Well, welcome to the guide about the Dash cryptocurrency. Today I will answer a wide range of questions regarding this cryptocurrency that, in fact, ranks 15th out of all cryptos!
The cryptocurrency Dash was launched in 2014, and has a total market cap of $920 million. I’m sure that you will also be surprised to find out that the name of this coin was changed twice before deciding on its final name — Dash. But more on that later!
In this guide, I will explain what the Dash cryptocurrency is, what makes it so special, and how Dash transactions work. Not only that, but I will also talk about how secure the Dash cryptocurrency is, and how it can be bought, stored and used.
So, by the end of this guide, you will have a good understanding of the Dash cryptocurrency, as well as its uses and features.
Are you ready to know the story of DASH? Well, let’s get to it.
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- One of the more private cryptocurrencies
- Fast transactions speeds
- Masternodes ensure transaction anonymity
- High-end security
- May be abused in some illegal activities
- Has suffered a bug upon release
- Not truly decentralized
Table of Contents
What is DASH?
Dash cryptocurrency, like Bitcoin, is a digital currency that can be used to send or receive payments. In fact, Dash was built on top of the blockchain technology that Bitcoin uses, however, some significant improvements have been made to it.
Dash has gained popularity because it offers better privacy and higher transaction speeds than Bitcoin. It can achieve this with the help of a unique model that involves “Masternodes”.
I will elaborate more on Masternodes later as they form the backbone of the Dash network.
Not only does Dash cryptocurrency provide these benefits, but it also operates on a self-governing and self-funding model. Unlike Bitcoin, Dash’s network can fund itself to make further improvements on the DASH technology.
Dash, where ‘Dash’ is a mixture of the words ‘Digital’ and ‘Cash’, was released on January 18, 2014, as “Xcoin (XCO)” by Evan Duffield. On January 28, 2014, the name was changed to “Darkcoin” before finally being renamed “Dash” on March 25, 2015.
Dash was forked from Litecoin, and Litecoin was forked from Bitcoin. A bug got introduced when the fork happened, resulting in the mining of 1.9 million DASH coins within the first two days. 1.9 million is about 10% of the total Dash coins that will ever exist!
After this technical error, Evan Duffield offered to relaunch the coin, but the Dash community disapproved of the proposal, and so the project continued as is.
Since its launch in 2014, the DASH cryptocurrency was priced at less than $10 until the end of 2016. As you can see from the chart below, the price of Dash started to increase at the beginning of 2017, and reached a high of $1540 on the 20th December 2017.
So, now you know how it all started for the Dash cryptocurrency. Next, let’s look at each of the above-mentioned factors in detail to understand what makes Dash so unique.
How Can DASH be Used?
Dash has many features that provide it an edge over other cryptocurrencies like Bitcoin and Litecoin. Dash can be used to make transactions in a more private and speedy manner because of these three features: Masternodes, PrivateSend, and InstantSend.
Let’s have an in-depth look at each one of them.
On the Bitcoin blockchain there are miners who verify transactions that take place on the blockchain, and in turn, get rewarded for their work. Similarly, on the Dash cryptocurrency blockchain, there are also miners, but the system is divided into two parts — Masternodes and miners.
A user must make a deposit of a minimum of 1000 DASH in order to become a Masternode.
Masternodes act as special servers that perform the critical functions on the Dash crypto network. They are responsible for Private Transactions (PrivateSend), Instant transactions (InstantSend), and the governance and treasury system.
As you can see below, there is a strong and growing network of Dash Masternodes.
These Masternodes improve the security of the network and make sure that the transactions are as quick as cash transactions. This costs money and effort from the Masternodes, so they are rewarded by the network.
A Masternode gets 45% of the total reward received from mining DASH coin. So, suppose 1 DASH coin gets mined by the miners, it will be split in the following manner:
- 45% rewards (0.45 DASH cryptocurrency) goes to miners;
- 45% reward (0.45 DASH cryptocurrency) goes to Masternodes;
- 10% (0.10 DASH cryptocurrency) goes towards funding for further network improvements.
