Dash is short for “Digital Cash” and it aims to become exactly that. A pioneer in the crypto industry, Dash’s protocol is modeled after Satoshi’s original blockchain and adds a few unique features for maximum speed, privacy, and lower transaction fees. Thanks to these innovations, Dash has the potential to become a true standard for transactions between individuals in a decentralized and secure manner. Not only is this one of the most well established cryptos in the payments space, but the community continues to innovate and bring crypto to new and exciting places, particularly in emerging markets.
- Crypto-asset type: Money Coin;
- Maximum supply: 18,900,000 DASH;
- Circulating supply (to date): 8,314,008 DASH;
- Token Economics: Inflationary Asset - Similar to Bitcoin, creation of new Dash decreases by 7.1% approximately every year reaching an asymptotic value, thus making it effectively deflationary, until max supply is reached;
- Protocol: Proof of Work/Proof of Service.
History Dash, which stands for “Digital Cash”, was released in January 2014, based on the Bitcoin protocol and originally under the name XCoin. Founder Evan Duffield, having come across Bitcoin in 2010, wanted to introduce anonymity in the Bitcoin protocol. As that was impossible without a consensus among all developers of the blockchain, he decided to create his own cryptocurrency.
Soon after its creation, XCoin was renamed Darkcoin, highlighting its anonymity features. Finally, in March 2015, and trying to access a more mainstream market and establish itself as a standard for online payments, it was rebranded to its current ticker Dash.
Since 2014 and for several years, Dash has traditionally been among the five most highly valued cryptocurrencies in terms of total market capitalization, and surged incredibly in value along with the rest of the crypto sphere during 2017. Despite the emergence of new competition, Dash stands out as one of the most established cryptos in the industry.
Evan Duffield created Dash in 2014 after seeing what he thought were inherent problems with the Bitcoin protocol. In 2017, Evan left his active role in Dash and was replaced by Ryan Taylor. They are arguably the two most recognizable faces of the Dash team.
Evan Duffield is the founder of Dash and was CEO of the project until April 2017. He started developing software at the age of 15 and worked in several public relations and financial companies before deciding to embark on creating the Dash protocol. After leaving the CEO position, he has remained in an advisory role in the Dash board and has focused on supporting further development of decentralized applications.
Ryan Taylor is the current CEO of Dash Core, which leads the development of the Dash project. Before joining Dash, he was an Associate Partner at McKinsey and also served as analyst in a New York-based multi-billion dollar hedge fund. He joined the project in 2014 and served as Dash’s Director of Finance before replacing Evan Duffield as CEO.
Like Bitcoin, the main use case for which Dash was conceived was to enable secure, fast and affordable transactions between individuals all over the world without the need of a bank or any other centralized entity. Going back to the definition of “money” in the 19th century, the main functions of money are to act as a medium of exchange, unit of account, and store of value.
Bitcoin has traditionally been used significantly more as a store of value than as a medium of exchange, hence acting more as a sort of “digital gold” than “digital money”. Arguably the main reasons for that are the relatively slow and expensive transactions.
Dash on the other hand, provides instant transactions with negligible fees, and so aims to become an actual form of digital cash that can be employed in online transactions, e-commerce, and even traditional establishments.
Dash is indeed being used by many as a store of value. In fact, holding Dash long term has additional incentives as well due to the existence of something called masternodes. With this system, token holders with a large purchasing power are encouraged to hold 1,000 DASH (currently valued at approximately $500,000) in order to receive block rewards in the form of new coins for providing a series of services.
Dash already has significant adoption in several verticals, like in developing countries where cryptocurrencies are needed most. Besides, there are thousands of merchants and hundreds of ATMs supporting Dash all over the world. In any case, and although its main use is still as a medium of exchange and store of value, Dash definitely has the potential to go beyond that, as will be shown in the following sections with the different projects that are being developed in the Dash environment.
Dash is indeed based on the Bitcoin protocol and is therefore intended to work purely as a digital currency, or money token, although with a new iteration called Evolution (which will be further described later), Dash will introduce Decentralized Application Protocols (DAPs) and data contracts. When compared to Bitcoin, Dash introduces a series of new features to make it more private, faster and more scalable.
Perhaps the most important difference is the introduction of masternodes. Unlike Bitcoin, where miners are responsible for all services in the network, Dash uses a two-tier approach consisting of both miners and masternodes.
In the Proof-of-Work protocol, computers in the network compete to solve mathematical problems in order to obtain rewards in the form of coins, while securing the network. A downside of this is the high costs and environmental impact in terms of energy associated with this protocol.
