Kvě 06

Dash: A Digital Cash System

Source: bitcoin

dash Digital cash

“Hi, what can I get you?”

“Small espresso, thanks.”

“That’ll be 2,000 Satoshis.” You scan the QR code.

“Please go to the ‘Awaiting Confirmation’ room on your left. We’ll bring your coffee once

we receive four confirmations; should be about 45 minutes. Thank you!”

This article was provided by the Vanbex Group on behalf of the Dash project.

Sounds ridiculous, right? It represents a step backward from our current user experience. But this scenario is the future Bitcoin has unless something changes.

Even though Bitcoin surpasses government-issued currency in many ways – it greatly reduces fraud, eliminates corrupt third-parties, and much more – it will never go mainstream as long as the average Joe or Jane can’t use it in everyday life. And everyday life includes lots of point-of-sale purchases.

Waiting for Confirmation

Each day, point-of-sale systems are used to fill-up gas tanks, buy groceries, or pick up a box of diapers. In none of these situations will anyone wait 10-40 minutes until the transaction confirms. Why should they? It only takes seconds with credit cards. Everyone expects payments to occur near instantaneously.

Bitcoin was originally designed as a digital cash system, but cash has two important properties: (1) it “settles” immediately (assuming the cash isn’t counterfeit); and (2) the payment happens instantaneously, i.e., as soon as the cash changes hands.

Since Bitcoin is much, much harder to counterfeit than cash, it represents an advance over cash in settlements, but as currently configured, Bitcoin is a step backward in payment processing.

Until confirmations happen, Bitcoin is susceptible to double-spending and fraud. So you want that cup of coffee? Please wait!

Consider the way Bitcoin handles transactions. Essentially, through the magic of cryptography, each transaction gets confirmed on the blockchain, and once confirmed, that transaction can’t be repeated or spent again. (Of course, a transaction should receive multiple confirmations – perhaps two to six – before it is considered fully secured.)

The process of finalizing a transaction is comparable to settlements in the modern banking world, but bank settlements can take as many as 45-60 days. With Bitcoin, the settlement time has been reduced to under an hour, which is an amazing advance.

Bitcoin is a powerful settlement engine that ensures transactions are free of fraud and multiple spending. But for a merchant, being susceptible to chargebacks two months is not acceptable.

In a Hurry? Use Dash!

Most customers, however, don’t care if the settlement takes 60 minutes or 60 days; let the merchant worry about that. Although Bitcoin shines when it comes to quick settlements, it cannot, as currently designed, safely speed up payment processing.

Some Bitcoin companies offer services that make sophisticated guesses on the likelihood a transaction will be double-spent. If they guess wrong, they back it up by paying the lost bitcoins to the merchant themselves.

But this solution to confirmation lag seems like something from within our antiquated credit card system, something centralized and open to exploitation. What’s needed is a solution at the protocol-level, embedded in the cryptocurrency itself and such a solution already exists in Dash, a cryptocurrency based on Bitcoin.

Using a technology called “InstantX,” Dash can secure transactions immediately (in less than 4 seconds), preventing double-spends and fraud. All the while Dash, like Bitcoin, still settles transactions through blockchain confirmation, making it a complete settlement and payment system.

How does it work?

InstantX depends on Dash’s innovative “Masternode network,”  which doesn’t exist in Bitcoin.

Bitcoin’s network relies on altruistic supporters to host nodes. Dash, however, boasts a powerful network, a second-tier of servers, which are incentivized with block rewards for being the backbone of the Dash network.

For InstantX, these Masternodes work together in what is called “quorums.” A quorum of 10 randomly-selected Masternodes “locks” the transaction, so that even during the lag time between payment and confirmation, it can’t be double-spent. (More technical details can be found in the InstantX white paper).

Dash: True Digital Cash

The InstantX system does not represent an untried theory; it has already been implemented and used in the real world. In January of this year at the Miami Bitcoin Conference, some Dash enthusiasts introduced the “Dash ‘n Drink” soda machine from which sodas could be purchased using Dash.

Someone could create a Bitcoin soda machine, too, but it would be horribly open to double-spends, because customers could simply redirect the bitcoins they just spent while walking away with their cold beverage. Dash’s InstantX makes this impossible; the transactions are locked before they can even hit the bottom of the dispenser. Most likely, the transaction will also be settled before the can is warm. A win-win for the customer and the merchant.

Bitcoin imagines itself a digital cash system. However, it would be more accurate to call it a digital “half-cash” system. It handles settlement nicely, but falls flat in the arena of instant payments. Dash is truly digital cash.


Images courtesy of Freedom Outpost, Dash.

The post Dash: A Digital Cash System appeared first on Bitcoinist.net.

Dash: A Digital Cash System

Share
Kvě 01

The Origin of Dash and the Future of Money

Source: bitcoin

dash

The introduction of Bitcoin to the world sparked a revolution of finance and economics. Bitcoin set money’s value free from government constraint; now the value could be determined solely by the market. Instead of depending on centralized third parties for every financial transaction, people could exchange value around the world cheaply and in a completely decentralized manner. Bitcoin ushered in the age of truly digital cash. But Bitcoin isn’t the whole story. By creating an open-source money, Satoshi Nakomoto, the inventor of Bitcoin, unlocked vast vistas for others to explore. Over the years many developers have taken up the challenge and built upon the foundation that is Bitcoin to solve many real-world problems. One such person is Evan Duffield, and his project: Dash.

