What Is Dash Coin?
One of the biggest problems with many cryptocurrencies is their slow speed of transactions. If you’re trying to buy something at a store, having to wait 20 minutes (or more) for payment to be approved starts at inconvenient and gets rapidly worse from there.
The Dash coin cryptocurrency – usually just ‘Dash’ – circumvents this with transactions that can be approved in less than one second. The ease of use has contributed to its rapid growth among cryptocurrencies, but many other factors help it stand out from the crowd. Here’s everything else you need to know about Dash.
Dash runs primarily on Masternodes, which are powerful servers that help to ensure a certain level of performance by the system. This is a sharp contrast to some other cryptocurrencies, which may have every user acting as a primary node for the system.
Masternodes are paid for their service with 45% of each block reward, distributed randomly across the network. This is where things really get interesting. Dash wants to minimize the number of unnecessary masternodes and does this by requiring ownership of at least 1000 Dash in a way that’s visible to the network.
To put this into context, Dash was trading around $1200 at the time this guide was written, making a Masternode worth about USD $1.2 million. Ownership of Masternodes is not permanent – people must keep the currency in-place. If it’s moved somewhere else or spent below the threshold, the Masternode stops working.
The high value of Masternodes is used as an incentive for active participation in the Dash system, including voting on proposals about the governance and development of Dash. Its governing system is funded by a budget of 10% of all block rewards, leaving 45% for the miners.
(In practice, Masternodes and miners split most blocks in half. The final 10% appears in one “superblock” that is generated approximately every four weeks, and the payout from that is distributed to the winners of all budget proposals.)
The end result of all of this is a two-tier system. The lower tier consists of miners, while the higher tier has the Masternodes. To enforce the positions, Masternodes can reject any ‘improper’ block generated by a miner (such as one where they try to keep all of the Dash mined from it), refusing entry to the main blockchain.
Being honest, most people can’t afford an entire Masternode. That was a realistic possibility in Dash’s early days, but as long as $1 Dash is worth more than $10, entry to the system is challenging at best.
The easiest way around this is buying a ‘share’ of a Masternode. Essentially, this allows for partial (rather than full) ownership and can be done to create a new Masternode or join an existing node.
How Much Can Masternodes See?
While Masternodes ultimately view all of the data they process, they do not allow their owners to look at most of it. In other words, Masternode owners cannot see anything about people’s transactions. This is an important part of the system’s guarantee of privacy.
Governance Of Dash
Like most cryptocurrencies, the Dash digital currency does not have a central governing body that can make decisions for the network. Instead, the network itself makes the decisions by allowing Masternodes to vote (Yes/No/Abstain) on each proposal.
The number of Masternodes, and the high cost of adding new nodes, help to prevent any individual from gaining too much voting power. Also, limiting votes to Masternodes ensures that the people making decisions have a real stake in the outcome.
The self-funding system also deals with one of the major problems of a cryptocurrency. Most other currencies need donations from users or ‘pre-mined’ and used as an endowment for the maintenance of the system. Dash funds itself as it goes along, with a stable and largely predictable income.
Dash does not require a majority of the entire network to vote on every issue, but it does require a majority of each quorum (6/10 voting yes) to approve any proposal. Furthermore, the number of yes votes must be at least 10% of the entire network.
Dash Wallet Choices
Dash offers a variety of different wallets for users.
Dash Core Wallet is the full, official release of the system. It includes all features, including the Masternode code, and requires you to have the entire blockchain. The Dash Core Wallet has a slower startup time than some other wallets, but the presence of all features makes it more useful once it’s up.
Electrum-Dash is a lighter wallet which only accesses the blockchain through servers. Keys are still stored locally, but it doesn’t allow the use of some of Dash’s advanced features.
Mobile Wallets (including Dash Wallet, Jaxx, and Coinomi on Android devices and Dash Wallet and Jaxx on iOS devices) emphasize speed and use. Most notably, they allow you to pay with InstantSend, allowing you to spend at retailers without having to wait for confirmation from the full block.
Physical Wallets keep keys on a USB device. Options here include systems like TREZOR, KeepKey, and Ledger, all of which have different functions and uses. They also include simple web interfaces for making transactions. Like all physical keys, however, you may be out of luck if you lose your device. (It’s also worth noting that most physical wallets support multiple currencies.)
As Dash’s popularity has grown, so has the number of fake wallets trying to scam people out of their money. Dash strongly recommends that you only use wallets listed on their official website. Any other service should be considered suspect, and Dash maintains a scam warning list here.
Dash is relatively unusual in that it allows for the use of debit cards. These are a two-part process, where Dash is pre-paid onto the card, then withdrawn as cash (in the local currency) or spent anywhere that accepts debit cards directly.
As of the time this guide was written, the debit system was not fully implemented around the world. That’s likely to change as time goes on, but for the moment, you shouldn’t rely on being able to debit your account.
Is The Debit System Safe?
Broadly, yes. Companies like VISA (one of the largest card companies in the world) run some of the debit options, including Shakepay and UQUID. Like the wallets, we strongly recommend that you only use debit providers listed on Dash’s official website.
How To Buy Dash Coin
Aside from mining it yourself – which isn’t practical for everyone – there are several common ways to acquire Dash.
The first, and to a certain extent the easiest, is to have partial or total ownership of a Masternode. This provides an income of Dash on a regular basis (almost always within 4 days or less, subject to randomized distribution).
Exchanges are the most popular way to buy and sell cryptocurrencies. Exchanges have many different features – some have lower fees or regulatory requirements, while others are decentralized or more secure. They’re also evaluated based on whether they accept official currencies (United States Dollar, etc.) or just cryptocurrencies.
Instant Exchanges are a faster and easier version of normal exchanges, essentially allowing you to change one currency to another. Most instant exchanges have limits on how much you can change in a given period, and the rate for doing so is usually worse than slower exchanges.
Peer-to-Peer exchanges are the slowest option, but allow people to directly trade with each other. Some peer services offer an escrow system for added security, but this involves an added fee on top of any losses you’re already incurring.
ATMs are the last way to buy Dash and essentially act as mobile stores that accept payment by cash or card. Some also allow you to change Dash back to cash, but that’s not guaranteed, so make sure to check it before you start using the system.
ATMs may have different ways of providing the Dash, too. They might print out a paper with encrypted information and instructions, connect to physical wallets, or give you a new account where you can log in and send the Dash to yourself.
All of these transaction methods, put together, mean the money Dash represents is easy to use and exchange in various ways.
The Price Of Dash
Like many cryptocurrencies, Dash has sharply increased in price since around the first third of 2017. We don’t yet know how – or if – the prices are going to settle over the long term. Nevertheless, Dash has a fairly strong position within the market thanks to its ease of use, governance by people with a vested interest in maintaining its value, and self-funding style.
That said, the current design is that there will only be 22 million Dash mined – as of this writing, about 7.8 million has been uncovered. As a deflationary currency, its value is expected to continue increasing over time.