Dash (cryptocurrency)

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Dash (Digital Cash) is an open source peer-to-peer cryptocurrency with a strong focus on the payments industry. Based on the Bitcoin project, Dash aims to be the most user friendly and scalable payments system in the world[1].

In addition to Bitcoin's feature set, Dash offers instant transactions (InstantSend),[2] private transactions (PrivateSend)[3] and operates a self-governing and self-funding mechanism that fosters the creation of independent entities that serve the network[4]. Notable entities include Dash Core Group[5], Dash Force[6], Kuvacash[7][8], Alt36[9][10] and Dash Help Venezuela[11][12]. This decentralized governance and funding system makes it one of the first decentralized autonomous organizations (DAO)[13] and the first DAO recognised by international law[14].

Dash splits its block reward 45% to miners, 45% to masternodes and 10% to a treasury managed by the DAO - this allows the network to scale on-chain by incentivising all essential network infrastructure to upgrade as required.

Software development is currently focussed on improving access for non-technical users: enabling payment of contacts by name rather than cryptographic addresses, and single-click purchases from websites or mobile apps without a central authority.[15][16]

History[edit | edit source]

Dash was originally released as XCoin on January 18, 2014. The founder, Evan Duffield, proposed a series of improvements to Bitcoin's protocol[17], including:

  • a two-tier incentivized network of Masternodes and miners
  • instant transaction confirmations without a centralized authority
  • a system for increasing fungibility of coins and anonymity of users
  • an improved hashing algorithm (X11)

XCoin was renamed to Darkcoin on January 28th, reflecting a focus on user anonymity, then on March 25, 2015, rebranded as Dash (a portmanteau of "Digital Cash") to reflect a shift in focus towards mainstream payments.[18]

Features[edit | edit source]

Masternodes[edit | edit source]

Unlike Bitcoin's single-tier network of miners, Dash utilizes a two-tier network of masternodes and miners.

As in Bitcoin, Dash miners secure the network by providing proof of work. The second tier of the Dash network consists of masternodes, which perform PrivateSend, InstantSend, and governance functions. In future releases aimed at improving ease-of-use, the masternode network will store encrypted data relating to user and merchant accounts (DashDrive), and will enable third party clients to interact with the Dash network via a decentralised API (DAPI).

Masternodes require 1000 DASH as collateral to prevent sybil attacks. This collateral can be spent at any time, but doing so removes the associated masternode from the network. Because masternodes perform essential functions, and because their hardware and bandwidth requirements increase as the network scales, the block reward is split between miners and masternodes, with each group earning 45% of the block reward - this ensures that all essential parts of the network are incentivised for their participation.

The remaining 10% of each block reward funds the "budget" or "treasury"[19] from which payouts are awarded to contractors working for the network. Anyone with a plan for improving or growing the Dash network can submit a proposal to the masternodes, requesting funding for their project. Projects are then approved or rejected by a periodic vote, and payouts occur directly from the blockchain to the address contained in the proposal.

PrivateSend[edit | edit source]

Masternode distribution worldwide, excluding IPv6 and Tor nodes (as of March 2017)[20]

PrivateSend is a coin-mixing service based on CoinJoin, with numerous modifications. These include using masternodes instead of a single website, chaining by mixing with multiple masternodes, restricting the mixing to only accept certain denominations (e.g.: 0.01 DASH, 0.1 DASH, 1 DASH, and 10 DASH, etc.), and passive mode. The maximum allowed for a PrivateSend transaction is 1000 DASH.[21]

Later iterations used a more advanced method of pre-mixing denominations built into the user's cryptocurrency wallet. The implementation of PrivateSend also allows masternodes to submit the transactions using special network code called DSTX,[22] this provides additional privacy to users due to the deadchange issue present in other CoinJoin based implementations such as DarkWallet and CoinShuffle.[23]

In June 2016, DarkSend was rebranded to PrivateSend.

In its current implementation it adds privacy to transactions by combining identical inputs from multiple users into a single transaction with several outputs. Due to the identical inputs, transactions usually cannot be directly traced, obfuscating the flow of funds. PrivateSend makes Dash "fungible"[24] by mixing the coins in the same denomination with other wallets, ensuring that all coins are of the same value.

InstantSend[edit | edit source]

InstantSend is a service that allows for near-instant transactions. Through this system, inputs can be locked to specific transactions and verified by consensus of the masternode network. Conflicting transactions and blocks are rejected. If a consensus cannot be reached, validation of the transaction occurs through standard block confirmation. InstantSend solves the double-spending problem without the longer confirmation times of other cryptocurriencies such as Bitcoin.[25]

In June 2016, InstantX was rebranded to InstantSend.

