Welcome to the Dash review. New to crypto? Access our Blockchain 101 material before you dive in!
If you would like to learn more about our scoring methodologies please click here.
Blockchain Use Case (1.6 out of 2)
Dash is short for “Digital Cash”. The intention of the project is to become the leading digital currency for point of sale transactions. Dash supporters argue that Bitcoin and other digital currencies take too long to clear transactions. Users need transactions to clear quickly if they are going to use digital currencies for every day transactions.
Dash has incorporated a feature called InstantSend. InstantSend allows users to instantly send Dash from one party to another on the network. Users will not have to wait for entire blocks to clear before their transaction is approved. The network takes advantage of the Master Node system (which I will touch on shortly) to accomplish this.
Dash also wants to improve upon the fungibility of virtual currencies. Fungibility is a pivotal feature of any type of currency. It means that all units of the currency are equal. Unfortunately, Bitcoin and other virtual currencies are not truly fungible because users can view the transaction history of any particular unit. Units that belonged to famous participants (ex. Satoshi Nakamoto) or units that were used in illegal dealings might be valued differently than other units.
This is where PrivateSend comes in. PrivateSend is a coin mixing mechanism. When a user wants to send Dash privately their transaction is split into denominations of .1, 1, and 10 Dash. Then Master Nodes match these up with similar transactions engaged in by other Dash users and mixes them all together. This results in an output that hides the amount of Dash any particular user has sent.
Master Nodes play a big part in enabling these two features. In order to become a Master Node a user must stake 1,000 Dash. Master Nodes receive 45% of all the block rewards produced. Miners receive another 45%. The additional 10% is allocated to a treasury fund that is used to fund projects that will make Dash better. Dash combines Proof of Stake and Proof of Work consensus mechanisms.
Development and Management (1.4 out of 2)
Dash was founded by Evan Duffield in 2014. Evan started working with computer code as a teenager and had professional experience in software development before diving into the cryptocurrency space. This happened in 2013 when he decided to combine his software development ability with finance.
While studying for his Series 65 he came across Bitcoin and did not pay much attention to it at first. It captured his imagination after he came across it a second time and he became obsessed with the technology.
Duffield soon began to get involved in the project and started connecting with big names in the space on online cryptocurrency forums. He found that the community was in deep discussion related to fungibility. Believing that the community would reject his improvement proposal he went forward with creating a new cryptocurrency altogether.
Ryan Taylor is the current CEO of Dash Core Group. Dash Core Group is a corporation that supports the network through a variety of different initiatives. Ryan started with Dash full-time as Director of Finance in April 2016. He was promoted to CEO after Evan left the position vacant in April 2017.
Ryan worked as a fund analyst before starting with Dash. While working as an analyst he mainly focused on the payments industry and related investments. He was charged with understanding the business models of potential investments the fund would make in this space. Because of this he possesses a deep understanding of what it takes to be successful in the payments industry.
Partnerships and Other Influences
Dash has made good progress in securing a large number of partnerships that are helping increase the visibility of the project. These partnerships also help drive the project towards long-term and sustainable success.
Alt36 is a digital payments platform that has decided to incorporate Dash. Alt36 is focusing on the cannabis industry at the moment. Cannabis related businesses find it difficult to access the same financial infrastructure as more mainstream businesses. This is because cannabis is still an illegal drug at the federal level. This forces business owners to deal in cash (which can be burdensome and sometimes dangerous) or move towards alternatives like virtual currencies. The use of virtual currencies in the cannabis industry will continue to grow and Dash has positioned itself well here.
The Dash treasury fund has also funded a project with KuvaCash in an effort to tackle Zimbabwe’s inflation problems. Countries that experience high levels of inflation can rely on virtual currencies to survive. Virtual currencies hold their value better than the local currency does. KuvaCash aims to provide citizens with a peer to peer payment option. Anyone with a phone number based messaging system can use it. Not only is Dash exposing their product to a brand new market but they are helping unbanked individuals and organizations access financial services.
Competitive Advantages and Risks (1.3 out of 2)
Dash will be competing with:
These should be considered when determining the project’s strengths:
- InstantSend allows transactions to be approved instantaneously which makes Dash more attractive to merchants.
- Dash self funds supporting projects and projects are decided on by a Decentralized Autonomous Organization (DAO).
- Allows for more privacy than some competitors such as Bitcoin and Litecoin.
- Can scale better than most competitors at the moment because of the Master Node structure it utilizes.
Risk can hint at a project’s chances of ending in failure:
- Dash does not protect the identity of users as well as other privacy focused projects like Monero and Verge.
- The instamine allowed early adopters to acquire close to 25% of the current supply of tokens. This means that Dash is more closely held than most cryptocurrencies. You can learn more about the instamine by clicking here.
Network and User Trends (1.4 out of 2)
Network hashrate is important to look at. An upwards movement in hashrate may signal that miners are bullish on the project. They are choosing to direct their computing power to this network as opposed to others.
Hashrate has increased by 567% over the last year but it is down by 18% over the last month. Competitors like BTC, LTC, and XMR have seen larger increases in hashrate over both the short and long-term. Miners are choosing to mine others coins over Dash.
However, the mining distribution is very decentralized and this is a good sign. It means that no one controls a large portion of the network approval power. This aids in the security of the network.
A measure called HHI can be used to calculated how centralized or decentralized an industry is. This measure can also be applied to network mining distribution. A decentralized system will have an HHI of below 1,500. The HHI of the Dash mining network is roughly 200 which means it is very decentralized.
Lastly, we can take a look at the amount of transactions that the network is processing daily. An increasing number of daily transactions is a good sign because it means that more users are utilizing it for its intended purpose.
Over the last year the amount of daily transactions has increased by 97%. The network has seen a 9.5% increase in daily transactions processed over the last three months. This is on par with the other privacy coins like XMR and ZEC. Bitcoin Cash and Litecoin are doing slightly better in this category.
Financial Considerations (1.5 out of 2)
Dash differentiates itself in a variety of ways. Its Master Node structure should allow it to scale better than competitors and its treasury fund mechanism should allow it to take advantage of opportunities to improve as a platform. Dash is attractive to merchants because transactions settle quickly via its InstantSend feature. And users that care about privacy can utilize the PrivateSend feature. Dash literally has something that fits everyone’s needs.
But in this space it might be more advantageous to be great at one thing. Other cryptocurrencies like Bitcoin, Litecoin, and Bitcoin Cash have wider reaches and are accepted by more vendors at the moment. All these cryptocurrencies are looking to close the gap when it comes to transaction approval speed.
Dash also does not do as good of a job keeping transactional data private when compared to its competitors. At the moment Monero, ZCash, and Verge all do a better job of obfuscating payment addresses and hiding transactional data on the blockchain. Users that really want to keep their information private will probably choose to use other privacy focused cryptocurrencies.
It shows how closely held Dash could be. The instamine that occured on the first day allowed the founding developers and a few early adopters to mine close to 25% of the current circulating supply and 10% of the maximum supply of Dash. This means that the price of the coin and the direction of the platform could be swayed by a select few. As an investor this makes me uncomfortable because it adds a different type of investment risk to the mix.
Dash is by no means a bad investment but it doesn’t stand out either. If payments are your thing you can do better than Dash in my opinion. And there are other privacy coins on the market that do a better job at fulfilling user needs.