Dash – Integrating Privacy and Scalability into the Bitcoin Protocol
Created in 2014, Dash is a cryptocurrency that attempts to fix the fundamental problems common in the sector, transaction speed and, pseudonymity. Made for instant transactions at extremely low fees, Dash was created as an anonymity-oriented asset that could be used for sending payments anywhere in the world.
Buying Dash on Binance – Step-by-step
As one of the oldest cryptocurrency projects, Dash is available on most exchanges.
We recommend buying Dash on Binance, as it is one of the most reputable exchanges in the sector and provides security measures that protect users from having their account hacked. On Binance, you can exchange BTC, ETH, USDT, and BNB for Dash.
If you want to directly buy Dash with fiat money, there are more than 300 ATMs that support Dash all across the world.
Before following the guide, make sure that your country is eligible to be served by Binance’s services. Additionally, we recommend you to verify your identity on the exchange and that you establish either a two-factor authentication system or an SMS authentication system.
After registering, you will be prompted to verify your identity and set the authentication system, but both features are purely optional. However, if you wish to make larger transactions, you are required to verify your identity in order to lift the deposit and withdrawal limits.
Once you have successfully set up your account and are ready to buy Dash, make sure to deposit either BTC, ETH, USDT or BNB into your account. Aside from transferring the assets from another wallet, you can also directly buy BTC and ETH with fiat money on your credit or debit card. Simply head to the wallet section, click on the link that redirects you to the Simplex payment processor, and select the amount of BTC or ETH you wish to buy. Simplex takes a transaction fee of 3.5%, but you will receive your money in only 30 minutes.
Now that you have any of the four assets listed above, you can purchase Dash.
In the top left corner on Binance’s homepage, click on ‘Exchange’ and select one of the two interfaces. We recommend the ‘Basic’ interface as it is simpler to use for people who have not used an exchange before.
After being redirected to the trading interface, find the trading pairs listed to the right and select the type of asset you have deposited. Once you have selected one of the four assets, type Dash in the search bar and select the trading pair.
Once selected, you will encounter the trade history, public orders, your own open orders, and a graph that represents the trading volume for both the buying and selling side. In the bottom part of the screen, you have several trading orders to choose from.
If you wish to buy Dash at the current available price, you can create a market order. Simply set the amount of Dash you want to purchase and click on ‘Buy DASH’. Your order will get instantly filled and the DASH you bought will be deposited to your wallet.
If you prefer to buy Dash at a better entry point, we recommend that you create a limit order. Choose the amount of Dash you want to buy, select the price at which you want to buy, and click on ‘Buy Dash’. Your order will be filled once someone wants to buy Dash at the price you want to sell.
When the creator of Dash, Evan Duffield, first came in contact with Bitcoin in 2010, he became interested in the technology behind the emerging digital asset. However, Duffield did not like the fact that Bitcoin would be limited when used for sending payments, as it could process transactions at slow speeds which would not allow adoption for large-scale projects.
Another feature that he disliked about Bitcoin was that, while wallet holders were anonymous to some degree, users could easily track down others via transactions and check the balance of a wallet. While not immediately dangerous, hackers could make use of this and potentially find the real identity behind the wallet. Knowing that the core developers of Bitcoin would never make any fundamental changes, Evan Duffield decided to create XCoin in 2014, what later became rebranded as Dash.
According to data from CoinMarketCap, Dash hit an all-time low of $0.21 in February 2014 and reached an all-time high of $1,642 in December 2017.
What later turned into Dash was first introduced as XCoin (XCO) by Evan Duffield in a bitcointalk thread in 2014. The cryptocurrency was essentially an altcoin fork of the original Bitcoin protocol. Based on the X11 algorithm that Duffield created, which used the proof-of-work (PoW) concept, Dash was far more resistant to ASIC mining machines compared to other assets at the time.
By applying a more advanced PoW algorithm, miners who used their GPU or CPU to mine Dash could compete with ASIC miners, who needed more time to efficiently mine blocks. As the name implies, the algorithm consists out of 11 hash functions. After the first function creates a hash, its value is sent to the next function which processes and creates another has that is again sent to the next function. After completing 11 iterations, the process is completed.