Governance and funding[edit | edit source]

Dash is the first decentralized autonomous organization powered by a Sybil proof decentralized governance and funding system.[26] Decentralized Governance by Blockchain (DGBB), often referred to simply as the "treasury system" is a means of coming to consensus on proposed network changes and funding development of the Dash ecosystem. Ten percent of the block rewards go to this "treasury" in order to pay for projects that benefit Dash. Funding from the treasury system has been used to hire additional developers and other employees, to fund attendance at conferences, and to fund integrations with major exchanges and API providers.

Each masternode operator receives one vote. Proposals are eligible for funding according to the following formula: (YES VOTES - NO VOTES) > (TOTAL NUMBER OF MASTERNODES * 0.1). If there are more proposals that meet that criterion than there are budget funds for the month, then the proposals with the highest number of net votes will be paid. Community interaction with proposal submitters is done through the dash.org forums, or through community-driven websites, like DashCentral.[27] These websites allow proposal submitters to provide multiple drafts, then lobby for community support before finally submitting their project to the network for a vote. After the submitter has enough support, the network will automatically pay out the required funds in the next super block, which happens monthly.

The funding system has seen revenue growth. In September 2015, the treasury system provided $14,000 in funding per month.[28] Due to increases in the value of Dash, as of March 2017 the treasury system provided about $574,000 per month in funding.[29] The treasury system has created a positive feedback loop, whereby additional development increases the value of Dash, which increases the amount of funding provided by the budget system.

References[edit | edit source]

  1. "Dash Documentation". Retrieved 20 April 2018. 
  2. "InstantSend Official Documentation". Retrieved 17 June 2016. 
  3. "PrivateSend Official Documentation". Retrieved 17 June 2016. 
  4. "Dash Official Website | Dash Crypto Currency — Dash". www.dash.org. Retrieved 2017-09-26. 
  5. "The Dash Team". Retrieved 28 April 2018. 
  6. "About the Dash Force". Retrieved 28 April 2018. 
  7. "Kuvacash - making money better". Retrieved 28 April 2018. 
  8. "Proposal DASHKuvaCashProject". Retrieved 28 April 2018. 
  9. "Digital Cash for the Cannabis Industry". Retrieved 28 April 2018. 
  10. "Proposal alt36-product36-pt1". Retrieved 28 April 2018. 
  11. "Dash Help - Soporte técnico". Retrieved 28 April 2018. 
  12. "Proposal DASH-Help-Support-Center". Retrieved 28 April 2018. 
  13. Juan S. Galt. "DASH – The First Decentralized Autonomous Organization?". Retrieved 17 June 2016. 
  14. Joel Valenzuela. "Dash Core Group Becomes First Legally DAO-Owned Entity". Retrieved 28 April 2018. 
  15. "Dash Evolution". Retrieved 20 April 2018. 
  16. "Dash Official Website". Retrieved 20 April 2018. 
  17. "Whitepaper -Dashpay/Dash". Retrieved 20 April 2018. 
  18. "Darkcoin Is Now Dash | Dash – Official Website". www.dash.org. Retrieved 6 January 2018. 
  19. "DASH Ninja - Blocks Masternodes Payee". DASH Ninja. Retrieved 24 September 2015. 
  20. "Distribution of 4065 Dash Masternodes V3". Dash Masternode Information. Retrieved 2017-03-19. 
  21. "PrivateSend". DASH. Retrieved 4 March 2017. 
  22. "v0.11.1 - InstantX Release | DashTalk". dashtalk.org. Retrieved 2016-03-27. 
  23. "Security Advisory for CoinShuffle and Darkwallet | DashTalk". dashtalk.org. Retrieved 2016-03-27. 
  24. "Dash's PrivateSend: What makes Digital Cash Fungible". The Dash Times. 2016-07-07. Retrieved 2016-07-10. 
  25. InstantX - Transaction Locking and Masternode Consensus: A Mechanism for Mitigating Double Spending Attacks dashpay.io
  26. "Self-sustainable Decentralized Governance by Blockchain". dashtalk.org. Retrieved 15 June 2016. 
  27. "Masternode monitoring and budget voting - DashCentral.org". dashwhale.org. Retrieved 15 May 2017. 
  28. dashcentral. "DASH and decentralized governance by blockchain". Retrieved 7 September 2017. 
  29. "Dash Surges to Record High, Claims $0.5 Mln Monthly Development Budget". cointelegraph.com. Retrieved 13 March 2017. 

External links[edit | edit source]