Dash is a cryptocurrency that was launched as a payment method with higher security, privacy, and transaction speeds than Bitcoin. It has a built-in CoinJoin service, which allows users to anonymize transactions.
In 2014, Evan Duffield founded the Xcoin project, later renamed Darkcoin, which was a fork of Litecoin, which in turn was a fork of the Bitcoin protocol. In 2015, the project was renamed again and received its current name – DASH.
Duffield claimed to have started developing the project as a hobby, writing the code in just one weekend.
Dash was designed to protect the anonymity of platform users using the X11 algorithm, as well as synchronous transaction delivery at higher speeds using masternodes.
There are several ways to send Dash: PrivateSend, InstantSend, and regular transactions. PrivateSend transactions are untraceable, while InstantSend transactions are processed in seconds for an additional fee.
The Dash network uses a masternode system, which allows for easy transaction verification. Masternodes are responsible for PrivateSend and InstantSend payments, as well as network governance.
The project was a huge success, but after three years of work, Duffield stepped down at the end of 2017, handing over control of the protocol to the Dash core team.
How does Dash work?
Dash uses a two-tier network that allows miners and masternodes to work together.
The first layer is maintained by miners, who compete with each other to create new blocks and maintain the blockchain's security. Miners prevent double spending by storing transaction history on the blockchain. To do this, miners use X11 hashing, which allows blocks of transactions to be chained together.
The X11 hashing algorithm was developed by Dash founder Evan Duffield. X11 uses multiple rounds of 11 different hashes: blake, bmw, groestl, jh, keccak, skein, luffa, cubehash, shavite, simd, and echo. This structure makes the X11 algorithm the most secure and complex of all modern hashes used in cryptocurrencies.
The second level is controlled by masternodes—direct network participants who partially assume certain functions of miners by staking 1,000 DASH. Masternodes assist miners by ordering and verifying transactions.
Advantages and disadvantages of Dash:
Pros:
- Security – Over 4,500 servers and 200 TerraHash X11 ASIC computing power units confirm transactions. Advanced encryption and a robust protocol guarantee security you can count on.
- Rapid evolution. An innovative incentive system has helped the cryptocurrency grow to over 4,000 masternodes since its launch in 2014. This makes it one of the largest peer-to-peer networks and one of the most secure and promising options for 24/7 access to your digital currency, no matter where you are.
- Speed – The Dash system uses InstantX. You can access it from your wallet, and it will fully process transactions in just four seconds.
- Low transaction fees. Most transactions cost just a few cents. This is much cheaper than PayPal or Moneygram.
- The first self-governing and self-funding protocol. Another factor increasing Dash's value is that it is open to anyone who can help develop the platform. The cryptocurrency funds its own growth and also ensures that everyone can be held accountable.
- Popularity. Just visit BitcoinTalk to see that Dash is one of the most discussed digital currencies. Its development, use, and how it differs from its competitors have been clearly described online.
Cons:
- Disadvantages of anonymity. Certain tools can eliminate the mixing of transactions used to mask identity.
- Funding issues. Marketing budgets and resources take precedence over innovation. In the long term, this could lead to a decline in productivity and functionality at the expense of attracting new customers.
- Competition. A quick look at Dash's history will quickly show that the cryptocurrency market is already volatile, and it's not clear that Dash will be able to maintain its position, let alone grow its market capitalization.
- Coin Limit. This cryptocurrency offers a fixed supply of 18,900,000 coins. However, there are actually far fewer coins in circulation than it appears. This is due to masternodes. Each masternode represents 1,000 coins. There are thousands of masternodes, meaning a significant number of coins are unavailable for use.
- In short, today's price may not reflect its future value. Therefore, it's difficult to decide whether Dash is a good investment.
How to mine Dash coin?
The Dash blockchain is built on a decentralized ledger, which records every transaction. The Proof-of-Stake (PoS) consensus algorithm then secures the blockchain. Miners use computers to solve complex X11 mathematical problems. If they solve them correctly, they can add a block to the blockchain. In return, the miner receives a reward in the form of Dash.
Mining requires specialized computers called Application-Specific Integrated Circuits (ASICs). They solve PoS problems in the most efficient way.
It's also worth noting that mining isn't always free, as it often requires significant investment in both electricity and the hardware itself. As a result, many miners are abandoning their individual work and joining mining pools to solve problems together.
How is Dash different from Bitcoin?
The main difference between these coins is the mining algorithm used to create new coins. Both cryptocurrencies use different mining algorithms. The algorithm used by Dash is X11, which is based on the Proof-of-Stake (PoS) mechanism. Bitcoin, on the other hand, uses the Proof-of-Work (PoW) algorithm to mine the cryptocurrencies that will circulate on the market.
With PoS, we have validators who verify and process transactions, and coins are mined in advance, while with PoW, miners mine coins, verify, and process transactions.
Dash is a fork of Bitcoin, so it aims to mitigate the scalability issues associated with the Bitcoin cryptocurrency.
Dash also differs from Bitcoin in its governance mechanism. Dash has created a self-funding mechanism, whereby rewards received are distributed among stakeholders known as the treasury, masternodes, and miners. This share is distributed according to established terms.
This takes a significant amount of time, leading to delays in transaction processing and ultimately high transaction fees.
The average DASH block mining time is 2.5 minutes (compared to 10 minutes), and miners receive only 45% of the DASH from each block (instead of 100% with Bitcoin).