The entire algorithm was at one point sent to the US National Institute of Standards and Technology to compete with other hash functions. In the first round, all 11 functions passed and were accepted by the institute. Only 14 hash functions out of 64 entered the next stage. During the second stage, only five hash functions of XCoin’s algorithm passed to the third stage. The final winner was Keccak, who was one of the 11 hash functions of the X11 algorithm.
While the project has demonstrated its security and the advanced technology behind it, there was a small bug that resulted in significant controversy. The lead developer and founder used Litecoin’s code was forked to develop Dash. By doing so, he accidentally created a bug which had a massive influence on the mining difficulty. After only a few days of launching XCoin, 10% of the coins were mined. Duffield almost instantly solved the problem, but the solutions he proposed created drama in the community.
XCoin was rebranded to Darkcoin only a month after it launched. The cryptocurrency was notorious for being already adopted by criminals who used it to make transactions on darknet markets such as the Silk Road.
In March 2014, Duffield published the project’s very first whitepaper that demonstrated the optimized PoW system and showed how transactions can be processed anonymously. One of the most significant features introduced in the whitepaper was a new governance system named Masternodes.
After a year of development, Duffield rebranded the project into Dash to remove the stain criminals left on it. Short for ‘Digital Cash’, the new name was well received by the community. By the middle of 2016, Dash was no longer used on the darknet.
In April 2015, Duffield introduced the idea of DAO, short for ‘Decentralized Autonomous Organization.’ The founder intended to develop a decentralized system used for governance, so that the project’s community would no longer argue over block sizes or forks, but vote on these issues.
The years that followed were filled with development updates. What started out with Evan Duffield transformed into a team of 30 developers. According to data from BitcoinTalk, Dash had one of the most active altcoin communities on the forum. By April 2018, Dash became one of the top 12 cryptocurrencies and had a market capitalization of $4.3 billion.
While Bitcoin’s central premise is to become digital gold, acting as a stable store of value asset, the sector’s most popular cryptocurrency can also be used for sending payments. However, with higher network usage Bitcoin can’t scale with more demand. The issue of scalability combined with a lack of anonymity created Dash, who’s developer Evan Duffield attempted to solve both of the problems incorporated into Bitcoin.
By introducing several cryptographic measures which ensured anonymity, and an improved proof-of-work algorithm that would prevent the domination by miners who use ASIC machines, Duffield created an asset that fared even better than Satoshi’s original vision.
The very fundamental nature of Bitcoin, decentralization, was the primary cause behind the lack of anonymity. To solve this issue, Dash introduced a feature named ‘DarkSend’.
Based on the CoinJoin concept, DarkSend is a decentralized P2P method made for creating anonymous transactions. By merging multiple transactions into a larger one, users can mask their payments and stay completely anonymous. After the network’s nodes elect a master node that will deal with the governance issue, the master node will create the anonymous transaction.
The feature allows users to remain completely anonymous. The transaction can be done risk-free, without any possibility of users losing or receiving incorrect funds. Additionally, the process is so anonymous that not even the nodes, nor the master node know the value, senders, and receivers of each transaction.
DarkSend is purely optional, users can create normal transactions if they don’t care about anonymity.
DarkSend – Security Measures
DarkSend is done in a completely decentralized fashion. However, that aspect brings a security issue as spammers and hackers can attack the network. By changing parts of the software, users can potentially refuse to sign transactions. By doing so, the entire process of performing a DarkSend would need to be restarted.
By using the native currency as a collateral asset, developers can create a stable system that will ensure the security of the network. By sending 0.1DRK (the project still had the name ‘DarkCoin’ during the time the whitepaper was published), users can carry out an anonymous transaction and will be financially punished if they refuse to sign the transaction. By doing so, the system prevents any spam attacks or malicious actions.
DarkSend – The fundamentals behind anonymity
Considering that the already functional CoinJoin concept was not developed enough to secure anonymity, the developers used several methods which allowed a DarkSend transaction to remain completely anonymous.
As all transactions are transformed into one larger transaction, the values of each initial transaction need to be the same to guarantee anonymity. As an example, only 1, 10, 100, and 1000DRK can be sent into what is referred to as the ‘DarkSend Pool’.
