What Is Dash Cryptocurrency? Launched in 2014, Dash was originally known as Darkcoin and was designed to ensure user privacy and anonymity. In fact, the cryptocurrency’s whitepaper, co-authored by Evan Duffield and Daniel Diaz, describes it as “the first privacy-centric cryptographic currency” based on Nakamoto’s work.
While it still features strong encryption features, Dash has since recast its ambitions. The cryptocurrency now aims to become a medium for daily transactions. “Dash is Digital Cash you can spend anywhere,” its website boldly proclaims.
How Is Dash Different From Bitcoin? The main difference between Dash and bitcoin lies in the algorithm used by them to mine coins. Dash uses X11 algorithm, which is a modification of the Proof of Stake algorithm. It also uses Conjoin mixing to scramble transactions and make privacy possible on its blockchain. On the other hand, bitcoin uses a Proof of Work algorithm.
Besides this, there are other points of difference between the two cryptocurrencies.
For starters, both 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 or 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 becomes an impossible task.
As recent events have indicated, the process is time-consuming and fails to prevent clogging, as slow processing results in a backlog of transactions within bitcoin’s memory pool. In turn, this can lead to high transaction fees and make bitcoin unsuitable as a cryptocurrency for daily transactions.
Dash has used economic incentive as a starting point and instituted a system of Masternodes to simplify the verification and validation of transactions. Masternodes are essentially full nodes with a starting stake (or, a “bond of collateral” as it is described in Dash’s whitepaper) of 1,000 DASH in their systems. “This allows the users to pay for the services and earn a return on their investment,” the cryptocurrency’s co-founders write in their whitepaper.
It also solves scalability problems for transactions. This is because they reduce the number of nodes required to successfully approve a transaction to a manageable number. They 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 governance model. Bitcoin and Litecoin, two cryptocurrencies with similar aspirations as Dash, grew out of academic institutions. To a large degree, future development of these cryptocurrencies is dependent on largesse from these institutions.
Dash has pioneered 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.
What Are Dash’s Future Business Prospects? As mentioned earlier, Dash aims to become a medium for daily transactions. It has cast a wide net to realize that ambition. In addition to the United States, it is present in multiple countries. For example, it has already started initiatives in two economically-distressed countries experimenting with cryptocurrencies.
Future prospects for Dash in these countries look bright. The Venezuelan government, which recently introduced its own cryptocurrency called the petro, has passed an order to government agencies asking them to accept any cryptocurrency for services. Dash has been an early mover in the country, having organized a series of well-attended conferences to introduce cryptocurrencies.
In an interview with Bloomberg, Ryan Taylor, CEO of Dash, said demand for the cryptocurrency had soared in the South American country. “We’re seeing huge demand in Venezuela through inquiries in our support lines as more and more people join our forums and chat rooms, even on how-to YouTube videos that have popped up,” he said.
Within the United States, Dash recently partnered with sports betting site FanDuel for CryptoCup, a fantasy league for basketball. Winners in the league will be paid in Dash’s cryptocurrency. Finally, there are reports that Dash is becoming a preferred coin for transactions on the dark web as well as for those involving money laundering. But Dash CEO Taylor says there is no truth to these assertions. These developments portend well for Dash because it translates into an uptick in its transaction volume.
At the same time, Dash has also invested in research. It has inked a partnership with Arizona State University to fund research in blockchain development and instituted a scholarship for graduate research fellowship on the same topic. According to Ryan Taylor, the company’s partnership with ASU is focused on scalability because it is a customer and merchant issue for cryptocurrencies. He says their team is exploring the possibility of compact blocks and various technologies that can allow blocks to propagate through a blockchain network quickly.