What is Dash?
Dash is a privacy-centric peer-to-peer cryptocurrency. It was launched in January 2014 as Xcoin by Evan Duffield. Later Xcoin was rebranded as Darkcoin and finally Dash (a portmanteau for ‘digital cash’) in March 2015.
Duffield came across Bitcoin in 2010 and became fascinated with it. However, seeing its drawbacks, he modified the Bitcoin protocol to bring Dash, a new cryptocurrency with additional functionalities including:
- and Decentralized Governance by Blockchain.
The functioning of Dash relies heavily on the operation of the Dash network which consists of two types of nodes, standard nodes, and masternodes. Much like in Bitcoin, standard nodes carry out functions such as hosting a copy of the blockchain, relaying messages and validating transactions. Masternodes, in addition to standard node functions, have responsibilities such as:
- voting on proposals for improving the Dash ecosystem,
- facilitation of PrivateSend transactions and
- facilitation of InstantSend transactions.
The masternode model addresses the issue of insufficient full-nodes, a problem that is present in many existing cryptocurrencies. Dash encourages users to fully participate in the consensus by distributing 45% of all mining rewards to masternodes. The other 45% goes to miners and the remaining 10% is allocated to the treasury.
Any user can deposit 1000 DASH and become a masternode. The deposit serves as a collateral for any attempt to compromise the healthy operation of the system.
PrivateSend is a feature that provides transaction anonymity and, therefore, the fungibility of coins. PrivateSend is an improved version of CoinJoin, an anonymization method first proposed by Gregory Maxwell. CoinJoin ensures user privacy by combining several transactions and mixing them inside the transaction. This makes it harder for any outside observer to determine individual transaction outputs.
PrivateSend is an improvement on CoinJoin in two ways:
- Denomination and
- Chaining approach.
PrivateSend breaks down inputs from three separate transactions into the following denominations: 0.01 DASH, 0.1 DASH, 1 DASH, and 10 DASH. After that, a mixing session takes place where the funds are mixed together. Chaining approach further increases anonymity by conducting multiple mixing sessions. A mixing session is limited to 1000 DASH and transactions of a larger amount are processed in multiple mixing sessions. PrivateSend brings fungibility, which some believe pseudonymous cryptocurrencies like Bitcoin cannot boast.