dash every week and ultimately 10% of the initial 1000 Dash invested at the end of 1 year.
Just like any other investment, investing in Masternode systems is also very risky. It is important to evaluate some key aspects of any masternode. These factors include but are not limited to:
- The reward system on the masternode
- The coin demand
- The minimum stake
- The usability and acceptability of the coin
- Probable block reward changes
Masternode innovation as a well thought out initiative has gained worldwide recognition and adoption. As mentioned earlier, some cryptocurrencies have enabled Masternodes on their blockchains.
Interestingly, African countries are not lagging behind in this move as well. African countries are making significant improvements lately in their acceptability of blockchain technology. Although, other continents like Asia and Europe are far ahead in the game, African countries like Nigeria, South Africa and Kenya are embracing the latest developments reasonably.