What Is Dash?

What Is Dash & How Does It Work? 2020 Guide

What Is Dash?

Launched in 2014, the cryptocurrency Dash was originally known as Xcoin. After being rebranded as Darkcoin, it landed on its current name, Dash, in March 2015. When it was initially created, it was designed to ensure user privacy and anonymity. The cryptocurrency’s whitepaper, co-authored by Evan Duffield and Daniel Diaz, describes it as “the first privacy-centric cryptographic currency” based on Bitcoin founder Satoshi Nakamoto’s work.

  • Dash aims to become a medium for daily transactions as a digital currency that can be used as cash, credit card, or via PayPal.
  • In 2018, the digital cash company expanded into Venezuela, the cryptocurrency's first foray into an economically distressed country.
  • Dash is run by a subset of its users, which are called "master nodes."
  • All master nodes have a starting stake, which is equal to 1,000 DASH in their systems.
While it actually includes solid encryption includes, the organization has since reworked its desire. Run currently expects to turn into a mode for everyday exchanges as advanced money that can be utilized as money, charge card, or through PayPal. Indeed, the organization's site broadcasts: "Run is Digital Cash You Can Spend Anywhere." Dash is an open-source project which incorporates a decentralized installment network. 

In March 2021, Dash is the world's 42nd most significant cryptographic money by market capitalization ($2.19 billion). The estimation of Dash's cryptographic money is $220.47. 

Getting Dash 

Run intends to turn into a vehicle for everyday exchanges, and it has projected a wide net to understand that aspiration. In 2018, the computerized money organization ventured into Venezuela, the digital currency's initial introduction to a monetarily bothered country. 

Interest for digital money—and the quantity of Dash clients—has quickly expanded since the virtual cash was first presented three years prior. The justification this is the requirement for value-based cash; Venezuela is presently encountering a time of huge common agitation and excessive inflation so much that the neighborhood money (Bolivia) has been basically delivered worthless.

In a recent interview with CryptoSlate, Ryan Taylor, CEO of Dash, said that cryptocurrency is “critical” for “survival” in Venezuela. Citizens of the country have turned to cryptocurrencies, such as bitcoin and Dash because they can be transacted quickly and cheaply.

Dash has also invested in research, funding a blockchain research lab in partnership with Arizona State University (ASU). Through this lab, Dash funds research that is "designed to accelerate research, development, and education in ways that advance blockchain transaction speed, efficiency, security, and expand its uses."

The Dash-ASU agreement also provides scholarships for undergraduate and graduate research fellowships.

How Is Dash Different From Bitcoin?
The main difference between Dash and Bitcoin lies in the algorithm that each technology uses to mine coins. Dash uses the X11 algorithm, a modification of the proof-of-stake (PoS) algorithm. It also uses Conjoin mixing to scramble transactions and make privacy possible on its blockchain. 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 is designed to ensure consensus without authority, requires substantial investment infrastructure for full nodes (full nodes are nodes dedicated to mining). In this system, Bitcoin miners running full nodes commit to increasing amounts of time and money to ensure optimal operations. With the scaling of Bitcoin’s network, this is increasingly becoming an impossible task.

This process is time-consuming and fails to prevent clogging. Slow processing results in a backlog of transactions within Bitcoin’s memory pool. And in turn, this can lead to high transaction fees, making Bitcoin unsuitable as a cryptocurrency for daily transactions. 

Dash uses a different system for handling transactions. Dash is run by a subset of its users, which are called "master nodes." Masternodes simplify the verification and validation of transactions. All master nodes have a starting stake, which is equal to 1,000 DASH in their systems. In the cryptocurrency's whitepaper, the cofounders justify this system: “This allows the users to pay for the services and earn a return on their investment.”

It also solves a scalability problem for transactions. This is because the number of nodes required to successfully approve a transaction is reduced to a manageable number. Masternodes are responsible for approving transactions from the miner network and providing services, such as payment and privacy, to the Dash network.  

As of March 2, 2021, there are 4,685 master nodes in Dash’s network.7

The second innovation within Dash’s ecosystem lies in its 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.

Unlike Bitcoin and Litecoin, Dash has pioneered a self-funding model by splitting block rewards between three stakeholders—master nodes, 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. 

Investing in cryptocurrencies and other Initial Coin Offerings ("ICOs") is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date, this article was written, the author owns 0.1 bitcoin.

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