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July 11, 2018

What is Dash (The Best Explanation)

Dash is a digital currency, that can be used to make instant payments while maintaining the privacy and security of the transaction through codification (encryption).

I guess you've never used Dash to buy a cup of coffee or to pay for your cellphone bill, right? So you know it's not so common in our traditional life, but you want to learn how this digital currency works and how you can benefit from it.

So you're in the right place,  by the end of this article besides understanding what Dash is you will learn how the mechanism of blockchain works.

The Dash creator

Evan Duffield

Evan Duffield is an American software developer who has worked for major banks like Wells Fargo. Currently working at his own Hawk Financial Group company and leading the Dash project.

Evan believes he can improve what the Bitcoin movement has initiated and make Dash the best digital currency.

Dash is digital money

The easiest way to understand what Dash is and how it works is to compare with the email service that you know very well and uses pretty much without thinking.

Let's start by making a comparison to simplify understanding of the whole process of sending and receiving something that is 100% digital and circulates over the Internet.

Imagine that you could send an email to someone to pay for something you bought, such as a cell phone. You would send an attachment file that has the value of $ 1,000.00 and the store upon receiving your attachment would send you the product.

This is an example of digital money, right? Sent over the Internet without having to physically go local, without having to depend on banks or services like PayPal.

Money transfer

But the problem is that being something digital, you could use the copy and paste feature to make a lot of copies of that digital money and  send it to everyone.

Obviously this possibility would bring total chaos to the world leaving everyone rich and able to have their unlimited source of digital money on the computer.

That's the "catch", Dash is digital money that can not be copied.

Let's now see what the process of transferring Dash would be like. It's simple but you can not transfer money more than once to different people.

Transfering Dash

To use Dash you simply perform the following steps:

  • Download a digital wallet software
  • Fill in the recipient's address
  • Fill in the amount you want to transfer
  • Press the send button
Dash Transfer

The transfer address is like a bank account, you can share the information with people as it is just for receiving money.

This address is an alpha numeric string that is stored in your App, you do not need to memorize anything. The following is an example of the address:

Xp5af7nvdDTornWVef2emciVeW1XNBPjxK 

Dash can't be copied

Copying digital money would bring total chaos to the world, as everyone could do it and have an endless supply of money to take a vacation sitting on a beach.

But with digital money Dash is different, you can not copy it as well as you can not copy other digital coins like Bitcoin, which was the pioneer in this regard.

The development of advanced codes has created a way to prevent copying of something that exists virtually, this is done by recording the amount of digital money that each person or company has in a virtual ledger.

How a digital ledger works

So if you have a digital amount of money registered into an accounting book it is possible to control your credits and debits. When you send digital money to someone else is debited from your account, when you receive is credited to your account.

Example of a ledger

But then you think for a while and think: "wait...this already exists, with banks and payment systems like PayPal and other services." Yes, you are right, but in this example, who controls the ledger are the banks or the companies like PayPal.

Each bank has its own ledger version. You are tied to using these banks and intermediary systems to send money and carry out your financial transactions.

Well, Dash (digital money) also uses ledger and can control transactions without relying on banks to update the debit and credit amounts.

This control and updates of the ledger is done within the blockchain...

How Dash uses the blockchain

If you have not read about what blockchain is and want to know more about it, you can find information in the article: Blockchain, understand how it works. But just in case, I will explain in a simplified way how Dash makes use of this blockchain technology.

All transactions that are performed between people are recorded in a Ledger, see in the example below as "A" sends money to "B" which sends money to "C" and so on. Everything is correctly registered by computers.

Ledger transaction

This type of transactions occur all the time and are stored in the ledgers grouped in blocks as they are updated. With each update there is the record of the transaction values and the exact moment they occurred through timestamp.

Below a example of a transaction where values and date/time are recorded in the ledger and grouped into blocks forming a set that is the blockchain.

Obviously this is an illustrative example of the process, so you can understand the concept, the important thing is to know that everything is being recorded.

Ledger in a blockchain

The information is public

Everything that is registered in the blockchain can be accessed publicly, this makes the system completely transparent and secure because there is no hiding or "makeup" information as can happen with private ledger.

When I say public, I mean that you and anyone else can have access to all transactions by simply accessing a web page on the Internet.

Your identity is protected

This is the moment when you freak out thinking that everyone will see your transactions, find out your identity and how much money is in your Dash wallet.

Calm down because that's not how it works.

