Dash (cryptocurrency)

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Dash (cryptocurrency)
200px
Official Dash logo
Date of introduction 18 January 2014; 3 years ago (2014-01-18)
User(s) International
Inflation Estimated 22 million coins maximum, with a 7% decrease in the number of coins generated per year
Symbol DASH
Plural Dash

Dash (formerly known as Darkcoin and XCoin) is an open source peer-to-peer cryptocurrency that uses a system called Darksend to add privacy to transactions.[1] It was rebranded from "Darkcoin" to "Dash" on March 25, 2015, a portmanteau of "Digital Cash".[2]

One of the features of Dash is decentralized governance, making it a decentralized autonomous organization.[3] Token fungibility and user transaction privacy is another feature,[4] which is provided by a service called Darksend, a decentralized coin-mixing service provided by the network.

Dash uses a chained hashing algorithm approach called X11 for the proof-of-work. Instead of using the SHA-256 (from well-known Secure Hash Algorithm family) or scrypt it uses 11 rounds of different hashing functions.[5] The main reason for X11, was to duplicate the maturation cycle of the mining economy, which was originally important to Evan Duffield.

As of 2016, Dash is among the top-5 most popular cryptocurrencies.[6]

Overview

Darksend

File:Mnparpays.png
Masternode count by country (as of September 2014)

Darksend is a coin-mixing service originally based on CoinJoin. Later iterations used a more advanced method of pre-mixing denominations built into the user's wallet. The implementation of Darksend also allows masternodes to submit the transactions using special network code called DSTX,[7] this provides additional privacy to users due to the deadchange issue present in other CoinJoin based implementations such as DarkWallet and CoinShuffle.[8]

In its current implementation it adds privacy to transactions by combining identical inputs from multiple users into a single transaction with several outputs. Due to the identical inputs, transactions usually cannot be directly traced, obfuscating the flow of funds.

Masternodes

Darksend's mixing is performed by Masternodes, servers operating on a decentralized network which have the responsibility of signing the transactions. For each round of Darksend, the user selects two to eight (or even more) rounds of mixing which vary the degree of anonymity achieved. Random Masternodes are then elected to perform the coin mixing. Masternodes are trust-less cryptographic technology, in the sense that they cannot steal user coins, and the combination of multiple Masternodes ensures that no single node has full knowledge of both inputs and outputs in the transaction process.

To avoid the possibility of sybil attack, a process where a peer-to-peer network is overtaken by "bad actors", collateral requirements have been added to the process of joining the Masternode network second tier. These are presently 1000 DASH [9] and allow secure network communication in via signed messages. As an incentive for operating a Masternode, chosen nodes currently earn 45% of the mining rewards.[10]

InstantX

InstantX is a service that allows for near-instant transactions. Through this system, inputs can be locked to only specific transactions and verified by consensus of the Masternode network. Conflicting transactions and blocks are rejected. If a consensus cannot be reached, validation of the transaction occurs through standard block confirmation. InstantX purportedly solves the double-spending problem without the longer confirmation times of other cryptocurriencies such as Bitcoin.[11]

X11

X11 is a hashing algorithm created by Dash core developer Evan Duffield. X11’s chained hashing algorithm approach utilizes a sequence of eleven cryptographic hashing algorithms for the proof-of-work. This is so that the processing distribution is fair and coins will be distributed in much the same way Bitcoin’s were originally.[citation needed]

With chained hashing, high end CPUs give an average return similar to that of GPUs. Another side effect of the algorithm is that GPUs run at about 30% less electrical power than scrypt and 30% to 50% cooler, putting less stress on the computing setup and ensuring lower energy bills for miners.[12]

Dark Gravity Wave (DGW)

Dark Gravity Wave (DGW) is a mining difficulty adjustment algorithm created by Dash core developer Evan Duffield to address flaws in Kimoto’s Gravity Well. It uses multiple exponential moving averages and a simple moving average to smoothly adjust the difficulty, which is re-targeted every block. The block reward is not adjusted strictly by block number, but instead uses a formula controlled by Moore's law: 2222222/((Difficulty+2600)/9)2.[13][14]