This article was provided by the Vanbex Group on behalf of the author, Eric Sammons.

 

The Importance of Anonymity

With a background in both software development and finance, Duffield was captivated by Bitcoin from its earliest days. Most particularly, he was intrigued by the idea of digital cash: a technology that could replicate the features of physical cash but without the drawbacks inherent in conventional currency. According to Duffield, “I started tinkering with Bitcoin in 2011, really early in it’s development. I decided I wanted to dive into cryptographic currency and like all things, the best way to learn something new is to sink or swim.” As he studied Bitcoin more deeply, however, he discovered a weakness in its design: a lack of true anonymity.

Why is anonymity important? Some might argue anonymity is only essential for those who wish to engage in illegal activities. But this is not the case. Anonymity is necessary for cash for two reasons. First, it gives each transaction privacy, so that no one can pry into the financial transactions of others. Imagine giving public access to everyone’s credit card transactions. Such information, aside from just violating individuals’ privacy, could be used to manipulate people in many ways. Second, anonymity makes the currency “fungible,” meaning every unit of the currency is worth the same as any other unit. Why is this true? If people could track coins to specific people and transactions, efforts could be made to “taint” coins, for example, if they were involved in illegal activities previously, making them worth less than others.

Unfortunately, Bitcoin does not supply true anonymity; each transaction is broadcast on a public blockchain for anyone to study. True, those transactions are not publicly linked to specific individuals, but with enough forensic research one can draw connections between transactions and individuals.

Duffield at first wanted to improve anonymity in Bitcoin itself, but he found that his suggestions were not accepted by the core Bitcoin developers. So, in the grand tradition of open source technology, he decided to fork the project and create his own digital coin. He called it “Darkcoin,” reflecting the anonymity of the currency, and released it on January 18, 2014. Calling Darkcoin a “more private blockchain,” Duffield marketed it as a “privacy-centric” currency.

Thus was a new coin born.

The initial reception was nothing short of remarkable. People quickly realized that Darkcoin solved a real-world digital currency problem, and the price reflected that realization. Users flocked to the coin, and soon its market capitalization was one of the highest of any digital currency. In its first year Darkcoin overcame a number of technical hurdles – inventing a whole new way of doing money isn’t for the faint of heart – and became one of the top digital currencies on the market.

From Darkcoin to Dash

That’s only the beginning of the story, however. From these humble origins something greater was introduced to the world, perhaps even greater than Duffield himself realized. For the technical solution to implementing an anonymous currency held the seeds to much more. Duffield created an incentivized 2nd-tier of nodes (called “Masternodes”), more powerful than regular Bitcoin nodes, which would be the foundation for a whole host of future features, many of which weren’t even considered when Darkcoin was first created.

Anyone who has worked in software development knows how important the initial foundation of a project is. Without a robust infrastructure, there are limitations to what can be accomplished as the project matures. By creating a Masternode network, Duffield gave his coin a leg-up in building future features into the coin. Unlike Bitcoin nodes, Masternodes receive payments for their service to the network. Because they are incentivized, more can be demanded of them: more powerful hardware, required software upgrades, etc. This Masternode network became the robust foundation to which more and more features could be added – features which are not possible for Bitcoin or other coins without a 2nd-tier network of nodes. As Duffield notes, “I first discovered a way to make a decentralized anonymity engine, something that had never been done before, then I continued to find other new concepts such as decentralized funding, decentralized governance and a decentralized storage engine.”

As the project began to include more features, however, the Darkcoin name became a liability instead of a strength. It emphasized only the one aspect of the project – anonymity – and not everything it had the potential to become. Further, public perception was that the Darkcoin name referred to its use in illegal activities, which was never the intention of the project. As Duffield noted, “It became apparent that the Darkcoin branding was getting in our way, so in order to accomplish our greater mission, we decided rebranding was necessary.” So the name was changed from Darkcoin to “Dash.” A shortened form of “digital cash,” the revised name is a reflection of Duffield’s original vision for the project.

Looking to the Future

Since its creation, the Dash Masternode network has shown itself capable of handling new features. Over the past two years, new Dash features have continued to be added. For example:

InstantX: To solve the problem of lag time in transactions, Masternodes are able to instantly lock transactions.

Self-Budgeting: To solve the problem of lack of funding for development, Masternodes can direct funds right from the blockchain to support development.

Self-Governance: To solve the problem of making governance decisions on the future of the currency, Masternodes can vote on what development occurs.

This is just the beginning. Dash’s powerful Masternode network allows for features in the protocol level that other digital currencies must push off to centralized third parties. With Dash, almost any feature can be decentralized and included at the protocol level. For example, the next phase of the Dash project, called Evolution, will introduce a new level of user-friendliness to a space which is not known for it. Duffield’s excitement for the future of Dash is apparent: “[Dash Evolution] is a next-generation platform for purely decentralized e-commerce. This system when deployed will allow low-risk reputation-based e-commerce and a completely decentralized arbitration system that can replaced centralized escrow services.” And with Dash’s strong foundation, who knows what else is possible in the future?

From its origins as an anonymous Bitcoin clone, Dash has evolved over the past two years into “digital cash.” With its powerful infrastructure and self-governance/self-budgeting system, Dash is poised to break into the mainstream and become the future of money.


Images courtesy of Dash, Pixabay.

The post The Origin of Dash and the Future of Money appeared first on Bitcoinist.net.

The Origin of Dash and the Future of Money

Share