What Is Dash?

Since its introduction in 2008, Bitcoin has not only been frequently seen in areas such as global fund circulation and payment, but has also been widely used for money laundering, and dark network payment. This is due to its financial attributes, anonymous nature, and other features.

However, after using Bitcoin for a long time, people discovered that it is not truly anonymous or resistant to tracking and censorship. As a result, some developers began to create cryptocurrencies with enhanced privacy and anonymity, as well as faster and lower-cost transactions, giving rise to the concept of privacy coins.

DASH is an anonymous cryptocurrency forked from Bitcoin that offers users stronger privacy protection and faster transactions by improving Bitcoin’s algorithm. DASH has gradually grown into one of the market’s most important privacy coins and is regarded by netizens as the coin that can best fulfill Satoshi Nakamoto’s dream.

What is DASH?

DASH was launched in January 2014 as “Xcoin” by Evan Duffield and was also known as Darkcoin due to early media attention from market speculation and dark web trading, and was later rebranded as DASH in March 2015, also known as “DigitalCash”. DASH is a detachable, fast, and private open-source P2P cryptocurrency that offers instant transactions, anonymous trading, and cryptocurrency feature for online transactions and anonymous payments.

DASH is also widely used around the world as an alternative to electronic cash and fiat currencies, serving individuals and institutions such as merchants, financial services, traders, and foreign exchange targets due to lower fees and fast, anonymous transactions. DASH is especially popular in areas where traditional payment systems face technical barriers or where hyperinflation has rendered existing currencies useless, such as Venezuela.

Figure: DASH offline promotion in Venezuela Source: https://sfl.global/news_post/dashzaiweineiruilazhenshishiyongzhuangkuangburuyuqi/

The DASH issuance is calculated as a geometric sum with a maximum total of 18,921,005 pieces. However, if the governance group does not allocate the 10% overall bonus reserved for the budget proposal, the maximum total of DASH is 17,742,696 pieces. Furthermore, the output rate of DASH decreases by one-quarter of every 210,240 blocks, or approximately every 383 days, and the issuance rate decreases by approximately 7%, resulting in approximately one reduction per year.

Chart: DASH’s latest price on October 20, 2022 Source: coinmarketcap

Unlike bitcoins that allocate 100% of the block reward to miners, 10% of the block reward is reserved as funding for proposals designed to strengthen the Dash ecosystem. The remaining block rewards and any transaction fees are split 50/50 between miners and Dash master nodes. Dash will continue to mine for approximately 192 years until it produces less than 1 Dash of cryptocurrency per year.

DASH is primarily produced using the X11 proof-of-stake (PoS) algorithm. The X11 hashing algorithm employs 11 scientific hashing algorithm sequences for workload proof, resulting in a complex cryptographic algorithm with a high-security level in current cryptographic digital currency mining applications, enhancing digital currency security and reducing uncertainty.

Meanwhile, DASH employs a two-layer network mechanism of PoW+PoS, where miners can earn rewards by providing algorithm servers similar to Bitcoin and solving algorithm puzzles, or they can join the DASH network by purchasing 1000 DASH to become master nodes and earn node rewards. The Dash network approved a proposal on August 13, 2020, to change the block reward distribution between miners and master nodes from 50/50 to 40/60.

The DASH network reallocates rewards every three superblock cycles in order to adjust the percentage share of rewards, with the redistribution of rewards between miners and master nodes expected by May 22, 2025.

Figure: DASH miners and masternodes’ reward redistribution process and estimated date
Source: https://docs.dash.org/zh_CN/stable/introduction/features.html#masternodes

What is the Dash “Halving”?

When talking about BTC, LTC, ZCash, and other PoW tokens, people will often use the term “halving” to describe the periodic block-halving events by reducing the number of block rewards offered to miners. Like Bitcoin’s halving mechanism, Dash also has a built-in mechanism that gradually reduces the amount of Dash that enters circulation.

Dash’s system for reducing the emission of new coins is designed to be more gradual than Bitcoin’s, which should provide more stability and predictability for the Dash mining ecosystem. Dash uses a mining deflation mechanism: every 210,240 blocks (~383.25 days), the issuance rate decreases by around 7.14%. In addition to the fact that DASH halving occurs almost once a year under the control of this mechanism, the supply of each block has a direct relationship with the total number of miners in all networks, and more miners participating means fewer mining rewards.

At the time of writing, there are approximately 11.03 million Dash coins in circulation. The Dash block reward is 2.7637 DASH and the total amount of DASH remaining to be mined is 7,855,031 DASH. The next Dash halving date is estimated to occur sometime on June 20, 2023, and the Dash block reward will be approximately 2.5663 DASH after the halving.

Figure: Comparing bitcoin and dash coin issuance. Source: docs.dash.org

DASH’s anonymous trading mechanism

DASH’s anonymous transactions employ Coinjoin, a cryptocurrency quantity splitting and mixing technology capable of providing users with a high level of granularity and financial privacy. When a transaction initiator initiates an anonymous transaction, the transaction input is divided into standard amounts and distributed to a set of master nodes at random. In each round, master nodes mix and split the funds of three different initiators and output them to achieve anonymous transactions. The initiator can mix multiple rounds, increasing the difficulty of monitoring and tracing the transaction.

