How to Trade Dash

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Why Care About Dash?

There are plenty of reasons why you should care about Dash and even consider it as an investment. Cryptocurrency has come a long way since Bitcoin captured the imagination of a small minority of people in 2009. Now there are hundreds of different altcoins with radically different purposes. From The Ripple network, (Ripple guide link here) designed to facilitate faster currency exchange to Ethereum (Ethereum guide link here) and its smart contracts.

Dash, in particular, is designed to protect the anonymity of its users while also facilitating almost instant transactions. The cryptocurrency also implements a unique two-tier system that incorporates both proof of work and proof of stake verification protocols. This allows Dash to implement some impressive features like privatesend and instantsend.

If you’re interested in trading Dash and want to know more about it. This guide will walk you through and answer the question, what is Dash and what makes it unique?

A Brief History of Dash

Founded in January of 2014, Dash (formerly Xcoin and Darkcoin) was created with the aim to be the most user-friendly and scalable cryptocurrency.

Dash has had a fairly controversial history, beginning with its creation. Within the first two days of Dash’s (then Xcoin’s) creation, approximately 1.9 million coins were “instamined”. This is approximately 10% of the total supply of Dash.

Dash’s creator, Evan Duffield, has claimed that the “instamine” was due to a bug in the Litecoin code used to fork Dash. Specifically that the code incorrectly converted the difficulty and then tried using a corrupt value to calculate the subsidy. In other words, it was an accident.

This explanation has never fully satisfied many members of the cryptocurrency community. Despite Dash’s potential, the questions over the Instamine incident have always hung over its head.

What is Dash?

Dash was designed to improve on Bitcoin’s perceived flaws. Specifically in terms of transaction times and privacy. Its creators view it as being the next logical step towards fully digital cash.

Like Bitcoin, Dash stores all transactions made by users on a public ledger. This is so that the network can verify users have enough funds in their wallets in order to make a transaction. This is where the similarities end. Unlike Bitcoin, Dash runs a two-tier Network where miners and master nodes run in tandem.

One of the reasons Bitcoin transactions take so long is because they are processed by miners, whose function it is to secure the network. This has lead to a scalability problem as the network has grown in popularity. Dash solves this by using a concept known as masternodes. In order to prevent one individual easily taking over the network, each masternode requires at least 1,000 Dash to function.

The users running these nodes are rewarded with a share of each new block and they are given voting rights in the network, allowing Dash to run as a form of decentralized network. The masternodes decide on the direction of the network, with each one having a single vote on issues that affect the blockchain. They are designed to help make decisions on the blockchain and masternodes are how many of Dash’s most interesting features function.

They allow the blockchain to lock in funds and make instant transactions. On top of this, they help to facilitate an advanced version of coinjoin called Privatesend. This allows the masternode to mix three users’ transactions together. Theoretically, this makes it very difficult to find out where a transaction originated.

It should be noted that this is very different than the approach taken by Monero. The privatesend function is used alongside something known as instasend. The masternodes lock in the funds to prevent double spending and help to process transactions almost instantly. This is in contrast to Bitcoin, where transactions can take 10 minutes or even an hour.

Dash believes that this heavily decentralized system will help protect the currency from being controlled by a single large group of miners or centralized third parties. They also argue that the masternode system provides better security than using a “trusted” third party.

How is Dash Made?

Dash is mined in much the same way as other cryptocurrencies. Unlike banks or governments, which physically print currency, Dash is made by its community.

Like most cryptocurrencies, Dash is based on a decentralized ledger of all transactions, called a blockchain. This blockchain is secured through a consensus mechanism called Proof of Work (PoW)

The miner uses their computer to process complex equations. Once these equations have been solved a new block is added to the chain and the miner is rewarded with some Dash. The effect of this is two-fold. Firstly, it encourages users to process transactions on the blockchain. Secondly, it controls the creation of new tokens.

