DASH Cryptocurrency | DASH vs Bitcoin in Blockchain

Dash is an open-source cryptocurrency. It is an altcoin that was forked from the Bitcoin protocol. It is also a decentralised autonomous organisation (DAO) run by a subset of its users, which are called “masternodes”. The cryptocurrency was originally called Xcoin. After some minor adjustments it finally landed on its current name, Dash, in March 2015. When it was initially created, it was designed to ensure user privacy and anonymity.

Points to Remember

• Dash aspires to become a medium for daily transactions as a digital currency that can be used as cash, credit card, or via PayPal.
• Dash is run by a subset of its users, which are called “masternodes.”
• All masternodes have a starting stake, which is equal to 1,000 DASH in their systems.

History of DASH

The currency was launched in January 2014 as “Xcoin” by Evan Duffield, as a fork of the Bitcoin protocol. It is an altcoin and in its early days it was subject to pump and dump speculation. However, It was rebranded as Darkcoin, which received bad reputation for being used in dark net markets. In March 2015, it finally rebranded again with the name Dash as a portmanteau of ‘digital cash’. As of August 2016, Dash is no longer used in any major dark net markets worth noting.

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.

Understanding Dash

Dash aims to become a medium for daily transactions, and it has cast a wide net to achieve that ambition. In 2018, the digital cash company expanded into Venezuela, an economically distressed country.

Demand for cryptocurrency and the number of Dash users has increased since virtual currency was introduced three years ago. The primary reason for this is the need for a transactional currency; Venezuela is currently experiencing a period of significant civil unrest and hyperinflation to such a degree that the local currency (bolívar) has been essentially rendered valueless.

Dash Vs Bitcoin

The fundamental point of difference between Dash and Bitcoin lies in the algorithm that each technology uses to mine coins. Dash uses a modification of the proof of stake algorithm. It also uses CoinJoin mixing to scramble transactions and make privacy possible on its blockchain. On the other hand, Bitcoin uses a Proof of work (PoW) algorithm.

The two cryptocurrencies have different systems for handling transactions. Transactions on Bitcoin’s blockchain need to be validated by all nodes within a network. The process, which ensures consensus without authority, needs investment infrastructure for full nodes. However, this consensus process is time-consuming and fails to prevent clogging. Slow processing in turn leads to high transaction fees, making Bitcoin unsuitable as a cryptocurrency for daily transactions.

Dash however, uses a different system for handling transactions. It is run by a subset of its users, called “masternodes” Who simplify the verification and validation of transactions. This makes the number of nodes required to successfully approve a transaction reduced to a manageable number thereby solving a scalability problem. Masternodes are responsible for approving transactions from the miner network and providing services, such as payment and privacy, to the Dash network.

The second innovation within Dash’s ecosystem lies in its unique governance model. Bitcoin and Litecoin, two cryptocurrencies with similar aspirations as Dash, grew out of academic institutions. To a large degree, the future development of these cryptocurrencies is dependent on largesse from these institutions.

But unlike Bitcoin and Litecoin, Dash has started a self-funding model by splitting block rewards between three stakeholders—masternodes, miners, and treasury. The first two get a 45% share each. The 10% share accruing to the treasury is used to finance future development projects at Dash. Masternodes play an important role here as well: their votes determine future development directions for the cryptocurrency.

Design

Dash was designed to allow transactions quickly and to have a swift governance structure in order to overcome the problems in Bitcoin. It splits its rewards into three categories: 45% for the miners, 45% for the masternodes (the computers that have additional services in the network and have a significant investment in Dash tokens), and 10% for the decentralised governance budget, this split based design makes it radically different from Bitcoin.

Governance

Governance is handled through a form of DAO, or decentralised autonomous organisation in which decisions are made on a blockchain through masternodes. Masternodes perform standard node functions like hosting a copy of the blockchain, validating transactions.

In addition to that they also act as shareholders and vote on proposals for improving Dash’s ecosystem. However, lately there have been a lot of issues regarding incompetence of masternodes. This is because anyone with 1,000 Dash Coins (DASH), can become a masternode owner.

Along with masternodes, the system includes standard nodes and miners. The system’s decentralisation has been criticised due to a mishap, which allowed too many coins to be distributed at release. This focussed the wealth to a small group, giving them disproportionate power in decisions over the currency’s future.

Consensus

As of 2018, coins were mined using a proof of work algorithm and the average time to mine a coin was around two and a half minutes. Masternodes in Dash ecosystem provide two additional kinds of transactions.The first is the “InstantSend” which bypasses mining and instead requires a consensus of masternodes to validate a transaction, speeding transactions. The other is the “PrivateSend” which is intended to give users optional consumer-grade privacy; it mixes participating users’ unspent Dash before executing a transaction.

Advantages and Disadvantages of Dash

Current Status of the DASH coin

Just like bitcoin there is a cap on how many Dash coins can be mined, this cap is fixed at 18 million. Hence, only 18 million Dash coins can be mined. About 2million of them were mined within the first 48 hours of its launch. At present, a total of 7.4 million of the Dash coins have been mined. Dash has a variable block reward which decreases at 7.1% rate every year.

Competition

Both bitcoin and Litecoin aim to become a medium for digital transactions one day, when cryptocurrencies would probably go mainstream. Litecoin’s market value surged in 2017 when Steam (a popular diversion platform) announced that it would be using Litcoin instead of bitcoin on its platform. However, over the years Dash has definitely taken the advantage.

Conclusion

In this article, we gained a brief idea about the popular cryptocurrency Dash. We were introduced to it, learnt about its history and how it was founded. We then went into depth to understand the working of this crypto and finally compared it with the all time popular, Bitcoin in order to gain a deeper perspective about Dash.