Introduction to the Dash Cryptocurrency – Part 1

One of the biggest benefits that bitcoin brought to its users was decentralization. History shows that many of the problems with currencies and money occur when a few powerful entities such as governments or big banks start making erroneous decisions. What often happens next is the increase of national debt and people of a country have to pay for those bad decisions. This is what happened in the United States when the US government bailed out banks and corporations during 2008. This is what happened in Iceland and many other countries.

In the aftermath of the 2008 world financial crisis many countries started engaging in quantitative easing, which led to the decrease of value of national currencies. Countries have been doing that so that their products and services become more competitive on the international market. They would print more money, which would lead to money having less value. Because money would have less value, products and services would become more competitive. While it did work for some countries, the issue with this approach is the same: there are a few key players that are making decisions. These decisions may turn out to be incorrect and if they do, everyone else will have to pay.

With bitcoin, it is impossible for someone to make a few bad decisions and have others pay because the currency is decentralized. There is no chief executive officer of bitcoin or bitcoin bank that serves as a portal for bitcoin transactions. Users on the network can send transactions to one another whenever they want to without having to use any banks at all.

Also, bitcoin is a currency that has a cap. There can only be 21 million of bitcoins in circulation. This means that no individual or entity can decide to suddenly expand the number of coins and devalue the currency.

Nakamoto released the first version of bitcoin software in January of 2009. Since then, most cryptocurrencies used the software to create new networks and build on the features of bitcoin.

DASH is one of such cryptocurrencies. Just like bitcoin, it is a self-governing decentralized network. One of the features that DASH offers that Bitcoin doesn’t have is anonymity. Two features that make DASH stand out from other cryptocurrencies are InstantSend and PrivateSend.

DASH is a combination of words digital cash. The currency was first introduced to the market as XCoin (XCO). This occurred on January 18, 2014. In February of the same year the coin changed its name to Darkcoin. Darkcoin became DASH on March 25, 2015.

Evan Duffield was the creator of XCoin. Within the first two days after the launch of the coin, the network saw an influx of 1.9 million coins, which is about 10% of the total supply of the coins that Duffield planned for the network to ever have. It turned out that the mining occurred because of the bug related to the difficulty of coin mining during the first several days of the existence of XCoin. Evan suggested a relaunch of the coin, but the community rejected the idea, which is why the development of the network continued. Most of the initial 1.9 million coins were sold on exchanges at very low prices.

 

Features of the DASH Network

The bitcoin network is a single-tier network. Miners on the network compile transactions into blocks and add blocks to the blockchain.

DASH network works in a different way. It is a two-tier network. The first tier is miners creating new blocks in a similar way to the bitcoin network. The second tier consists of masternodes that perform PrivateSend and InstantSend functions, which are the functions that make the DASH network unique. Masternodes also have governance functions. In essence, DASH is a decentralized autonomous organization (or a DAO, not to be confused with The DAO, which was an initial coin offering and a project on the Ethereum network).

To prevent attacks from occurring on the network, masternodes need to have 1,000 dash coins as collateral in order to be able to function as masternodes. It is possible for a masternode to spend any and all of the funds that it holds as a collateral, but if the amount goes below 1,000 DASH coins, the masternode will stop being a masternode and will be removed from the network. Because masternodes perform functions essential to the existence of the network, they get a part of the reward that the network gives out for mining of the new blocks of its blockchain. On the DASH network, miners get 45% of the rewards, masternodes also get 45% and 10% goes into the treasury system that supports the existence of the network.