There is no reason to panic because the transactions only show the numbers that represent the portfolios but not your name, your identity is protected.

Who updates the blockchain?

It's interesting to have the ledgers recording the transactions with values and dates, but then you ask: "Who updates the ledgers in the blockchain?".

Miners are responsible for updating the blockchain, whether on the platform for transactions with Bitcoin, Dash, Ethereum or any other altcoin. The miners who are processing the transactions on the network.

I will explain the mining basics in this article, but if you want to understand the subject in detail read the article: What is Bitcoin Mining.

Dash and the blockchain miners

Imagine people in Russia, Japan, Australia, Brazil, USA or anywhere in the world. On their computers there is a software that connects to a network on the Internet to process Dash transactions. They are the miners.

Does this mean that you who are reading this article can have a computer at home with this software and also be a Dash miner? Yes, exactly !

Dash Miners

Miners are scattered all over the world working together, it's a type of distributed processing, there's no central server like a bank.

Each miner has a copy of the blockchain and when there are new transactions these blockchains must be updated to keep the same information correctly.

That's why blockchain is safe, if one or two or ten computers are not available anymore on the network, the system still works and has the advantage of having more processing capacity than any existing banking system in the world.

Consensus in the blockchain

Have you heard that word before? Stay calm because it's not complicated.

Consensus is the term used for the state in which everyone, or most of the miners in the network agree on the correct version of the blockchain.

There can not be a version of the blockchain with values different from the others, as the system is distributed it is necessary to always check everything so that each miner (also known as the network node) has the same information.

Proof of work

To maintain the consensus, it is necessary to use something called Proof of work, where a single miner will gain the right to check the new block that must be added to the blockchain and brodacast (spread the information) to the others.

But how does the miner do this "proof of work"? It has to compete with the others solving a mathematical problem that increases the difficulty when the amount of miners in the net of the blockchain increases.

A new mathematical problem is solved by miners within minutes, so proof of work repeats within the blockchain network and gives the rights of new miners to update the ledger and earn a reward.

Dash - Proof of work

This reward comes in the form of digital currency, which in this case is Dash.

New coins are generated in the network to pay for the computer that solved the problem and it earns the right to create a new block and aggregate it to the blockchain.

That is why this process was called mining, because every time the "proof of works" occurs the ledger is updated and a new currency (Dash) is generated.

The blockchain keeps the information of each transaction that was carried out, the time the block was published and the total of existing coins, including the new coins that were generated in the mining to reward the miner.

Open and honest system

The money generated, transacted and recorded in the blockchain is considered honest and open to viewing by anyone, plus the fact that inflation (new coins created) are transparent and predictable within the blockchain network.

Blockchain encryption

The transactions carried out in the blockchain are encrypted and thus protected against any kind of information attack or tampering.

To work with encryption there is a concept of using keys that should be used in pairs that work through something called digital signature.

For digital money transactions like Dash you need 2 things:

1. Public Key

It is a key made up of letters and numbers (alphanumeric) that represents the address of your wallet, something similar to your bank account number for deposit.

Public Key Example: Xp5af7nvdDTornWVef2emciVeW1XNBPjxK 

2. Private Key

Also consisting of alphanumeric characters, it represents the key that is used to sign a transaction, the same way you use a password for your bank account.

Fictitious private key example:

2b5bg10i18ud8YYYYYYYY6d18742dca1c3b789YYYYYY4d1346787987a

The public key can be disclosed because it is through it that digital money transfers can be received, whereas the private key must be protected and never disclosed because it is used to authorize transactions.

Signature and broadcast in the blockchain

When you use your digital wallet through an App on the mobile phone or software on your computer, inform the destination address (public key of the recipient), the amount you wish to transfer and press "Send", the private key in your wallet signs the transition before broadacast it for everyone in the blockchain network.

That's why you should save your public key well protected, without it you do not have access to your digital coins. If it ends up in the hands of third parties they will be able to access your funds.

This procedure of working with encryption and digital signature using private keys is possible through the hash functions.

Dash: Money as a service

The concept of the community that supports the Dash is that money works as a service and can meet the needs and changes of the market.

In their view it is necessary to finance the people who are responsible for creating and maintaining this technology that allows the existence of digital money.

Dash and the decentralized organization

Through the DAO (Decentralized Autonomous Organization) it would be possible to pay volunteers worldwide to work with the development of Dash.

The DAO makes important decisions about the development of the digital currency and also to manages the financial resources to fund the project.

