Dash Trading: Is an Improved Governance Model Enough Reason to Trade It?

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Dash is one of the most recognizable cryptocurrencies that is traded and transferred by an open-source platform. There are plenty of reasons to consider trading Dash, including innovative technical solutions and an improved governance model.

Dash is available on most major exchanges and can also be traded as CFDs. This post explains how it works, but you can also jump to our crypto brokers list if you’re keen to get started.

Reasons You Might Trade Dash

Innovative Technical Features

Developed years after Bitcoin, Dash had the benefit of hindsight. The developers concentrated on Bitcoin’s weaknesses and have come up with innovative technical solutions like InstantSend and PrivateSend adding speed and privacy to transactions.

Instead of relying on volunteers to develop and maintain the network, they have provided incentives at the protocol level – namely 15% of each block reward going to a development and promotion fund – earning a reputation as a “self-funding” protocol.

Improved Governance Model

Unlike Bitcoin and other cryptocurrencies that need almost an absolute consensus for improvements and upgrades, Dash has incentivized Masternodes. Their operators have had to stake some money into the network in order to run a Masternode, and so can be considered as the network’s guardians in the sense that they would always act in the network’s interest. Each Masternode gets 1 vote toward protocol governance issues.

Added Utility and Growing User Base

Dash’s extra features, particularly instant and private transactions, are proving quite useful to Dash’s vibrant and growing community of users. Many say Dash has some of the most ardent and vocal adherents – which is probably due to their development fund being used to perpetually evangelize the coin. This virtually guarantees that it is unlikely to die off or become obscure.

How to Buy or Trade Dash

Cryptocurrencies can widely fluctuate in prices and are not appropriate for all traders. Trading cryptocurrencies directly is not supervised by any EU regulatory framework but trading cryptocurrency CFDs is. Your capital is at risk.

So you want to trade Dash? The next problem is figuring out how on earth to get hold of some. Buying or trading Dash isn’t as simple as acquiring Bitcoin, Litecoin, or Ethereum.

If you want to acquire Bitcoin it is usually as simple as logging onto an exchange and buying it with Fiat currency. Dash normally has to be traded for other cryptocurrencies. The easiest way to do this is to trade BTC for DASH.

Your first instinct is probably to use an exchange like Bitfinex. This involves buying coins with fiat currency and storing them in a virtual wallet. This is the approach taken by many users but it carries a number of risks.

There are several exchanges to choose from and it can be a little overwhelming to choose the right one. Here are two options we recommend if you are set on buying or trading Dash:

Coinbase

When you’re considering how to trade Dash the first step is to buy Bitcoin. One of the better choices for this is Coinbase. They are one of the oldest and most well-established cryptocurrency exchanges. They offer an exchange, a wallet, and a user-friendly interface.

You can purchase Bitcoin, Ethereum, and Litecoin using either bank transfer or credit/debit card. Their fees for this are also fairly low. Coinbase charges 1.49% for most forms of bank transfer and 3.99% if you choose to pay by credit or debit card.

Privacy diehards may balk at using Coinbase. Like many other more reputable exchanges Coinbase uses ID verification. This is to ensure that the exchange isn’t used for illegal activities and to comply with KYC (know your customer) regulations. This is considered best practice by many exchanges.

LocalBitcoins

If you wish to avoid giving your ID to an exchange you may want to look at Localbitcoins. They are a Peer-to-Peer exchange that does not require ID verification. Keep in mind that not every user on these kinds of services is honest. Always make sure to read reviews before you trade to avoid being scammed out of your bitcoins. If you take steps to protect yourself from scams then LocalBitcoins is easy to use and their low fee of 1% makes it a good choice to buy Bitcoins.

However…

Managing your own cryptocurrencies can be a challenge. You might fall prey to a phishing scam and have your coins stolen. You could misplace your access codes and leave your coins forever trapped in a wallet you cannot access. If you use a wallet on your smartphone, if your phone were stolen then your cryptocurrencies could be gone as well.

On top of the more obvious risks, there’s also one you may not have thought of. Your Dash trade 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. Many MtGox 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.

CFDs

Events like the above can represent an unacceptable risk to many traders. The question is whether there is 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 regulated broker.

Note: Cryptocurrencies can widely fluctuate in prices and are not appropriate for all traders. Trading cryptocurrencies is not supervised by any EU regulatory framework however CFD trading of cryptocurrencies is.

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 trade 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 trade 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.

To save you some time, we compared dozens of brokers on 10 key factors such as reputation, safety, fees and account requirements (see full list).

Where to Trade Crypto in

Crypto brokers available in :

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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 73.90%-89.00% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Potential Risks of Trading Dash

Stiff Competition

Dash set out to be an improvement on Bitcoin, and even innovative features that at the time were unique – but it now has to share that mantle with an ever-increasing amount of coins that have the similar features. Litecoin and Bitcoin Cash also provide near-instant transactions and Monero and Zcash lead the pack of a slew of “privacy” coins.

Second-Tier Development Issues

Although the protocol has achieved self-funding for development and marketing purposes, third-parties service providers seem to be slow to the table. Dash has been very slow to see any merchant adoption, and unlike Bitcoin and Ethereum, third-party software developers are mainly absent – meaning that the core protocol developers also need to build out the second-tier infrastructure themselves such as wallets and storage security software.

Further Reading

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