As shown in the snapshot below, this unique system of Masternodes is what helps Dash to provide two great benefits which we will look at next.
One of the problems with the Bitcoin blockchain is that it is completely public. What this means is that if you make a Bitcoin transaction, anyone in the world with internet access can find out the following things about it:
- The public address of the sender and receiver of each Bitcoin transaction;
- How much the transaction was worth;
- Previous transactions in which that Bitcoin was involved.
Can you see the problem? It is not like fiat transactions where the details of each transaction are known only to the parties involved.
However, Dash offers a service called PrivateSend which adds privacy to transactions. Because of this, Dash transactions cannot be traced back, nor is the identity of users revealed to the world. As mentioned before, private transactions are facilitated by Masternodes.
Even if all your transactions are legal (which I hope they are), would you really want the rest of the world to know all about them? Let me guess, your answer is “no!”. So, this is a huge advantage that the Dash cryptocurrency offers over Bitcoin.
This advantage is what also makes the dash crypto “fungible”. Ever heard of fungibility?
Well, traditional fiat currencies (such as USD, EUR, JPY) are all fungible. This means that any two $10 bills can replace each other. Just like 1 oz. of gold of the same grade is worth the same as another 1 oz. of gold of the same grade.
This concept is not true for Bitcoin. Since Bitcoin transactions can be traced back, someone can refuse to accept a Bitcoin which has been used in illegal trade in the past.
Since Dash cryptocurrency transactions cannot be traced, their history is unknown. This makes all the Dash coins equal and fungible.
On average, it takes about 10 minutes for a Bitcoin transaction to get confirmed. On the other hand, it only takes a few seconds for a transaction using Visa or Mastercard. That’s a huge difference, right?
Bitcoin Transaction Confirmation Time | Source: blog.bitaccess.ca
This has raised many questions on the scalability and mass adoption of Bitcoin. Dash solves this problem by providing a special service called “InstantSend”. Using InstantSend, Dash transactions are almost instantly confirmed by the Masternode network.
There is an extra cost for the InstantSend service over a normal Dash transaction. A normal Dash transaction gets cleared in about 2.5 minutes, which is still an improvement over Bitcoin.
But who wants to wait for 2.5 minutes at a grocery store just to make a payment? No one. So, by paying a small fee, you can ask Masternodes to clear your transaction within a few seconds.
These 3 useful features provide tremendous benefit to the Dash cryptocurrency over many others like Bitcoin and Litecoin. In addition to these features, there is one more thing that differentiates it from others.
Self-Governing and Self-Funding Protocol
In Bitcoin, when a block gets mined, 100% of the reward goes to the miner(s). However, with Dash, 10% of all the mining rewards go back to Dash.
It basically gets added to the budget which is then used to fund the growth and advancement of the Dash crypto. This means that Dash cryptocurrency can fund its own growth and adoption.
So, who decides the usage of this fund? Again, it is done in a democratic manner in which the Dash network participants vote on the various proposals as described on dash.org.
Below is a list of some of the live proposals in the Dash network.
As you can see, everyone in the Dash cryptocurrency community gets a chance to voice their opinion and contribute towards the development. This is very important, because blockchain is a modern technology that requires continuous development before it becomes mainstream.
As you can see, Dash cryptocurrency offers many improvements, both technically and in terms of its business model. This is the reason why it is one of the top cryptocurrencies.
Now that you know what Dash is and the benefits it has, let’s go ahead and see how a Dash transaction actually works.
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How do Transactions Work?
Let’s imagine you already own a Dash (have bought it from, say, Binance) cryptocurrency and you have stored it in your Dash wallet. Firstly, here are two important things that you need to know about your Dash wallet.
- Public Address: Think of this as your bank account number. This is randomly generated with a combination of letters and numbers which you can share with anyone who wants to send your payment.