Where Dash differs is that it runs on a two-tier system. The second tier of the system is the masternodes. These enable many of Dash’s most interesting features. The masternodes are rewarded with 45% of the coins from each new block, with another 45% going to miners and 10% going into the general Dash “Budget”.

Should You Trade Dash?

Dash has a great deal of potential. Its focus is on being simple to understand and use, even by people with low levels of technical ability. This gives the Network the potential to be taken up en-masse. Combine this with instant and private payments and you’ve got a potent combination.

Dash’s creator and community also take a long-term approach. Seeking to slowly build up partnerships and grow the currency in a slower manner in order to avoid the instability that plagues Bitcoin. This is good news for traders who want something that is relatively stable.

That being said, Dash is not without its risks. Many users are concerned by the Instamine event that took place during its creation. Around 10% of Dash’s coins were mined in the first few hours of the currencies creation. The owner has claimed this was due to a bug in the code and that the coins have since been sold on an exchange. Despite changing its name on a number of occasions Dash has never been able to get away from the controversy and many users still do not trust it.

The controversy surrounding the Instamine incident is a large part of why Dash has not seen wider price increases. However, recent announcements and the partnership with Blockpay have seen the cryptocurrency’s fortune improve.

Dash is an excellent choice for traders with an eye to the long-term who want to speculate on a coin that is trying to bring cryptocurrency into the mainstream.

What Drives The Price Of Dash?

Dash has seen strong growth, although it has been subject to the same cycle of ups and downs that other cryptocurrencies experience. Generally, if Bitcoin sees a large increase or decrease in its value then you should expect to see Dash and other cryptocurrencies follow suit. As with other cryptocurrencies, Dash is quite volatile. As such you should expect quite dramatic ups and downs.

In the past Dash has grown significantly when partnerships have been announced. In March of 2017 people investing in Dash saw the value of the currency increase on the announcement of a partnership with Blockpay. This saw speculators pour into the currency and it drove its values to all-time highs.

Similarly, Dash saw an increase in value just before the Dash Conference in September of 2017. This was in anticipation of more announcements. During the conference, more partnerships were announced and you should generally expect to see the value of your Dash investment increase on the back of press releases and conferences.

Like Monero, Dash will also see gains if cryptocurrency regulations look imminent. People will be looking for a way to protect their money from seizure by the authorities. Admittedly Monero is widely regarded as the more secure currency so they will see a bigger boom from any potential regulations.

Dash designed their cryptocurrency to be used in the same way as cash. Its value will increase as more partnerships and more ways to spend Dash are implemented. You should expect to see large spikes in value if online merchants begin to announce that they will accept Dash as a payment method. Dash has a higher chance of this happening than certain other currencies thanks to the instantpay function.

What is The Price Outlook For Dash, and What Do Experts Say on Prices?

As with most cryptocurrencies, the short-term outlook for Dash is volatile. Generally, you will see a small increase in value followed by a large spike as traders pile in. This is then followed by a correction period where the value of the cryptocurrency falls back to something resembling its actual market value.

Most long-term traders will want to buy at the end of that correction period, this is typically the balance just before any major leaps in value, but you will need to use your own judgment.

In the long-term Dash has the potential to do well.  Even though many experts still harbor suspicions over the insta-mine controversy Dash will be able to do well if they can convince more end-users to adopt their currency. If more services like Blockpay begin to adopt Dash then you should expect prices to rise.

Experts are divided on whether investments in Dash will do well in the long term. Many such as Peter Todd believe that Monero is more likely to win the war on privacy based currencies. He argues that the pre-mine makes Dash too high of a risk for traders and encourages traders to instead look there. Others, such as Riccardo Spagni have gone further, arguing that the instamine controversy makes Dash an outright scam.

Some have taken a more positive approach to the currency, Joel Venezuela, the editor of Dash Force news, has argued that the increase in the price of Dash is long overdue. Specifically, because the currency has solid plans for long-term growth and has mass marketing potential.

