This is a sponsored cryptocurrency guide by eToro.
In this eToro series of introduction to cryptocurrencies, we are now covering another popular cryptocurrency, Dash. In this article, we will be going through the basics of Dash and cover its features, purposes and utilities so you will have a pretty good idea on what Dash is by the end of the article.
What is Dash?
Initially created in January 2014 as “Xcoin”, it was rebranded to “Darkcoin” shortly thereafter. In March 2015, it went through another rebranding to Dash (an abbreviation of Digital Cash). Dash is an open-source cryptocurrency project that enables peer-to-peer trustless digital money transactions without any central authority similar to Bitcoin.
Being open-source, all of Dash’s codes are publicly available for viewing, and anyone with coding experience can vet the stability of the code. Dash differentiates itself from Bitcoin as a transactional cryptocurrency by focusing on near instant and private transactions. It is based on the same blockchain technology Bitcoin is built on, with 3 major additions, namely Masternodes for governance, InstantSend and PrivateSend.
Dash Masternodes are similar to full nodes on the Bitcoin network, except that they have collateral on them, and are entrusted with three of the main functions of the Dash network: Voting on Dash’s Budget, InstantSend and PrivateSend. For Dash, the collateral required to run a masternode is a minimum of 1000 DASH, which at current price costs approximately $67,000.
In return for the services that the masternodes provide for the network, masternode operators are rewarded with 45% of the block reward that comes with each block. Based on Masternodes.online, a DASH masternode will ROI in approximately 5,207 days (14.3 years!) without accounting for any operational costs.
Masternode operators make up the Dash Decentralized Autonomous Organization (DAO) where each masternode have one vote to put submit for budget proposals. The Dash DAO is responsible to oversee spending of the Dash Budget, which is funded through 10% of each block’s rewards. The masternode operators will vote on ways to spend the DASH including but not limited to: marketing, development costs, and research costs.
Run Dash Forrest Dash Run! Image credit: Giphy
Having masternodes is what allows Dash to instantly send money across without waiting for the next block to be mined. Suppose Bob wishes to send 1 DASH to Alice via InstantSend. Masternodes on the network will lock Bob’s input and broadcasts this to all other nodes, which then prevents Bob from double-spending the same 1 DASH he sent to Alice earlier. As soon as the message is broadcasted and the masternodes reach a consensus, Alice receives the 1 DASH.
One of the biggest use cases for InstantSend is facilitating micro-transactions (think buying coffee, groceries etc.) where even a 5 minute waiting time would make it impractical. With InstantSend, Bob and Alice do not have to wait for a block to confirm the transaction. The balances are reflected with the masternodes locking up funds involved which prevent any form of double spending.
Nope. They can’t! Image Credit: Giphy
Bitcoin runs on an open ledger which allows anyone to view all transactions that have occurred within it. One of the major downsides of an open ledger is that if you have received funds in a lawful manner from someone who sourced his/her funds illegally (i.e hacked/stole it), you might find your funds rejected further down the chain even though it was lawfully obtained on your end. This is of course not fair to you as you did not obtain your funds in an unlawful manner.
PrivateSend on Dash aims to alleviate this problem by introducing a way to merge funds together such that they cannot be uncoupled thereafter, thereby preventing the origins of your funds from being traced. In the simplest form, when you wish to send funds, the masternodes matches your transaction with another one happening at the same time and helps you move funds in denominations of 0.1, 1 or 10 DASH. Further obfuscation can occur afterwards where the first masternode passes it to the second and so on.
Technical details on Dash
For those of us who enjoy geeking out at technical specifications on blockchain/crypto projects - this one's for you!
- Address format: Starts with "X" Hashing Algorithm: X11
- Block info: ≈ 2.5 minutes block time, 2MB blocks with ≈ 56 transactions/s
- Block Rewards Allocation: 45% allocated to miners, 45% allocated to Masternodes, 10% allocated to Dash DAO budget.
- Block Rewards: Approx. 3.3456 Dash per block (excluding superblocks that occur every 16,616 blocks for 10% Dash budget) as of 01 Feb 2019. Decreases by 7.14% per year.
- Available/Total supply: ≈ 8.6 million/18.92 million Dash
Mining in Dash
Much Crypto, very wow. Image Credit: Giphy
Dash started out being CPU and GPU mineable but it has since been taken over by ASICs. CPU/GPU mining is still doable but no longer cost-effective. Dash uses the X11 mining algorithm it currently has a block time of 2.5 minutes. If you’d like to know more about Dash mining, Dash.org’s official forums have a community of miners.
If you need to know more about Dash in-depth, make a dash (hah!) over to their official documentation site for full/technical details. Otherwise, there’s the Dash’s official Youtube Channel with a ton of resources and great video explainers. If you’d like to just meet some new people while slowly learning about Dash, feel free to hop on their official forums!
This is a sponsored cryptocurrency guide by eToro.
Jin is a Market Research Analyst at CoinGecko. In his free time, Jin enjoys messing with crypto related stuffs on a slightly technical side and generally learns about crypto as he munches on snacks. Follow the author on Twitter @jin_8315