Unlike other digital coins like Bitcoin, in the Dash blockchain there is a division of the reward between: Miners, Masternodes and Treasury:

Dash Reward

Miners

The miners participate in the process of updating the ledgers in the blockchain and get 45% of the reward through the generation of new Dashes.

Masternodes

Masternodes are the responsible for decision making and to be a masternode is necessary to own 1,000 Dashes which enables you to make good profit making decisions, rather than making bad decisions and losing money.

These masternodes use a votes to make decisions and come to a common agreement between changes that must be made in the network.

For voting rights it is necessary for the masternode to complete 3 tasks:

  • Keep an updated copy of the blockchain
  • Provide the functionality of "Instant Send" *
  • Provide the functionality of "Private Send" *

* See details about this feature later in this article.

Treasury

Part of the money that is used to pay for all the costs related to programming, lectures, documentation, translation, videos, fairs, etc. that are necessary for Dash to function as digital money.

Instant send and Private send

According to the community, the "instant send" and "private send" features differentiate the Dash blockchain from all other blockchains.

"Instant send" functionality aims to improve the speed of the transactions to just a few seconds making it a fast digital currency.

"Private send" allows the privacy of the transactions to be maintained.

To better understand these features we are going to discuss what the problem is with Dash's competitors block networks and how this issue can be resolved.

The problem of slow transactions

To carry out transactions with digital coins, you must have confirmations in the blockchain that can take a long time to complete.

In the Bitcoin blockchain network transactions take from 10 minutes to several hours to be confirmed, this makes the use of this digital currency unfeasible.

Imagine a practical situation where you are in line on a supermarket and each of the 5 people in front of you wants to pay with Bitcoins. If the time for each transaction commit is 10 minutes, you would spend almost 1 hour in line.

The solution with quick confirmations

To be a digital currency, or digital money such as Dash, the transaction time should be small so that it is possible for example to buy a coffee and pay quickly as it is done with a credit, debit or cash card.

Dash's "instant send" functionality allows transaction confirmation to be performed in just 1.3 seconds, which is the ideal time for the real world.

The problem of privacy in the transactions

In order to receive digital money you need to tell people what your private key is, just like you do with your bank account for deposit.

Even if the public key does not show its name but rather a sequence of alphanumeric characters, it is still possible to know that it belongs to you, because at some point you have passed it to someone who can trace back to you.

In a traditional network of blockchains such as Bitcoin, it is possible to follow the transactions performed between these public keys, to trace back the path of each of the transactions carried out until it reaches its origin.

This model is not the same as cash, where it is not possible to track who has spent money or the credit card model, where the operator can track the use of the card but the information is not publicly available.

The solution with Private Send

The Dash Private Send feature allows privacy to be maintained through the interchange feature, ie before reaching the final destination the coins are exchanged with other users in the blochchain network.

Dash is better than other altcoins?

The community that supports Dash believes so. According to them, Dash would be a form of digital cash that is more adapted to reality to be used in real day to day situations such as paying for a lunch or coffee.

With this division of reward in the blockchain it is possible to fund the progress of this digital money and make it better and better to be used with the same ease with which physical paper money is used in practice.

The features of Instant Send and Private Send are promising, it remains to be seen if they are escalable and will work well with the growth of daily transactions.

The value of Dash has grown a lot in recent years, the currency may turn out to be really a good option.

Where can I buy Dash?

Below is the list of exchanges where you can buy Dash:

Dash Summary

Created by the American Evan Duffield, Dash is a digital currency that can be used for transactions faster than its competitor Bitcon. The Dash community claims to have improvements to speed and privacy issues.

Dash works with the same blockchain concept to confirm transactions and create new coins through mining, but has other elements in the network like the masternodes and there is a division in the reward for the work in the blockchain.

The coin came in 7th among the most important crypto-currencies today and had an expressive appreciation that came to threaten the leadership of Bitcoin.

Dash has functions like "instant send" and "private send" and is working on new features those that promote to give functionality of a bank to the currency.

The future of Dash

Keep following and stay tuned for development progress and news related to this digital currency, especially Evolution software.

The community is very confident in the functionality of this software that brings the concept of implementing most of the features found in a bank in the way Dash works to get people to use it.

Learn more about Dash

More information on Dash development can be found on the official website at: https://www.dash.org/

Below is a video that explains in a comprehensive way, how the blockchain works.

Books and stuff about cryptocurrency

There are books of experts in the area of cryptocurrency. If you want to understand more about bitcoin it is worth checking the links below:

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