Governance and Funding

Dash is the first decentralized autonomous organization powered by a Sybil proof decentralized governance and funding system.[3] DGBB or Decentralized Governance By Blockchain as its called is a decentralized process by which the network determines where money is spent. Each Masternode operator is given the ability to use 1 vote on each governance proposal, which is a completely open and decentralized process.[15] Community interaction with proposal submitters is done usually through community driven websites, like DashWhale.[16] These websites allow proposal submitters to provide multiple drafts, then lobby for community support before finally submitting their project to the network for a vote. After the submitter has enough support, the network will automatically pay out the required funds in the next super block, which happen monthly.

Although, only in use a few months, the funding system has seen growth of its month revenue, from originally ~$14 thousands in September 2015, to nearly $30 thousands in March 2016.[17] Eventually the budget system can theoretically scale to $9M per month at a market cap of $500M.[18]

Since its inception, the project has used the system for important assets like acquiring dash.org,[19] adoption into the Lamassu ATM[20][21] and the Dash N' Drink instant soda machine,[22] along with funding many public events.[23][24][25]

Game Theory

Masternodes utilize a cryptographic bond model, which results a supply and demand market between the interest rate Masternodes are paid and the risk of holding the underlying asset. Early on in the history of the asset, the high return caused a massive uptake of Masternodes, starting from about 500 in Oct 2014 and increasing to 3650 in March 2016.[26]

History

Dash was originally released as XCoin (XCO) on January 18, 2014. On February 28, the name was changed to "Darkcoin". On March 25, 2015, Darkcoin was rebranded as "Dash".[2]

I discovered Bitcoin in mid 2010 and was obsessed ever since. After a couple of years in 2012 I started really thinking about how to add anonymity to Bitcoin. I came up with maybe 10 ways of doing this, but I soon realized that Bitcoin would never add my code. The developers really want the core protocol to stay the same for the most part and everything else to be implemented on the top of it. This was the birth of the concept of Darkcoin. I implemented X11 in a weekend and found it worked pretty well and it would give a completely fair start to the currency. What I really was aiming for with X11 is a similar development curve where miners would fight to create small advantages much like the early start of Bitcoin. I think this a requirement to create a healthy ecosystem.

Evan Duffield, March 2014 [27]

Launch

Within the first hour of launch, approximately 500,000 coins were mined, followed by another 1,000,000 coins in the next 7 hours and finally another 400,000 in 36 hours. All told 1.9 million coins were mined in 48 hours, or approximately 32% of a current supply (as of October 2015) of approximately 5.9 million,[28][29] generating controversy regarding the initial distribution of coins. According to Duffield, this was the result of an error in the code "which incorrectly converted the difficulty, then tried using a corrupt value to calculate the subsidy, causing the instamine".[30] At the time, Duffield was working a full-time job and coding for Dash on the side, so its not surprising that there were errors in the initial code.[30] Duffield claims in the official bitcointalk.org thread (mirrored) that "Dash has no premine and was fairly and transparently launched".[31]

At the time Dash (then called Xcoin) was launched, the cryptocurrency space was riddled with scams. People were creating new currencies, hyping their value, then dumping them and abandoning the project. Many likely feared the same for Dash. However, since Dash's launch, there has been over two years of development, leading to a cryptocurrency that has over 50 volunteers and has solved such vexing issues as slow confirmation times, block size increases, decentralized governance, and a self-funding development budget.

Adoption

According to CoinMarketCap, in March 2016 the daily trade volume of Dash was ~1% of the total trade of all cryptocurrencies,[32] and the market capitalization of Dash was ~40 millions of US dollars.[33] Since then, Dash has become the most active community on BitcoinTalk reaching nearly 6000 pages, 118k replies, 5.9M reads.

