{"id":105986,"date":"2023-03-14T20:55:01","date_gmt":"2023-03-14T20:55:01","guid":{"rendered":"https:\/\/wp.dash.org\/?p=105986"},"modified":"2023-03-14T20:55:01","modified_gmt":"2023-03-14T20:55:01","slug":"the-impact-of-bitcoin-on-dash","status":"publish","type":"post","link":"https:\/\/wp.dash.org\/blog\/the-impact-of-bitcoin-on-dash\/","title":{"rendered":"The Impact of Bitcoin on Dash"},"content":{"rendered":"
Bitcoin introduced the world to a peer-to-peer, decentralized cryptocurrency. For the first time ever, we had a financial system that wasn\u2019t dependent on any government, company or bank. There are no intermediaries whatsoever. Like many cryptocurrencies, Dash has been heavily influenced by Bitcoin\u200a\u2014\u200aboth from a technical and philosophical perspective.<\/p>\n
Bitcoin is powered by blockchain technology. The blockchain is a digital ledger that records every Bitcoin transaction. Bitcoin\u2019s person to person network architecture downloads and maintains a copy of the blockchain on every server (node). This ensures robust decentralization and complete transparency. The protocol also uses very sophisticated cryptography to send transactions securely. Even governments and the military can\u2019t break this level of encryption.<\/p>\n
At its core, Dash follows the same architecture, with one key difference. Dash uses a two-tier network of normal nodes (layer 1 just like Bitcoin) and Masternodes (layer 2) to ensure scalability, better security, much faster transactions and optional privacy based on the user\u2019s needs. Dash founder, Evan Duffield, used this 2nd layer innovation to mitigate Bitcoin\u2019s low throughput, slow governance mechanism, and lack of privacy, optional or otherwise.<\/p>\n
Interestingly, Duffield forked the original Dash codebase from Litecoin. Litecoin is a Bitcoin fork that offered an altcoin that was significantly faster than BTC. The original Dash protocol was dubbed \u201cXcoin\u201d and then \u201cDarkcoin\u201d before rebranding to Dash. Following the Dash Core 0.11.0.x protocol update, the Dash codebase changed from a Litecoin fork to a Bitcoin fork. Dash also regularly backports updates from Bitcoin<\/strong><\/a> to maintain any competitive innovations or advantages that Bitcoin may produce\u00a0.<\/p>\n One of the most important things that Bitcoin had to fix was the double spending problem. Double-spending is a flaw that allows the same digital token to be spent more than once. It\u2019s the digital version of counterfitting. Unlike their physical counterparts, a digital asset can be easily replicated.<\/p>\n Until that problem was solved, a digital currency could never be successful and become widespread. You could never really prove that this bit of Dash or Bitcoin was yours and yours alone. If you can\u2019t prove ownership, a merchant can\u2019t be sure that any given transaction is real and final. This is one of the reasons a credit card or debit card transaction isn\u2019t really finalized for several days or more. In one sense, this problem was even harder to solve in a decentralized digital currency network since there is no central authority like the bank to oversee the validity of transactions.<\/p>\n This is the root cause of the expense, complexity, errors and delays in the credit card, debit card and personal check systems in the legacy banking system.<\/p>\n Double or pending charges on your bank account or credit card do not necessarily mean that you have been charged twice.<\/p>\n Authorization hold (also called card authorization, preauthorization, or preauth) is the banking industry practice of authorizing electronic transactions made with a debit card or credit card, and holding the balance as unavailable either until the merchant clears the transaction (also called settlement), or the hold \u201cfalls off\u201d and makes the balance available again.<\/p>\n For debit cards, authorization holds can fall off the account from one to five days after the transaction date, depending on the bank\u2019s policy. For credit cards<\/a>, holds can last as long as 30 days, depending on the issuing bank.<\/p>\n Satoshi Nakamoto completely solved the counterfitting\/double spending problem with a stroke of genius. It\u2019s called the proof-of-work (PoW) consensus algorithm. Every server (node) on the Bitcoin network sees every transaction, and the consensus algorithm makes it extremely difficult and expensive to fool the network for even one or two blocks. And virtually impossible to fool for longer than that. This single innovation solved the problem that the legacy banking industry has not been able to solve for 100 years\u2026..and is still not solved today.<\/p>\n From a tokenomics perspective, Bitcoin is famous for having a fixed upper limit of 21 million. DASH also has an upper limit of 18.9 million. This completely changes the long term nature of the currency. There is no upper limit on how many dollars can be printed. The same is true for every other fiat currency in the world. This is what causes inflation. A good case can be made that the US Dollar is the most stable paper currency in the world.<\/p>\nBitcoin\u2019s impact on Dash\u2019s protocol and tokenomics<\/h3>\n