Figure: Example of how a DASH coin works when conducting Coinjoin anonymous transactions. Source: DASH white paper

CoinJoin begins by breaking your transaction inputs down into standard denominations. These denominations are 0.001, 0.01, 0.1, 1, and 10 Dash. Then a request is sent to the master node via the user’s wallet. These master nodes are informed that your transaction will be created in a certain denomination using CoinJoin, during which no identifiable information is sent to the master node, so there is no way to know who initiated the transaction.

Then waiting for two other people to use Coinjoin, the transaction begins when the three people are gathered. Master nodes instruct the wallets of the three users to pay for themselves the now-transformed input. The user’s wallet pays that denomination directly to itself, but at a different address (called a change of address). Users can choose from 2-16 rounds of CoinJoin. Your funds will be added to a given denomination at least through the rounds you specify, with up to three additional rounds to further increase privacy. There is no additional waiting when you wish to trade with your denomination funds.

While DASH’s Coinjoin technology was revolutionary in that it allowed early users to gain tremendous security and convenience in anonymous transactions, it also had limitations.

• Each Coinjoin must be mixed by three equal transactions or wait if the amounts differ, and large transactions frequently require multiple Coinjoin rounds to achieve anonymity.
• The existence of master nodes makes them an easy target for government agencies or malicious attackers.
• Its privacy performance is moderate when compared to similar projects on the network today, and tokens that have passed Coinjoin can still be locked after multiple rounds of tracking.

DASH is more than just “digital cash”

DASH has evolved as “digital cash” for the past eight years, and thanks to the efforts of the BD and marketing teams, DASH now has a large number of individual and institutional customers in the global cash trading sector.

• DASH is available online with over 180 exchanges, creating a favorable environment for arbitrage and money flow.
• Offline: Through the inclusion of ATMs and extensive ground-truth advertising and point-of-sale setups, DASH has achieved tens of thousands of point-of-sale integrations in Venezuela and the United States.
• DASH has partnered with several credit bureaus as well as banking and financial institutions to provide service features such as remittances, credit operations, and consumer payments based on the technical features of instant transactions and low fees, serving millions of users in the United States, Venezuela, and Brazil.

However, DASH’s ambition goes beyond “digital cash”. The launch of the DASH Platform in Q4, 2022 will usher DASH into the programmable era, and DASH users will benefit from the convenience and benefits of decentralized applications.

Dash Platform is a Web3 technology stack for building decentralized applications on the Dash network. The two main architectural components, Drive and DAPI, turn the Dash P2P network into a cloud where developers can integrate with their applications. Its purpose is to smoothly enable value creation and transfer while leveraging the benefits of the Dash network. These benefits include immediate Instant Data Confirmation, robust project management, and tremendous scaling potential, allowing organizations to leverage tools to add metadata to payments, providing a more powerful and user-friendly application experience.

DASH’s positioning will shift from “digital cash” to a Web 3.0 financial services platform with the launch of the DASH Platform, and DASH developers have created a decentralized username for use with the DashPay mobile wallet so that users all over the world can send and receive digital cash without having to enter complex wallet addresses. There are also revolutionary data contracts, similar to Ethereum’s smart contracts, but with costs, build speed, and security far exceeding Ethereum, as well as a decentralized cloud service system with data storage.

The shift in DASH has attracted significant capital interest, with 200 funds responding out of 2,000 funds surveyed by CointelegraphResearch on Dash’s investment allocation in 2022. Of those surveyed, 19 funds hold DASH, and more than 40 plan to invest in DASH in the next 12 months.

The Problem with DASH

While DASH is a well-known and respected brand in the payment space in many parts of the world, it has recently come under regulatory scrutiny for money laundering and asset compliance. As technology evolves and regulatory technology improves, financial authorities will be forced to introduce new types of technology and policy regulations to keep up with the rapidly changing market. The Financial Action Task Force (FATF) implementation of regulatory policies for digital asset service providers (Virtual Assets and Virtual Asset Service Providers) to implement transaction monitoring. These policies also require compliance with intelligence agencies and the implementation of Anti Money Laundering (AML)/Countering the Financing of Terrorism (CFT).

Although DASH’s blockchain ledger is open and auditable, with full timestamps and transaction information, DASH, like Bitcoin, has not participated in public offerings and has no history of raising capital. As it moves forward with its business, DASH has encountered more stringent vetting standards from financial review agencies in some countries that classify it as private coins. However, because some countries’ financial review agencies classify DASH as ‘privacy coins’ when advancing its business, it is still subject to more stringent auditing standards.

Conclusion

DASH is currently ranked among the top 100 cryptocurrencies in terms of market capitalization, with a total market cap of approximately $443 million.

The upcoming launch of DASH’s new DASH Platform in Q4, 2022 has piqued the interest of some investors while also enticing dApp developers to participate in the testing of the DASH Platform, a data contract smart network. The combination of a large number of users, low fees, fast trading, low-cost contracts, and a new Web 3.0 financial platform is propelling DASH even higher in value.