DASH Digital Cash: Slow and Steady Could Win the Race

Company: Dash
Website: https://www.dash.org
Year: 2014
Country: N/A
Blockchain competitors: Bitcoin, Ethereum, Litecoin, etc.
Ticker: DASH
Exchanges: Bitfinex, Kraken, Poloniex, BTC-E, etc. (full list)
Blog and updates: https://www.dash.org/blog/

Dash is a cryptocurrency with a difference. It uses a technology called “Masternodes” to resolve two major hurdles within the bitcoin ecosystem: privacy and transaction speed. While Bitcoin transactions are available to anyone via the blockchain, Dash transactions can be anonymised using a mixing protocol which runs “an innovative decentralized network of servers called Masternodes”, making them impossible to trace. Dash transactions are confirmed almost instantaneously through the Masternodes — a significant point of comparison to the bitcoin blockchain, which currently takes around 45 minutes to confirm a transaction. The driving force behind Dash is a vision to make crypto payments universal, available to anybody regardless of their background. The Dash team is investing great deal of time and resources into spreading awareness about blockchain technologies and educating the general population about cryptocurrencies.

Although Dash is not currently available through a token sale, it is a major player on the altcoin scene. You can acquire Dash on major cryptocurrency exchanges (including Bitfinex, Poloniex and Kraken), by going through a broker or by mining it.

Before you rush off to get your hands on some Dash, here are some points the Tokenguide team put together.

PROs

The most obvious point of difference between Dash and other cryptocurrencies is the concept of Masternodes. This essentially means that Dash has a different consensus mechanism. Instead of lumping mining and transactions together, it separates them out into two layers. As is typical within cryptocurrency mining, users get Proof of Work (PoW) rewards for mining Dash. In addition to this, users are also rewarded for setting up and maintaining special servers called Masternodes, which are united into a Masternode network. This network allows for a variety of unique features, notably InstaSend (transactions confirmed within four seconds) and PrivateSend (makes transaction history inaccessible through the blockchain). To run a Masternode, users need to provide a collateral of 1000 DASH (at the time of writing 1 DASH = $147 on Kraken) and can expect a 10% return year-on-year. This collateral exists to make it prohibitively expensive to cheat the system. There are currently over 4,500 active Masternodes (by comparison, the much older and larger bitcoin blockchain has roughly 7,500 active nodes). Our team believes that the concept of Masternodes is an impressive innovation which successfully resolves some very important inconveniences found in bitcoin and other cryptocurrencies.
Another attractive feature of the Dash ecosystem is its fee distribution mechanism. 45% of the transaction fee goes to the miners as a Mining Reward, 45% of the same fee goes to the Masternode owner as a reward for Proof of Service. The remaining 10% of the transaction fee are passed on to the 15+ full-time employees working within the Dash foundation. This creates a solid economic system within which each party is aptly incentivised to play their part in upholding the decentralised network. A committed team of compensated employees creates an ecosystem which is curated, continuously nurtured and responds to the community’s needs. This fee distribution mechanism allows certain attractive features to be built on top of the Masternode network — but more on that later! By contrast, in the bitcoin blockchain, the transaction fee is received by the first bitcoin miner who mines a block containing the transaction, making it a rather inflexible system.
Onto the impressive features built on top of the Masternode network. Perhaps, the concept of a full-time team supporting a decentralized project looks like a bit of an oxymoron? To combat this, Dash has harnessed the potential of Masternodes to create a decentralised decision-making mechanism which ensures that the blockchain develops in a way that responds to the needs of its community. Remember the DAO? Well, Dash has built a system which makes the DAO concept a reality. Dash calls this “Decentralized Governance by Blockchain” or DGBB. In this system, decisions are made by Masternode owners who can submit proposals and then vote for or against them. Successful proposals are then implemented by the Dash development team. An interesting case occurred in early 2016 when Dash’s Core Team submitted a proposal, asking the network whether the blocksize should be increased to 2 MB. Within 24 hours, the network reached consensus, voting in favor of this change. Compare this to bitcoin, where debate on the blocksize has been raging for nearly three years. In Tokenguide’s opinion, the DGBB is an interesting mechanism which creates a simple solution for governing decentralized entities.
Dash also has a solid philosophy and potential for rational real-world application. The idea is to make cryptocurrencies familiar enough to nurture their adoption for day-to-day transactions. Dash itself is perfectly tailored for microtransactions, making it a great contender for the position of an “everyday electronic currency,” a niche that neither bitcoin nor ether can hope to cover. The Dash team is dedicated to spreading awareness about cryptocurrency and demystifying it for the general population. In fact, they’ve been at it long before crypto became a “hot topic” earlier this year. They’ve produced a wide range of educational content, including videos, articles and an extensive wiki. To us, this shows commitment to their cause and a real desire to engage with a wider audience. If Dash’s goal is widespread adoption, education is something they definitely should be focusing on.