By applying the process, the pool cannot differentiate between the users as they all send the same amount of funds to the final transaction. The funds that are later on sent to the receiving side of the address must also add up. If the user received 100DRK and was only meant to receive 10, he will relay the rest of the funds to another user. The same process is applied for all recipients and their values need to add up to the total amount of funds located in the pool.
As for the process of electing a master node, all nodes that participate in the transaction are eligible to become one and have an equal chance. The implemented governance algorithm elects a node that will act as the master node and process the larger transaction. To prevent any malicious behavior, the master node is also forced to provide collateral so that he is punished in the case that he ruins the DarkSend process.
In the case that the master node fails to complete the process, another node is selected in his place and acts as the next master node.
Process of electing a masternode
As mentioned before, all nodes have an equal chance of becoming the master node as the election algorithm is pseudo-random and based on the transaction IDs sent by each participant. The algorithm starts by creating the sum of all hash values sent in the pool and processing the value with the X11 algorithm. After the process is completed, a random number is generated.
After successfully generating the number, it is compared to information based on the transaction output data. The node with the lowest score receives the privilege of a master node, while the second-lowest score becomes the node slave, whose function we have already described.
Compared to the Bitcoin protocol, where miners have access to all the functions in the blockchain network, Dash has two layers for the entire network. Functions such as creating and verifying new blocks are done by miners.
However, the second layer consists out of governance functions that can only be done by masternodes. These functions include managing the PrivateSend, InstantSend and other related functions.
For vital governance functions, a node requires 1000 DASH as a collateral asset to become a masternode. The collateral system is employed yet again to prevent any malicious actions or lack of compliance. Both layers earn an equal amount of the block rewards, with both miners and masternodes earning 45%. The treasury system (used as the project’s budget) earns the rest 10% of the reward.
Major Historical Events
Given that Dash is one of the oldest projects in the history of cryptocurrencies that are still being developed, the cryptocurrency has a rich history behind it. Starting from 2014, the Dash team changed and added significant features to the code. To give a better view of rapidly Dash has changed over its lifespan, we wrote a chronologically ordered list of major events.
18 January 2014 – Launch
After finally being developed to the point of release, Evan Duffield launched Dash under the name of Xcoin in January 2014. Dash initially launched as a fork of Litecoin, which caused some initial issues, including a rapidly mined supply.
Ensuring fair competition between CPU/GPU and ASIC miners, Dash was based on the uniquely designed X11 hashing algorithm, instead of the traditionally used SHA256. The complex algorithm ensured a process where ASIC mining machines would not have an advantage.
28 January 2014 – Rebranding
As the name Xcoin was unexpectedly already claimed by another individual, Duffield was forced to change the name in order to avoid copyright issues and long-term problems. Xcoin was renamed to Darkcoin to reflect the anonymous nature of the project. The initial project name left its mark on the project, considering that every Dash address starts with an X.
25 May 2014 – Introduction of masternodes
Masternodes are one of the most unique features and were initially introduced in May 2014. The new governing process was accepted considerably well among the crypto community. Many other projects have copied the concept of masternodes and integrated it into their blockchain networks.
Sharing an equal amount of block rewards as miners, Masternodes created an important second layer of managing the blockchain network.
13 March 2015 – Second and final rebrand
The Dash developers and community have discussed the issue of Darkcoin’s reputation for a long time. At the time, Dash was used by criminals on darknet markets to make anonymous transactions. To remove the impact they have created, the project was rebranded into Dash, short for Digital Cash. By rebranding, the team also changed its focus from privacy to cash payments.
15 August 2015 – DAO introduction
Making another significant step in developing Dash, the team introduced the concept of a decentralized autonomous organization (DAO). The organization was used for managing the budget of Dash, which received 10% of the block rewards. By voting, DAO participants could pick which aspect they want the project to invest in.
29 February 2016 – First X11 ASIC miner
The X11 algorithm was created to bring equality between miners who used CPU/GPU and miners who used ASIC machines. However, iBeLink announced the very first X11 mining machine that had a significant increase in hashing power.
24 September 2017 – First community conference
Dash has one of the most vibrant altcoin communities in the cryptocurrency sector. According to Bitcointalk, Dash had the most active community on the forum. In September 2017, the community celebrated the rise of Dash by hosting the first community conference in London, attended by hundreds of people, including the core developers.