- Private Key: Think of this as your ATM pin number which you wouldn’t share with anyone. It is also a random sequence of characters that you need to access your Dash wallet to make a transaction.
So, suppose you want to send 1 Dash to your friend Kate. You would have to go through the following steps to make this transaction happen.
- You would send 1 Dash coin to Kate’s public address by signing in to your wallet with your private key.
- Dash miners will add your transaction into A block is basically a group of Dash cryptocurrency transactions happening in a similar timeframe.
- If you chose the InstantSend service than your transaction will be instantly confirmed by the Masternode. Otherwise, it will be confirmed by a normal miner in around 2-3 minutes.
- Once that is done, the rest of the miners on the network will be told about it. They will double-check the results from the miner that verified the transaction to make sure there are no mistakes and that the transaction is valid.
- 1 Dash coin will then get transferred from you to Kate.
This is how a transaction on the Dash network works. Simple!
How to Purchase Dash?
Now that you know how Dash transactions work, you should also be aware of how to get yourself some Dash coins, too.
The process of purchasing Dash coins is actually very simple, especially when compared to some other, less-known and less-available cryptocurrencies out there. All that you need to do to purchase Dash is to register on Kucoin (or any other high-end cryptocurrency exchange out there), verify your identity, and purchase it via your desired payment method of choice!
If you want to purchase Dash via a credit or debit card, you can also do so via Simplex - they provide super-fast and secure services.
Storing your newly-acquired Dash coins is also very straightforward. You'd be able to do so on a hardware wallet, such as Ledger or Trezor.
Before purchasing Dash or any other cryptocurrency, it is important to understand it’s future potential. After all, you are investing your hard-earned money in a very unpredictable market.
So, let’s have a look at what the future looks like for Dash!
Potential of DASH
Dash has performed extremely well during 2017. If you had invested $10 at the beginning of 2017, it would have grown to around $1500 in December. That’s a growth of about 14,900% in under a year! Crazy, right?
It has been one of the favored cryptocurrencies, even by the experts. Roger Ver, who is often referred to as the “Jesus” of cryptocurrencies has even shown support for Dash.
I did my first @Dashpay payment yesterday. I moved $100K for ~0.3 cents, and was confirmed in the next block. Bitcoin used to work that well
— Roger Ver (@rogerkver) March 2, 2017
One of the main reasons why the cryptocurrency Dash has become so popular is because it is solving two of Bitcoin’s major problems — lack of privacy and slow transaction speeds.
Following are a few of the reasons why Dash is fundamentally a strong cryptocurrency:
- As mentioned earlier, its improvements on speed and privacy is a major advantage over Bitcoin.
- As an investor, it is important that a project makes continuous improvements in the technology of the cryptocurrency. Fortunately, the Dash cryptocurrency is a self-governing and self-funding system.
You can expect it to continually improve on its technology and grow its user base, both of which are very important for the future of Dash.
- According to bitinfocharts.com, the average transaction fee for Dash is between $0.2 - $0.3, whereas it is in the range of $2 - $5 for Bitcoin. It is much cheaper to transact using Dash coin when compared to Bitcoin.
There are also many other things which favor Dash coin, but you need to watch out for some of the factors which can block its growth too:
- Critics of Dash cryptocurrency say that it’s not truly decentralized, because a lot of important functions are carried out by Masternodes. If someone controlled a majority of the Masternodes then they could potentially control the Dash network as well.
While this is difficult, it is not impossible.
- It is also facing stiff competition from other privacy coins like Monero and ZCash. It is said that the privacy provided by Monero is better than that of Dash. So, it is important to keep track of the competition if you do decide to invest.
- Due to the private nature of Dash, it is more likely to come under the scanner of the regulators. This is because illegal traders may prefer the cryptocurrency Dash because of the anonymity it provides. More on this later!
These are some of the challenges that Dash faces which you need to be aware of before you invest in it.
