Dash vs Monero
This article will provide a comparison on everything you need to know about Dash vs Monero.
Here’s a list of topics that are covered in this guide:
- What is Dash
- What is Monero
- Dash vs Monero
- Final word
Foreword on privacy coins
Cryptocurrencies are built on the blockchain technology, a digital ledger technology designed to bring decentralization, security, and anonymity to the ecosystem of financial transactions.
The blockchain technology’s foremost implementation was in Bitcoin, and while the Bitcoin network is leveraging the innovative features of the blockchain as a digital asset, as it is common with most first-time applications, Bitcoin has some shortcomings – especially in the aspect of privacy and anonymity in transactions.
This potentially fundamental flaw in design had to be addressed which led to the emergence of alternative cryptocurrencies offering complete privacy and anonymity.
Although they are quite a number of coins in the market that claim to be anonymous, only a few of them have been successfully developed to be relevant in the real world.
The top two promising cryptocurrencies in this domain of anonymous cryptocurrencies are Dash and Monero.
What is Dash
Dash is a decentralized, open source digital cash based on the blockchain technology.
It was developed as an improvement on Bitcoin’s core code especially to improve on the features of privacy, anonymity, transaction fees and speed.
The development of the Dash network is driven by a user community of crypto enthusiasts.
Dash is also based on a solid and scalable technology and with its popularity in the crypto market, the coin is well positioned for mass adoption in the future.
Introduction to Dash
On the 18th of January 2014, software developer Evan Duffield created Dash.
But it wasn’t always named Dash. Duffield originally released the coin as XCoin with the ticker XCO.
A month after it was released, in February 2014, XCoin was renamed to Darkcoin.
It wasn’t until the 25th March 2015 that Darkcoin was officially rebranded to Digital Cash, more commonly referred to as its abbreviated form – Dash.
Duffield was set on developing Dash not just as a completely anonymous electronic cash but as a cryptocurrency network to facilitate financial transactions at very low cost with fast processing times.
Essentially, Dash is designed to offer the same level of ease transacting with fiat money offers.
The primary difference between the blockchain of a cryptocurrency like Bitcoin and that of Dash is that while the Bitcoin network is powered by a consensus on the blockchain, the Dash network is powered by masternode owners.
Perhaps, the biggest advantage Dash has over Bitcoin is in the transaction time and privacy.
Transactions on Dash can be processed in 1.5 seconds, far faster than Bitcoin’s long processing time.
The developers of Dash seek to build more than just a digital coin. It aims to become an actual currency to be used in instant and friction-less digital payments both online and offline.
Dash has a maximum token supply of 18 million coins which means that there will never be more than 18 million DASH coins in circulation.
Currently, the coin has a circulating supply of 8.4 million DASH with a market cap of over $1.4 billion USD.
How Dash works
The Dash network is built on a 2 tier system; the first tier consists of miners who verify transactions using nodes (computers on the network) while the second tier is made up of the Masternodes, computers on the network responsible for controlling the network and facilitating special functions on the blockchain.
Any user on the network can become a Masternode provided they own up to 1000 DASH coins which is held as collateral.
These coins are not frozen and can be used by the owner at anytime.
However, if as a masternode you spend your coins below the 1,000 mark, you will lose your Masternode status.
This collateral requirement is needed to protect the network as the Masternodes are unlikely to sabotage the development of the network with their coins at stake.
On the most cryptocurrency networks, the miner responsible for verifying a transaction gets 100% of the transaction reward attached to the mined block.
This system does not really incentivize the Masternodes who essentially control and manage the development of the platform.
Thus, the developers of Dash created a mining algorithm where the transaction rewards do not all go to the miner but rather are split into 3 between the miners, masternodes and development grants.
The reward is shared as follows:
- 45% – miner
- 45% – masternode
- 10% – maintenance fund (goes into further development of the network).
Privacy on Dash
Digital payments with the DASH coin offer exclusive privacy and anonymity such that a transaction on the network cannot be traced back to you, the sender.
How does this work?
If you want to send money to another user on the network using DASH, you can make that transaction untraceable by mixing it with other transactions.
This feature is based on a cryptographic coin mixing service known as CoinJoin.
Once you activate Private Send, your transaction becomes untraceable, and no other user on the network will be able to trace it back to you.
This private transaction feature is optional, and you can still choose to proceed with regular digital payments.
There is a limitation to how much you can send in a one-time transaction with Private Send.
The transaction cap limit is set at 1000 DASH, so if you need to send more than 1000 coins, you can either opt for regular payment or break down the coins into sets of less than 1000 DASH.
What is Monero
Monero is an open-source, privacy-centric digital currency.
The primary difference between Monero and most other cryptocurrencies is that Monero is completely secure.
While cryptocurrencies are touted as providing anonymity in transactions, that is a common misconception by virtue of the fact that cryptocurrencies operate a public digital ledger system where other users can see and trace transactions back to the real user.