20 December 2017 – All-time-high
During the great bull run of 2017, Dash reached its ATH at $1642.22. The project’s coin reached an impressive price, given that Dash once had a low price of around $0.20.
14 January 2019 – Latest development update
In January this year, Dash has released one of its latest major updates. The new version brought significant changes, including radical changes to the masternode governance system and several updates concerning instant and private transactions.
The 0.13.0 update is seen as one of the most significant changes since the introduction of masternodes. On the 22nd May 2019, Dash introduced the 0.14 version which brought slight changes concerning the security of the blockchain network.
With a long history of development and innovation, Dash plans to continue its success streak by continuing to work on the project. Five years since its launch, Dash has delivered amazing updates and created features so successful, that they were copied by other projects.
While the team has an official roadmap available on their website, the list of future updates is not that long, considering that they only announced what they are planning to introduce in 2019. However, we will discuss some of the notable changes that the Dash team announced at the time of writing.
Dash Core v1.0
Somewhere during 2019, the team will release the long-expected Dash Core v1.0 overhaul update. The major update will bring many changes, including personalized usernames, decentralized API software, decentralized storage, and new libraries for developers.
Username based payments
Dash wallet holders can now create personalized usernames and register them directly to the blockchain network. By doing so, users can create a list of contacts and find other wallet holders, including family and friends, by their name.
Decentralized API (DAPI)
APIs are generally used in the blockchain industry to act as a center for communication between blockchain networks and other systems. Dash plans to introduce a decentralized version of their API that will be hosted on the second layer, where masternodes perform their work. By doing so, developers will be able to send off-chain data to the masternode network in a secure and decentralized manner.
The Dash Core team will create a decentralized storage, which allows users to bypass centralized 3rd-party systems. Users will be able to store all of their data on the network such as profile data.
Development libraries and SDK
To increase the adoption rate of Dash even further, the team decided to provide developers with tools that will enable them to create programs in the code of their choice.
DashPay Wallet MVP and DashWallet
Based on the new ‘Evolution’ platform, the core team will introduce two kinds of wallets. Both wallets come with features such as the Dash Drive, DAPI, and unique usernames.
Additionally, people who decide to create a username for themselves can create a contact list, similar to smartphones, where they can find family, friends, merchants, and other individuals through usernames.
Dash has one of the largest and most active communities in the cryptocurrency sector. Using several platforms such as Discord, Telegram, GitHub, Reddit, and others, Dash enthusiasts regularly discuss new and future updates.
Both the developer and enthusiast community are fairly strong. To educate everyone about their project, the core team regularly posts updates and learning resources that can be used to provide more insight into their core code, partnerships, and announcements.
One of the most significant aspects of the Dash community is their ‘Decentralized autonomous organization’ (DAO). The organization is completely decentralized and based on rules enforced by an open-sourced code. The DAO is controlled by shareholders and not a central entity.
All decisions and information provided by the DAO, including transactions and rules, are available on their public blockchain. The organization is also used for discussing and voting for budgetary issues.
One notable event about the organization was the creation of a venture capital fund named ‘The DAO’. It launched with $150 million in crowdfunding in 2016 and was hacked later on. The perpetrators stole around $50 million worth of Dash, but the hack was reversed after a few weeks, with the money restored.
Does Dash still focus purely on privacy?
Since its inception, one of the greatest strengths about dash was its privacy-oriented nature. However, the project started focusing on making payments faster and cost-effective starting from the rebrand of Darkcoin to Dash.
Where can I store Dash?
Dash is one of the most support digital assets in the cryptocurrency sector. You can store the asset on most desktop wallets, including Dash Core, Dash Electrum, Exodus, Coinomi, and others. Hardware wallets such as Tremor and Ledger also support Dash on their devices.
Can I mine Dash?
Dash is based on the Proof-of-Work concept, which requires miners to participate in order to secure the network and validate transactions. Dash coins can be mined using the X11 hashing algorithm. Additionally, mining Dash is easier as the algorithm is resistant to ASIC machines, ensuring fair competition.
What can I pay for with Dash?
As of Q2 2019, there are more than 4,800 merchants and services worldwide. The massive adoption rate of Dash is backed by a cost-effective and fast transactions system. Dash can be bought and used in most countries, with the ability to pay for electronics and IT hardware, utility bills, groceries and much more.