While Venezuela’s words should be taken with a dash of salt, he is correct that Dash is one of the more usable currencies out there. This will certainly work in Dash’s favor as cryptocurrency becomes more mainstream. In particular instant transaction times give Dash a good chance of being adopted by mainstream merchants.

Other cryptocurrency experts take a positive view of Dash’s privacy-enhancing potential. When questioned on the matter both Manfred Karrer and Anthony Di Lorio said that they believe Dash will play an increasingly important role over the next few years as users become more concerned about their privacy.

Despite the many misgivings, some experts have Dash is in a good position to do well. The technology is simple to use and this could see it enter the mainstream over the coming months and years.

 

How to “Buy” Dash

So after carefully considering all of the pros and cons, you’ve decided that you want to trade Dash. The only question is how do you buy some? Well unfortunately this is where things become a little confusing. In order to buy Dash you’d first have to buy some Bitcoin and then trade that for some Dash. Not only is this time consuming it comes with a number of risks, some less obvious than others.

To start with there’s the more obvious problems. You might make a trade on the wrong exchange or with the wrong person on a peer-to-peer exchange. The result could be that you get scammed out of your Dash tokens.  resulting in the loss of your hard earned cash. If this happens it is almost impossible to retrieve your money.

If you’re planning to trade Dash you’ll also need to start taking your security seriously. You need to always enable two-factor authentication, use a password manager, read up on operating effective firewalls and keep abreast of the latest developments in cybersecurity. Failure to do so could lead to your computer being compromised and your money disappearing into the wallet of a hacker.

On top of the more obvious risks, there’s also one you may not have thought of. Your Dash investment could also be compromised by the exchange. Cryptocurrency exchanges are the biggest fail point in your security and it is completely outside of your control. If the owners prove to be incompetent or corrupt then your investment is very much at risk. This is a reality that many MtGox users found to their cost in 2013.

MtGox controlled 70% of the cryptocurrency market and was generally considered to be trustworthy. The problems began in March of 2013 when Fincen seized MtGox’s accounts. This prevented users from withdrawing any of their USD funds. Soon after this MtGox was hit by one of the worst hacks in cryptocurrency history. The attackers stole around $500 million worth of bitcoin and many users lost everything.

History repeated itself in 2017 when Bitfinex was rocked by a similar attack. The hackers made off with $72 million worth of Bitcoin stolen by emptying random users’ wallets. In order to offset the loss reduced the balance of all users accounts by around 37%. This prevented some users from losing everything but was understandably a deeply unpopular move.

Events like these can represent an unacceptable risk to many traders. The question is whether there is there a safer way to trade Dash? Thankfully, yes there is. Rather than buying your Dash directly through an exchange you could instead opt to trade contracts for difference (CFDs) through a safer, regulated broker.

A contract for difference is a contract between you, the buyer, and the broker. You pick an instrument, in this example Dash, and take a short or buy position. Then, if the market moves in the direction you choose, the broker agrees to pay you the difference. If the contract moves against your position then you will end up paying the broker instead. This allows you to make money from Dash without ever owning a single coin.

There are a lot of brokers out there and it can be a challenge to separate the good from the bad. The first rule when deciding how to buy Dash CFDs is to always use a regulated broker. They have to abide by strict codes of conduct so are much safer than an ordinary broker. You also need to compare the different fee structures and look at what extras a broker offers. Many brokers also offer demos and it is a good idea to take advantage of them before you settle on a platform.

Finding the right broker can be a challenge. Luckily we’ve already done the heavy lifting for you. We’ve done our research and for the vast majority of traders, Plus500 is probably the best way for you to trade Dash CFDs.

Plus500 – Our Top Recommendation For Trading Dash CFDs

If you’re looking for a regulated broker to start trading in Dash CFDs then it will be tough to find a better one than Plus500. They are headquartered in  Israel. They also have subsidiaries in the UK, Cyprus, and Asia. Plus500 is even listed on the London stock exchange. Each subsidiary is covered by a local regulator:

See the table below for exactly which regulator covers you in your country and what protection is offered.

