What is Dash?
Reading time: 11 minutes
This article explains what Dash is, if Dash is an alternative to Bitcoin, how new Dash coins are created, what Masternodes are, what Dash price movement is like, an explanation of what Privatesend and Instantsend are, as well as the key ideas, features, advantages, and challenges facing Dash in the competitive cryptocurrency world.
Dash shares many features with Bitcoin and other major cryptocurrencies: the main one being the ability to send a digital form of cash via the Internet. There are, however, some key differences between Dash and Bitcoin, including speed, cost and governance – with Dash coming out 'on-top' in all of those instances.
What is Dash?
Dash (DASH) is an open-source cryptocurrency that was launched in 2014. Dash offers user-friendly and scalable solutions ("open-source" means that technology and software is built, tested, and improved with user collaboration.) Both Dash and Bitcoin allow for online purchases, and work with blockchains that take care of each transaction (blockchain is the underlying logic behind cryptocurrencies, and provides a public ledger for all the transactions within the network.)
Similar to Bitcoin, Dash offers anonymity, as you are not required to disclose personal information (e.g. name and address). However, transactions are not public, which is a major difference with Bitcoin. Dash provides strong encryption features in order to make privacy possible on its blockchain, specifically, its 'PrivateSend' option (which we will cover later in this article).
The main difference with Monero, in turn, is that this is an extra option, rather than a built-in feature. Dash has worked on improving the field of cryptocurrencies in numerous ways. Simply put, Dash has worked intensively to improve upon Bitcoin's flaws.
Is Dash an Alternative to Bitcoin?
The simple answer is yes, and there are several alternatives to Bitcoin (also known as altcoins). Dash has managed to improve upon Bitcoin's original idea in multiple ways, including speed, cost, and governance. Let's review them one by one:
Speed: The transaction speed with Dash is incomparable to Bitcoin. Bitcoin transactions can take up to 10 minutes or more to confirm, while Dash manages to complete a similar transaction in only 4 seconds.
Costs: When it comes to costs, Dash manages to outperform Bitcoin by a large margin. Bitcoin transaction fees were around $6 in 2018. Dash managed to lower those fees drastically to less than half a US Dollar, although these fees can be expected to increase as more transactions take place.
Governance: Dash enables changes to be incorporated into the development of the coin, without the need for " hard forks". Bitcoin has encountered multiple hard forks (which is when two different solutions are implemented). Bitcoin Cash is an example of a different coin splitting itself off from the main Bitcoin offering. Dash manages this process via a voting system, which allows it to implement changes relatively quickly.
How are New Dash Coins Created?
The creation of new Dash coins is completed via the "mining" process, which is the usual method for cryptocurrencies to reward participants for recording blockchain transactions. The time required for Dash to mine one block is less than two and a half minutes. Newly created Dash coins are divided into three groups: miners, masternodes, and the development team:
- Miners: about 45% of the new coins are rewarded to miners as an incentive to ensure that enough computers are participating in the blockchain process.
- Masternodes: receive about 45% of the coins
- Development Team: The remaining 10% goes to the fund, to support the marketing of it, for customer support, and to the development team itself.
Trade With MetaTrader 5
MetaTrader 5 is a state-of-the-art trading platform that is FREE to download and trade on with Admiral Markets. Gain access to advanced charting and trading tools, trading insights, free technical analysis data, and much more! Click the banner below to download now!
What Are Masternodes?
Masternodes are known as the 'Proof-of-Stake' (PoS) algorithm, which is a concept wherein a person is able to mine or validate block transactions according to how many coins they hold. Bitcoin, for instance, is based on the Proof-of-Work (PoW) concept, which means that Bitcoin's blockchain needs to be validated by all nodes within a network. Masternodes differ from standard nodes because they reduce the number of nodes needed to approach a transaction. This makes the total number manageable, and solves scalability problems for transactions.
Masternodes receive a clear economic incentive for their work: they receive 45% of the coins, and they also impact the future direction, and course, of the coin via the governance module mentioned above. Unlike minors, Masternodes don't rely on the PoW to secure the network, accounting for second tier duties, such as PrivateSend, InstantSend, and the governance functions mentioned above.
What is PrivateSend and InstantSend?
PrivateSend and InstantSend are two of the extra Dash features which rely on the management from masternodes. The two features have specific advantages which are explained below:
InstantSend: It is easy to explain the concept of InstantSend as it allows transfers to be sent pretty much instantly: a transfer is sent in less than a second. The user pays a premium of 3 cent for this service.
PrivateSend: The name of the feature also explains itself. The exact details of the transfer are hidden, such as the information about the sender and the receiver. How is that possible? PrivateSend mixes all of the transactions with each other, which makes it much more difficult to trace the exact payment trail.
What Is Dash Price Movement Like?
Dash (DASH) has experienced significant amounts of volatility in recent years, just like many other cryptocurrencies. While 2014 to 2016 was a slow period for Dash, price action took off throughout 2017. In fact, in the last six months of 2017 Dash against the US dollar (DSHUSD) rose from $252.50 to an all time high of $1,550.