Alternatives

Zerocoin, Cloakcoin and DarkNet also have built in the mixing services as a part of their blockchain network.[34]

The Dark Wallet client software for bitcoin was built to natively mix transactions between users.[35]

References

  1. Greenberg, Andy. Bitcoin's nefarious cousin Darkcoin is booming Wired, San Francisco. 22 May 2014
  2. 2.0 2.1 "Darkcoin Is Now Dash | Dash – Official Website". www.dashpay.io. Retrieved 3 April 2015. 
  3. 3.0 3.1 https://dashtalk.org/threads/self-sustainable-decentralized-governance-by-blockchain.4708/
  4. "Fungibility". Wikipedia, the free encyclopedia. 
  5. Bentley, Guy. Darkcoin: The cryptocurrency putting privacy first, City AM, London. 12 May 2014
  6. http://cointelegraph.com/news/dash-young-cryptocurrency-with-an-interesting-story
  7. "v0.11.1 - InstantX Release | DashTalk". dashtalk.org. Retrieved 2016-03-27. 
  8. "Security Advisory for CoinShuffle and Darkwallet | DashTalk". dashtalk.org. Retrieved 2016-03-27. 
  9. "TAO'S MASTERNODE SETUP GUIDE FOR DUMMIES | DashTalk". dashtalk.org. Retrieved 2016-03-27. 
  10. "DASH Ninja - Blocks Masternodes Payee". DASH Ninja. Retrieved 24 September 2015. 
  11. InstantX - Transaction Locking and Masternode Consensus: A Mechanism for Mitigating Double Spending Attacks dashpay.io
  12. Duffield, Evan; Diaz, Daniel (20 April 2015). "Dash: A Privacy-Centric Crypto-Currency" (PDF). Self-published. 
  13. "Dark Gravity Wave - Dash – Official Website". Dash - Official Website. 
  14. How Is Darkcoin Mining Unique? coinbrief.net. Retrieved 30 December 2014.
  15. "Dash Budget Proposal Vote Tracker". dashvotetracker.com. Retrieved 2016-03-27. 
  16. "Masternode monitoring and budget voting - Dashwhale.org". dashwhale.org. Retrieved 2016-03-27. 
  17. https://dashninja.pl/budgets.html
  18. https://www.dash.org/binaries/evo/DashPaper-v13-v1.pdf?page=13
  19. "Announcing DASH.ORG! | DashTalk". dashtalk.org. Retrieved 2016-03-28. 
  20. "January 2016 Budget Proposal | DashTalk". dashtalk.org. Retrieved 2016-03-28. 
  21. "Dash To Become The First Alternative To Bitcoin Offered By The Lamassu ATM Project". CoinTelegraph. Retrieved 2016-03-28. 
  22. "Dash N' Drink | Dash Powered Soda Machine | Miami Bitcoin Conference | Jan 21-22, 2016". www.dashndrink.com. Retrieved 2016-03-28. 
  23. "February 2016 Budget Proposal | DashTalk". dashtalk.org. Retrieved 2016-03-28. 
  24. "November 2015 Budget Proposal | DashTalk". dashtalk.org. Retrieved 2016-03-28. 
  25. "October 2015 Budget Proposal | DashTalk". dashtalk.org. Retrieved 2016-03-28. 
  26. "Masternode Count". 
  27. Duffield, Evan. "The birth of Darkcoin". dashtalk.org. 
  28. "Dash Blockchain Explorer - Inflation Chart". cryptoID.info. 
  29. http://dashdot.io/alpha/wp-content/uploads/2015/05/image18.png
  30. 30.0 30.1 "Was The Instamine A Positive Thing For Dash?". dashdot.io. 27 September 2015. 
  31. https://bitcointa.lk/threads/ann-drk-darkcoin-first-anonymous-coin-darksend-no-premine-runs-30-cooler-than-scrypt.240313/#post-4345427
  32. https://coinmarketcap.com/currencies/volume/24-hour/#BTC
  33. https://coinmarketcap.com/currencies/dash/
  34. http://www.forbes.com/sites/andygreenberg/2014/01/13/bitcoin-anonymity-upgrade-zerocoin-to-become-its-own-cryptocurrency/
  35. Copestake, Jen (19 September 2014). "Hiding currency in the Dark Wallet". Retrieved 17 May 2015. 

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