Another important aspect that you need to consider (not just for Dash, but for every cryptocurrency) is security.
Is DASH Secure?
Dash cryptocurrency, like other cryptocurrencies, offers a secure way to transact without the need of any third-party intermediary.
For example, if you make a payment through your Visa credit card then Visa makes sure that the transaction is completed in a secure manner. It also records all transactions for future reference.
Unfortunately, if the security of Visa or other such intermediaries gets breached, then all of its users are at a risk. In fact, there have been many incidences lately where hackers have attacked banks and financial institutions, resulting in loss of wealth for the account holders.
Dash cryptocurrency, which is built over blockchain technology, offers a secure option by making this process decentralized. Rather than relying on a centralized entity like a bank, Dash transactions are confirmed by 4,943 servers hosted around the world.
So, Dash can be considered secure, unless a bug gets created in the technology itself, similar to what happened during the launch of Dash. This is often referred to as “Instamine controversy”.
When Dash launched, 2 million Dash were mined within 48 hours of the launch. If you recall, only 18 million Dash can ever be mined. One of the biggest beneficiaries of this bug was the creator of Dash.
Since then, Dash hasn’t faced any other security issues, but it does raise a doubt in the mind of investors.
However, I would still say that Dash is as safe as any other top cryptocurrency.
So, you now know have the answer to “what is Dash?”, you also know how Dash can be used and how secure it is. Let’s now look at how it can be misused, too.
How Can the DASH Cryptocurrency be Abused?
Because Dash cryptocurrency transactions are anonymous and untraceable, it has become a preferred coin for illegal trades. Many darknet market sites, such as Alphabey, have started accepting coins that provide anonymity to its users.
Also, it becomes easier to evade taxes if the government doesn’t know who is performing each transaction.
With privacy coins like Dash, you can choose to “not declare” the income you make from your investment, and it becomes difficult for the IRS to track you down. So, it has attracted the attention of users who try to use it for tax evasion or other illegal activities.
When Bitcoin first became popular, a lot of people had the misconception that it provides complete anonymity. As time passed, it became clear that Bitcoin is far from being a privacy coin. So, the attention has now shifted to privacy coins such as Dash and Monero.
While it is true that the Dash cryptocurrency can be misused, criminals form only a small percentage of the total number of users. As you can see, Dash is popular because it offers many advantages over fiat currencies as well as other cryptocurrencies, not just because of its criminal use cases.
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So, now you know why the Dash cryptocurrency is called a privacy coin and what other benefits it offers over Bitcoin. You have a fair idea of how Dash transactions works and how secure it is.
Undoubtedly, Dash uses unique and strong technology, which has given it an edge over many cryptocurrencies. With that being said, there are also negative things that you need to watch out for. One of those being the fact that it can be abused by criminals, making it a potential target for regulators.
In this guide, you have also learned the past performance of Dash and what the future looks like. It provided its early investors with tremendous returns of more than 14000% in 2017.
Out of the 18.9 million DASH that will ever exist, 8,009,502 DASH is already in circulation. In order to own DASH, you can either buy them or mine them.
If you choose the buying route, there are two ways to go about it:
- Registering on Kucoin or any other legitimate crypto exchange;
- Verifying your identity, if needed;
- Purchasing Dash.
- Entering the amount of Dash coins that you'd like to purchase via Simplex;
- Going through all of the required fields and checks;
- Purchasing Dash via a credit or debit card, in a fast and secure way!
Do also remember that storing Dash coins is super-simple, especially if you take the hardware wallet route.
So, what do you think about Dash? Is it better than Bitcoin? Will you invest in Dash?
Let us know, we would love to hear your thoughts!
The content published on this website is not aimed to give any kind of financial, investment, trading, or any other form of advice. BitDegree.org does not endorse or suggest you to buy, sell or hold any kind of cryptocurrency. Before making financial investment decisions, do consult your financial advisor.
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