Fundamentals are one of the most important aspects of a cryptocurrency. This is why whenever you see the announcement of a new coin the first information usually provided is the coin supply, emission rate, hashing algorithm and other similar information. This information is quite vital as it forms the base of a new cryptocurrency. It’s no use building fancy new technology on a platform with weak fundamentals that might make it collapse at any moment. As such it’s important to look at how Dash handles this critical aspect and why it excels at it.
The basic fundamentals of Dash
It’s always best to start with the basics, this gives a quick overview of the philosophy behind a project. Is it a fixed supply like Bitcoin that tries to achieve deflation or an inflationary supply like Ethereum for example. Dash follows in Bitcoin’s footsteps by assigning a maximum supply of 18.9 million Dash meaning that eventually there will never be more than that amount of Dash in existence. Over the time it takes to mine all of the Dash in the world, the reward miners get for solving blocks steadily decreases. So, inflation also reduces over time until it reaches 0%. And eventually once all Dash is created, if someone loses their Dash (by deleting a wallet with no backup for example) this would technically reduce the max supply of Dash, creating a negative rate of inflation. In essence, what a fixed supply means for Dash is that over time as the supply increase slows down, assuming similar levels of demand or higher; then the price of Dash should increase, and more people will be looking at it.
Of course, supply is not the only factor in fundamentals, another important one is hashing algorithm, or how new blocks are actually confirmed. Dash uses a traditional Proof of Work system where specialised machines called ASICs solve complex mathematical calculations to confirm transactions on the network. It uses an algorithm called X11 (named so as it contains 11 different hash functions) which isn’t of much use to the average user or investor but can be important for developers or miners. However, it is important to note that X11 has a great advantage over Bitcoin’s SHA-256 algorithm, as X11 is newer and possibly more secure which increases Dash already great security.
Lastly, a great basic metric to look at is block-time. Or how much time it takes for a new block to be mined on the network. Bitcoin has a 10-minute block time, meaning that on average it takes the Bitcoin network 10 minutes (however this can range from 1 minute all the way to 30 at times) to mine a new block. Dash has a 2.5-minute block time, so at the base level Dash transactions confirm on average 4x as fast as Bitcoin transactions. Masternodes enable payments-focused features such as Chainlocks and InstantSend which greatly increase transaction speed and reduce fees.
A deeper dive
Beyond some of the basics I have already talked about, it is just as important to learn some of the more technical details regarding a project. For example, how decentralised is it actually? After all the main purpose of cryptocurrencies and blockchain is decentralisation, yet unfortunately some cryptocurrencies have forgotten this and in the pursuit of speed or efficiency have turned their network more centralised. Fortunately, due to Dash’s POW algorithm and myriad of full nodes it is safe to say that it is fairly decentralised which is a major point for a good cryptocurrency. Security is also a top priority and Dash also has some incredible security when it comes to protection from attacks such as 51% attacks, I wrote in more detail about the security of Dash in my previous article.
Lastly, I believe a very important aspect to consider is whether a specific cryptocurrency has actually achieved what it set out to be. For example, Ethereum achieved decentralised contracts on its chain successfully. Dash has absolutely reached its goal, and is doing great at it. It’s fast, low cost, easily attainable and usable as digital cash. Additionally, the community around Dash is a strong one and is building applications and integrations globally such as in Venezuela and Nigeria.
A well-rounded success
It is rare in a space filled with scams and fake promises to find projects that truly have strong fundamentals. Dash sticks to its original purpose very well and is slowly but steadily growing. It gathers ideas from other platforms, improves upon them and adds some new unique ideas to create a blend that is hard to find elsewhere. New technologies and integrations are also on the way. Dash Platform aims to make Dash’s decentralized user experience no different than that of a centralized payment processor like PayPal or Venmo. Due to all this it’s easy to see why the Dash project has been a success so far and has quite a bright future ahead of it!
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