With all this innovation and a committed team backing the project, it seems as though Dash is a solid bet when it comes to altcoins. However, the Tokenguide team notes one major downside in this whole project which surfaces in all sorts of ways. This downside is simple, yet it’s definitely a big one: adoption.

CONs

Dash operates in a rather saturated market and therefore has multiple competitors, some of which are quickly becoming household names. In essence, Dash is competing against Bitcoin and Ethereum (to name the obvious ones). With The Economist running a front page feature on the “Bitcoin bubble” and even Vladimir Putin speaking about Bitcoin in a recent interview, it’s difficult for Dash to compete with such exposure. Meanwhile, the power of a cryptocurrency, especially one that strives to gain real-world usership, primarily depends on large-scale adoption. Meanwhile, Dash has been around since 2014 and despite the team’s best efforts, adoption has been slow. The Dash team has produced a huge backlog of engaging educational content and made countless attempts to reach beyond the cryptocommunity — all to no avail.
Indeed, Dash seems to be stuck in adoption limbo. It seems as though the concept of altcoins is still murky in people’s minds and largely induces a feeling of anxiety. No amount of video explainers seem relieve this anxiety, or popularise the concept enough. Meanwhile, despite transaction privacy, there is little focus on more large-scale privacy within the Dash network. This means that there is little adoption of the altcoin within illegal trade. Whether we like it or not, illegal trade is usually the first point of adoption for any cryptocurrency and Dash is clearly not seen as an option by that segment of the userbase. Dash therefore fails on two counts of mass adoption: mass-market and darknet.
Perhaps as a symptom of this sluggish adoption trend, very few institutional players are currently using Dash. As we’ve seen from previous examples, institutional validation is extremely important for mass adoption. Perhaps Dash has chosen to pursue an alternative marketing strategy and target the general population instead. However, it seems as though Dash has failed to harness the new momentum cryptocurrencies have been gaining in mainstream media. To ensure mass adoption, they would need to persuade the general population that Dash is better than bitcoin and ether as a gateway into crypto. Unfortunately, this is not happening right now, since cryptocurrencies are largely seen as assets to buy, hold and grow, not functional day-to-day currencies.

Tokenguide conclusion

We believe that, with time, each cryptocurrency will settle into its specific role and niche. Dash is built upon an awareness of its niche as electronic cash focused on micropayments. With ETH and BTC getting larger every day and not even competitive with bank transactions, Dash can be a well-placed contender for money transmitters. Moreover, Bitcoin’s looming fork and Ethereum’s sluggishness mixed in with its status as a go-to platform for ICOs demonstrate that cryptocurrencies will inevitably need to specialize. The fact the Dash is self-funded and perpetually self-developing using an internal governance mechanism and a very clear sense of purpose makes it a very likely winner of the long game among other cryptocurrencies. We believe that Dash should be considered as a long-term buy & hold cryptocurrency for any investor looking into crypto.

P.S. We would like to remind you that all opinions expressed in this piece are our own and are based on the research our team conducted independently. If you are serious about participating in an ICO, token sale or crowdsale of any kind, we strongly recommend that you conduct your own due diligence by familiarizing yourself with the projects, their background, white papers and the market(s) in which they operate. Stay safe!

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Tokenguide Team