Meanwhile, in the Proof-of-Stake protocol, token holders are the ones in charge of validating transactions and securing the network, by staking (locking up) their coins temporarily in exchange of a reward similar to a dividend. Many people believe this new protocol will become the new standard for cryptocurrencies. Ethereum is actually scheduled to transition from Proof-ofWork to Proof-of-Stake in the future.
In the Dash system, miners still compete to find new blocks and obtain rewards. However, there is a second layer that introduces further features and that is formed by masternodes. Masternodes are nodes in the network that hold at least 1,000 DASH and are responsible for securing PrivateSend, InstantSend (which will be explored below) and other special features of the Dash protocol.
Because running a masternode has associated bandwidth and hardware requirements, masternode holders are also incentivized with block rewards. For every new block that is created, miners and masternodes receive 45% of the reward each, and the remaining 10% is assigned to a so-called “treasury” that is used to fund projects and contractors. Proposals to improve the network or add new features can be voted and funded with this budget.
Two important features of Dash mentioned above are PrivateSend and InstantSend. The former was the original differentiation factor with respect to Bitcoin, natively introducing privacy in the blockchain. PrivateSend (formerly known as DarkSend) is an improvement of CoinJoin, where transactions between users of the network are basically mixed together in order to make it virtually impossible to track them down. Unlike in the original CoinJoin protocol, where a centralized system is responsible of performing the mixing, in the case of Dash masternodes are responsible for this task, thus making the system decentralized and not dependent on a single entity. Private, non-trackable transactions are a very important feature of Dash, and have the goal of eliminating the transaction history of single coins and therefore making the currency fungible, that is, ensuring all coins are worth the same value.
On the other hand, InstantSend (formerly called InstantX), uses the masternode layer to introduce instant irreversible transactions. Once a transaction is submitted to the network, masternodes quickly confirm it and ensure those coins cannot be spent again (duplicated). This can allow, still in a decentralized and secure way, to have instant payments in daily commerce using Dash in a similar way to how traditional cash is used with debit or credit cards.
One of Dash’s most exciting upcoming projects is Dash Evolution. Dash Evolution leverages Dash’s multi-layer architecture to securely and scalably enable developers to build trustless applications secured by the blockchain. These client-executed applications interact with the consensus validated data they have stored on DashDrive via the Decentralized API (DAPI). Besides, it will introduce blockchain-based usernames that allow Evolution applications to handle secure authentication while also providing a user-friendly alternative to the complicated addresses frequently associated with cryptocurrency interactions.
A new marketplace will introduce an approachable exchange for sellers and buyers, and will enable one-click payments for websites, stores and applications. This user-friendly system should behave similar to a mobile app store, greatly improving the utility of the coin for its average users.
With these advancements, Dash aims to become a sort of crossover between Facebook and Paypal, still with the advantages and security of a decentralized system.
Dash DAO & Projects
A Decentralized Autonomous Organization (DAO) is an organization of people that communicate with each other and take decisions on a network protocol, without the need of a centralized party. All DAOs are based on a monetary incentive, and Dash is no exception. The block reward obtained by miners and masternodes represents this monetary incentive.
10% of all block rewards are reserved for the Dash treasury. This is an important particularity of the Dash DAO because it allows the network to be completely selfsustainable. Developers, auditors, marketers, etc. can be contracted with these funds, which can also be used for supporting projects based on the Dash ecosystem. Masternodes, who are people with a substantial investment in the network and therefore a great stake on its success, are the ones that vote on the contractors and initiatives that receive money from the treasury. some of the most interesting Dash-based projects that have been supported by the treasury are:
- KuvaCash is a project to create an advanced mobile wallet powered by Dash, with the possibility of using or sending cash instantly anywhere in the world. Together with Dash, KuvaCash launched a program to fight hyperinflation in Zimbabwe and provide them with a stable currency.
- Similarly, Dash Venezuela aims to drive further adoption in Latin America, where they have reached hundreds of companies that are already accepting Dash for purchasing their products. Cryptocurrencies will likely first reach mainstream adoption in economies with a high inflation and decaying economy, where a strong and liquid currency is not readily available.
- Alt Thirty Six is a Dash Treasury funded company that integrates thousands of cannabis merchants with patients and customers, and has a 3-year exclusive deal with Dash. The legal cannabis industry is set to grow from $17 billion in 2017 to $40 billion by 2021, and Alt Thirty Six has secured deals with some of the most important dispensary chains throughout the US, with the prestigious Palm Beach Research Group nicknaming it the “PayPal of the Pot Industry”. This is particularly important for an industry that has traditionally been linked to cash payments and where banking solutions are limited.
- FanDuel is one of the most important fantasy sports services in the US. During the last NBA playoffs, they partnered with Dash to offer fantasy sport competitions with Dash rewards. Initiatives like these will drive further the use of Dash and cryptocurrencies as a whole.
Source: eToro market research.