DASH is a cryptocurrency created in January 2014 by Evan Duffield, successively named Xcoin, then Darkcoin. Initially based on a copy of Bitcoin, Dash allows confidential and almost instantaneous transactions, and is supported by a masternode governance system.
What are the differences between Bitcoin and Dash?
Dash is based on a two-tier system involving miners and masternodes. As in Bitcoin, miners use the computing power of their computer equipment to secure the network and add blocks of new transactions.
Dash is based on a two-tier system involving miners and masternodes
However, Dash also uses the Proof-of-Stake system to avoid centralisation of minors and increase the system’s resistance.
In other words, users with more than 1000 DASHs ($68,000 in September 2019) can run a masternode: a complete node of the Dash blockchain, which has more features.
Instant and confidential transactions
Dash has four times faster transaction confirmation time than Bitcoin and the network can handle approximately five times as many transactions over a given period of time, or approximately 35 transactions per second. If this is not enough, Dash also allows you to use the masternode network directly to perform near-instantaneous transactions through a process called InstantSend.
Dash benefits from four times faster transaction confirmation time than on Bitcoin
What is a Masternode?
The masternodes can, among other things, confidentialise transactions at the user’s request. They will then be mixed with other transactions, a mechanism similar to Monero.
Dash therefore implements a semi-decentralised governance system: the masternodes have the possibility to vote on any proposal to improve the protocol. If a proposal is accepted, developers with the necessary rights will decide whether or not to implement it.
The masternodes have the opportunity to vote on any proposal to improve the protocol
A reward mechanism to improve the project
Up to 10% of the money supply created by each block is dedicated to the treasury system. This is unlocked about once a month. Anyone can propose to use these funds to finance a project that benefits the network, and they will be allocated if they obtain the support of at least 10% of the masternodes. This model works as a DAO (Decentralised Autonomous Organisation).
The strenghts of Dash and the role of masternodes
Masternodes manage all of the above mechanisms and can provide the significant advantage of confidentiality, as well as the near-instantaneity of transactions with minimal fees through the InstantSend process.
Their role being essential, the masternodes are rewarded by the issuance of new DASHs at each block: 45% of the reward goes to the miners, 45% goes to the masternodes, and 10% is dedicated to on-chain treasury.
The masternodes are rewarded by the issuance of new DASHs for each block
The weaknesses of Dash
A frequent criticism of this system of monetary issuance and masternodes is the difficulty of raising 1000 DASHs and thus benefiting from the 45% of monetary issuance. Only the significant holders of Dash can thus receive this share of the money creation, leading to concentration and centralisation to the detriment of the other users of the project. In addition, a large portion of the DASHs that are counted in the overall capitalisation of the project are not ultimately in circulation.
A new monetary issuance curve
Although Dash is a Bitcoin fork, Dash’s founder has rethought the system’s monetary emission curve. While bitcoin reduces BTC emissions by 50% every four years, Dash decreases by approximately 7.14% every 384 days. Thus, the curve is smoother over time. In total, between 17.7 and 18.9 million DASHs will eventually be in circulation depending on whether or not the funds dedicated to on-chain treasury are used. Today, about 3 DASHs are produced per block.
Conclusion: a cryptocurrency with good fundamentals but of little interest to the market
Despite Dash’s relative advantages, few people pay much attention to it today. The project had its peak in March 2017, when it reached the third highest valuation on the cryptomarket, with a price at 0.1 BTC per DASH. Since then, it has a lack of notoriety and has not generated any particular enthusiasm, despite a comfortable valuation of $620 million in September 2019.
The number of contributions to the code is now very low, with only two active developers, and each block contains only a few dozen transactions. These are generally not signs of a project with a bright future.
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