Dash: Can This Cryptocurrency Outgrow Its Controversial History?


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Dash was created in January 2014 with the aim to be the most user-friendly and scalable cryptocurrency. Formerly known as Xcoin and Darkcoin, it was designed to protect the anonymity of its users while also facilitating almost instant transactions.

Dash has had a controversial history. Read on to learn why this is and what the status and price outlook of the cryptocurrency are today.

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.

Controversial Beginnings

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.

An “Instamine” is a variation of a “Premine”, where the developers mine a percentage of the coin before public distribution. These coins are meant to be used to fund development.

Premines were controversial in the early days of crypto as some coins were premined and once they achieved a certain value the developers subsequently cashed out and abandoned the development.

An Instamine is similar, except that it is unintentional, and the result of a bug in the launch software. In Dash’s case, they forked from the Litecoin blockchain.

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.

The controversy is that not everyone was convinced by the developers that claimed that the instamined coins were in fact mined by 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 Are Masternodes?

Dash solves the scalability problem faced by Bitcoin by using a concept known as masternodes. Instead of a miner performing the function of ordering and verifying transactions, Dash’s masternodes take on some of the functions of a miner.

This frees up resources from the miners and allows them to concentrate on securing the network. It also decentralizes some of the power that miners would normally have and balances it out with the network’s masternode operators.

In effect, rogue miners cannot overpower the network on their own – even if they achieve more than 51% of the mining power, as the masternode operators would keep the miners in check.

To ensure masternode operators incentives are aligned with the network’s best interest, each masternode operator has to contribute and lock in 1000 Dash as a commitment to the network. If a masternode operator cheats the network, they stand to lose their commitment. This ensures that the node operator plays by the predefined rules.

Masternode Basics
Masternode Basics via YouTube

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 enable many of Dash’s most interesting features.

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.

Facts That Make Dash Stand Out

  1. Dash has some impressive features like privatesend and instantsend.
  2. Dash’s network now has 4,100 masternodes, meaning Dash’s peer-to-peer network is one of the largest in the world.
  3. Dash has an extremely informative and well-organized sitemap.
  4. The Dash network has funded a feature-length documentary dedicated specifically to Dash.
  5. Dash has its own news site called Dash Force News.

What Is the Price of Dash?

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.

Dash Price Outlook and Expert Opinions

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.

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.

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 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, Joël Valenzuela, 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.

joel Valenzuala - Dash.org
joel Valenzuala via youtube

When asked where he thinks Dash will be in 5 years time:

“At the current rate of growth and checking out the competition, I would say as one of the dominant payment systems on the planet, and the first global and wildly successful decentralized autonomous organization. In short, as the first “out of beta” crypto whose primary use is in daily economic life rather than experimentation.” source: cointelegraph

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.

Data from U.S. Equity Research estimates the cryptocurrency market is expected to grow at a 32% rate by 2023.

“Growth is propelled by the benefits of compliance-free peer-to-peer transaction, cross-border remittance transfer, increase in use cases, volatility in the stock market, fluctuating monetary regulations in different countries, transparency, and immutability of the distributed ledger technology and benefits such as faster transaction and reduction in total ownership cost.

–RnRMarketResearch

Ville Oehman, crypto fund manager at Helvetic Investments, says the fund sees:

“A lot of potential in second-tier cryptocurrencies.”

Ville lists Dash as one of the top five currencies they will be adding to their crypto basket.

Vielle Oehman crypto fund manager at Helvetic Investments on CNBC crypto fund manager at Helvetic Investments on CNBC
Vielle Oehman, crypto fund manager at Helvetic Investments via CNBC

Dash vs Bitcoin

How does Dash compare to the leading cryptocurrency Bitcoin? What are the key differences? See below for our head-to-head comparison:

 Dash (DASH)Bitcoin (BTC)
PurposePrivate and instant transfersDecentralized digital currency
Founded20142009
FounderEvan DuffieldSatoshi Nakamoto (alias)
Market CapOver $10 billionOver $250 billion
Current Price
All time High$1,600 (December 2017)$19,908 (December 2017)
All Time Low$0.21 (February 2014)$0.06 (July 2010)
How long did it take to hit $100?37 months51 months
Notable SupportersRobert Genito (CEO of Genitrust)
Roger Ver (Cryptocurrency investor)
Naeem Aslam (ThinkMarket’s chief analyst)
Jeff Currie (Goldman Sachs)
Peter Theil (Venture capitalist)
Christine Lagarde (IMF)
Marc Andreessen (Early internet Pioneer)
Supply Cap18,900,00021,000,000
Initial DistributionMiningMining
Mining MethodASICASIC
Consensus MethodHybrid Proof of work/Proof of StakeProof of work
Network Hash Rate*Over 20 DASH an hourOver 40 bitcoins per hour
Difficulty increaseDifficulty is calculated each blockEvery 2,016 Blocks

*Total number of coins mined hourly on the blockchain

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.

Dash Masternode Rewards
Dash Masternode Rewards via YouTube

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”.

Further Reading

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