Dash (formerly known as Darkcoin and XCoin) has been around since 2014 and was created to focus on privacy and speed of transactions. The founders of dash had also identified these as two areas of weakness with the technology that support Bitcoin.
Bitcoin transactions are not anonymous – once you identify a wallet address, you can view all the associated transactions by navigating through the blockchain. Blockchain.info is a website that can be used for navigating the public ledger on the block chain.
To address these issues, two mechanisms were developed; PrivateSend and InstantSend.
The PrivateSend feature bundles your transactions with other anonymous payments. This makes it almost impossible to see where the transaction came from and where it is going to.
The InstantSend feature is meant to support transaction processing that takes less than a second. You pay for higher processing fees but it does mean that it is practical in certain areas of industry (like retail where Point of Sale systems need to validate a transaction immediately).
To achieve this, Dash essentially created two “layers” – a two-tier network.
The first layer is composed of nodes. These computers make up a peer-to-peer network. Miners use these nodes to verify Dash transactions and create new coins.
The second tier is composed of masternodes that contain the full blockchain of a cryptocurrency. These masternodes are dedicated to PrivateSend and InstantSend transactions.
Anyone can run a masternode, but they need to own 1,000 Dash coins – this was to prevent sybil attacks. An operator of a masternode is then entitled to a percentage of the associated transaction fees. The fee distribution from Dash for managing the blockchain is as follows;
- The miner gets 45%
- The masternode operator gets 45%
- The Dash maintenance fund receives 10%
Dash has experience some solid growth and support since its creation.
The Dash maintenance fund is also seen as a key differentiator to Bitcoin since those goes towards running the nodes. Instead of relying on community donations, Dash can fuel its growth directly from its blockchain. These feature sets make Dash self-governing and self-funding that will support a sustainable model.
Dash, however, is not with controversy since they are linked to an instamine. In an instamine or premine, a large number of coins are kept for a select few before the code is released. These people can then benefit greatly if the coins increases in value. There are some that say this is unethical and can lead to developers floating coins for their own enrichment and not to provide a new and practical solution.
- Private transactions
- Virtually instant processing of transactions
- The network is self funding which pays for software development, business development, integrations, marketing and whatever other real-world activities benefit the network
- The governance is decentralised by blockchain, where masternodes vote on how to spend the Dash budget. Anyone can submit proposals to grow the value of the network
- Incentivising the masternodes creates a sustainable model to help with scaling
- The difficult adjustment algorithm (for mining) is superior to the Bitcoin Cash algorithm (which came under some fire for being inconsistent)
- Positive uptake from merchants
- Linked to an instamine which has has a negative effect on their reputation
- Masternodes cause slight centralisation
- InstantSend fees are a bit high