However, after reaching an all time high in late 2017, the cryptocurrency crashed and spent much of 2018 moving all the way back down from $1,550 to a 2018 low of just $56. Much of the damage was done at the beginning of the year as the cryptocurrency was trading at a low of $280 by the beginning of April 2019.
This volatility is evident in the price chart of Dash against the US dollar (DSHUSD), as shown below:
Source: Admiral Markets MT5 Supreme Edition, DSHUSD CFD, Weekly - Data range: from July 30, 2017, to November 21, 2019, accessed on November 21, 2019, at 12:35 pm BST. - Please note: Past performance is not a reliable indicator of future results.
What's Next for Dash in 2020?
Due to its emphasis on speed, costs, privacy, and governance, Dash appears to have found a solid niche in the world of cryptocurrencies. Evidence of the cryptocurrency's standing can be found in the substantial number of businesses around the world that have adopted it: over 500 such merchants are listed by the official Dash website for the US alone, and more than 4700 are listed worldwide. There are, of course, threats to its niche position that need to be considered.
One such threat is posed by the relatively recent launch of digital wallets — serving more popular cryptocurrencies like Bitcoin — which seek to emulate some of Dash's key strengths, such as its anonymity service. For example, the Wasabi Wallet, a privacy-focussed Bitcoin wallet for a variety of operating systems, launched in late summer of 2018. Whether these new developments will serve to expand or hinder Dash's take-up, however, remains to be seen. Speaking of the price, analysing the charts is just one way how traders can forecast future price movements.
Source: Admiral Markets MT5 Supreme Edition, DSHUSD, Daily - Data range: from October 28, 2018, to November 21, 2019, accessed on November 21, 2019, at 12:35 pm BST.. Please note: Past performance is not a reliable indicator of future results.
The first half of 2019 has started off favourably for Dash investors with prices pushing to nearly 200 USD again.
But over the second half of the year, the cryptocurrency gave back all of those gains and marking new yearly lows around 61.00 USD.
A sustainable break lower continues the sequence of falling highs and lows, leaving Dash vulnerable to a drop significantly below 50.00 USD.
In general, traders should keep watching news announcements closely like the Latin American cryptocurrency exchange Daexs making it easier to buy Dash in Colombian peso or new Android apps developed specifically to find stores that take cryptocurrencies such as Dash. Especially if other crypto exchanges decide to lower barriers in regards to buy Dash in respective currencies, Dash could see sharper reversals. But as long as this is not the case, Dash seems prone to further losses.
Trade Dash CFDs with Admiral Markets
Did you know that you can trade Dash CFDs with Admiral Markets, along with other cryptocurrency CFDs? and a wide range of additional financial products as well?
In addition, Admiral Markets offers a range of insightful educational articles on chart analysis, trading strategies, tutorial guides, technical analysis, fundamental analysis, and risk management, to help traders to be better prepared for making trading decisions. Furthermore, it is also highly recommended to open a demo trading account first, in order to test your trading plans and strategies, before you apply them to the live markets. Click the banner below to start trading today!
About Admiral Markets
Admiral Markets is a multi-award winning, globally regulated Forex and CFD broker, offering trading on over 8,000 financial instruments via the world's most popular trading platforms: MetaTrader 4 and MetaTrader 5. Start trading today!
The given data provides additional information regarding all analysis, estimates, prognosis, forecasts or other similar assessments or information (hereinafter "Analysis") published on the website of Admiral Markets. Before making any investment decisions please pay close attention to the following:
- The analysis is published for informative purposes only and are in no way to be construed as investment advice or recommendation.
- Any investment decision is made by each client alone whereas Admiral Markets shall not be responsible for any loss or damage arising from any such decision, whether or not based on the Analysis.
- Each of the Analysis is prepared by an independent analyst (Jitan Solanki, Freelance Contributor) based on personal estimations.
- To ensure that the interests of the clients would be protected and objectivity of the Analysis would not be damaged Admiral Markets has established relevant internal procedures for prevention and management of conflicts of interest.
- Whilst every reasonable effort is taken to ensure that all sources of the Analysis are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admiral Markets does not guarantee the accuracy or completeness of any information contained within the Analysis. The presented figures refer that refer to any past performance is not a reliable indicator of future results.
- The contents of the Analysis should not be construed as an express or implied promise, guarantee or implication by Admiral Markets that the client shall profit from the strategies therein or that losses in connection therewith may or shall be limited.
- Any kind of previous or modeled performance of financial instruments indicated within the Publication should not be construed as an express or implied promise, guarantee or implication by Admiral Markets for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.
- The projections included in the Analysis may be subject to additional fees, taxes or other charges, depending on the subject of the Publication. The price list applicable to the services provided by Admiral Markets is publicly available from the website of Admiral Markets.
- Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, you should make sure that you understand all the risks.