RegulatorCountries CoveredProtection OfferedAdditional Protection Offered
Financial Conduct Authority (FCA)UK, Ireland and GermanyAll client funds are held in a segregated client bank accountFinancial Services Compensation Scheme (FSCS) may cover up to £50,000 if Plus500 fails.
Cyprus Securities Exchange (CySEC)Andorra, Argentina, Austria, Bahrain, Belgium, Bulgaria, Chile, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Gibraltar, Greece, Hungary, Iceland, Isle of Man, Israel, Italy, Kuwait, Latvia, Liechenstein, Lithuania, Luxembourg, Malaysia, Malta, Mexico, Monaco, The Netherlands, Norway, Oman, Poland, Portugal, Qatar, Romania, Saudi Arabia, Slovakia, Slovenia, Spain, South Africa, Sweden, Switzerland, United Arab Emirates and Uruguay.All client funds are held in a segregated client bank accountThe Investor Compensation Fund may provide up to €30,000 if Plus500 fails.
Australian Securities & Investments Commission (ASIC)Australia, New Zealand and South AfricaAll client funds are held in a segregated client bank account

This large number of regulators demonstrates that Plus500 has gone above and beyond in order to comply with regulations across a number of different countries. This also means that in the unlikely event you have any problems you will be able to take them to a regulator in order to resolve the dispute.

Plus500 has a very competitive fee structure. Unlike some other brokers, they charge zero commission. Instead, users are only charged on the spread of their CFD trades. In the case of Dash CFDs, this usually sits at around 3.35% although it is subject to change. This is a competitive rate which will help you make the most of your Dash CFDs. You should keep in mind that there are premiums for holding an overnight position and you might be charged an inactivity fee if you do not use your account in a 3 month period.

Plus500 have gone out of their way to make their platform accessible to traders around the world. The interface is simple to understand and should help newer traders ease into trading in Dash CFDs. They offer their service in over 31 languages and the platform has been localized in 50 countries. This is a nice touch that will help traders from across the world feel comfortable using the platform.

Plus500 also provides some of the best risk management tools out there. They have many of the tools you would expect from a good, regulated broker. You have the ability to customize your leverage and set close at loss or close at profit limits You can also set a close at loss or close at profit position which is very useful.

They also provide a few tools that most other brokers don’t offer. The most useful of these is the trailing stop.  This allows you to set your stop position to rise with the market. This means you can increase your profit without having to manually adjust your stop positions and if the market turns against you, you’ll still be protected. This helps you make more money from your Dash, CFD trades while also limiting your potential losses.

Many of us spend a lot of our time away from our computers so another useful addition is Plus500’s mobile app. This functions very much like their desktop platform and can help you trade while you’re away from home. One feature that we found particularly useful was the inclusion of the demo mode on the app. This allows new traders to try the service out on the go.

There are other brokers that might suit traders with specific requirements but for the majority of people, Plus500 is probably the best option to buy Dash CFDs.

No Matter Which Broker You Use, Remember That Your Capital Is At Risk.

Any trade is a risk and Dash is a very volatile commodity. When you’re considering how to buy Dash CFDs you need to remember that even if you use a regulated broker your capital is still at risk. If the market turns against you there is the chance you could lose some or all of your initial capital.

Trading in Dash CFDs is the same as trading in any other instrument. Make sure that you follow the golden rule. Only spend what you can afford to lose. If you follow this and use a regulated broker to protect yourself then you are well on your way to making the most of your Dash CFD trades.

Start Trading Dash Now

Saul Bowden Author

Saul is our resident cryptocurrency expert. He spends his days searching for the next Bitcoin. A longtime advocate of blockchain technology, Saul believes that cryptocurrency represents so much more than an excellent investment, it represents the future of finance.

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