The blockchain of Monero is opaque meaning transactions are not just anonymous but untraceable, in here lies Monero’s core value.
Introduction to Monero
Monero was launched in April 2014, the result of a hard fork of Bytecoin.
The Monero coin is represented by XMR in the market, and it was built on a CryptoNote technology, a cryptographic protocol specifically designed to facilitate anonymous digital payments.
The development of the platform is enabled by donations from the crypto community as the Monero development team did not reserve or lock up coins as common with most crypto projects.
Like Bitcoin, new coins are mined on the Monero platform using a proof of work consensus protocol.
However, mining is based on a CryptoNight hashing algorithm.
Monero’s core values are centred around three main features: security, privacy, and decentralization.
XMR has built a solid reputation for itself from providing security and privacy for every user on the network.
This privacy and anonymity are promoted by three innovative technology; ring signatures, ring confidential transactions and stealth addresses.
As a decentralized platform, Monero is completely free of government regulations or control by any centralized party who may try to manipulate the network.
Although Monero is usually associated with illegal cash settlements in darknet marketplaces, there is no denying the fact that the privacy-oriented design of the digital currency is the major contributing factor to its success in the crypto market.
As it stands now, with 16.5 million coins in circulation, the market cap of Monero is at $1.8 billion.
How Monero works
Owing to the high level of privacy provided on the network, Monero is totally fungible.
In other words, any unit of this currency can be replaced or substituted with another unit as every coin has the same value.
This fungibility is enabled by the opaque blockchain of Monero.
A transaction on the blockchain can neither be trailed not linked to any user, coins are indistinguishable from the other, and it is practically impossible to tell which coins were used in an illegal transaction.
Thus, every coin has equal value regardless of its transaction history which by the way leaves no trail.
It is also important to understand that while the developers of Monero designed the platform to protect the privacy of all users, these users have the option of changing the default privacy settings.
Essentially, as a user on the Monero network, you can choose to share your transaction history or keep it private.
Once you select the option of sharing your transaction history, the view key on your Monero account is automatically activated permitting any user holding it to view the account’s history of transactions.
The developers of Monero are focused on optimizing the features on the platform to ensure that every user in full control of their digital assets.
Privacy on Monero
Monero offers unparalleled anonymity for its users at an exceptional level yet to be matched by any other cryptocurrency in the system.
As earlier stated, this anonymity is enabled by 3 primary highly sophisticated and innovative cryptographic techniques which will be explained below.
Monero uses a technique known as ring signatures to hide the identity of the sender of funds in a transaction.
Essentially, what happens here is that several digital signatures sign off a specific transaction such that it is impossible to tell the true sender in the mix.
To illustrate, let’s assume you want to send some XMR to a friend, ring signatures will mix your account keys which form your unique digital signature with other account keys randomly picked from Monero’s blockchain.
These keys, along with your real key form a ‘ring’ of possible signers, another person viewing the database of the Monero blockchain will be unable to tell which specific key initiated that transaction; meanwhile, your coins have been delivered to your friend.
A stealth address is a unique one-time public key generated during a transaction to mask the identity of the recipient.
Stealth addresses are created for each transaction and destroyed afterward to ensure that the recipient’s address is not published on the blockchain such that money can not be linked with their wallet.
If you always receive payments through one public address, anyone monitoring the blockchain can easily calculate the total amount you have in your wallet by trailing every deposit and withdrawal transaction in your wallet.
Stealth addresses on the Monero blockchain obscure the destination address on behalf of the recipient and only the recipient and sender know the true destination of the funds.
Ring Confidential Transactions
Ring confidential transactions conceal the actual amount in a transaction.
Generally, miners cannot verify a transaction on the blockchain without the amount spent in the transaction.
On Monero, ring CT employs a mixing technique similar to the one in ring signatures to cryptographically hide the amount of XMR used a transaction while effectively ensuring that the transaction is still verified by miners.
Basically, your transaction is still validated without disclosing any detail that can be traced back to you.
Dash vs Monero: The difference
Dash and Monero are the two most popular privacy-centric cryptocurrencies designed to facilitate online digital cash transactions.
While they are inherently similar in their privacy and anonymity promoting functionality, the two cryptocurrencies have a number of differences between them.
Outlined below are the differences between Dash and Monero:
Dash is a fork of the Bitcoin blockchain; essentially, Dash was developed from Bitcoin’s open source code with improvements on the system to enhance security, privacy and transaction times.
Monero, on the other hand, is a fork of Bytecoin which is based the CryptoNote protocol.
On the Dash network, privacy is optional. If you do not use Private Send, your transaction will be published on the public blockchain like any other transaction.
Monero is based on the cryptographically secure CryptoNote protocol; thus, privacy of transactions is by default.
As privacy is optional on Dash, coin transactions can leave a trail, and as such, all coins may not hold the same value for users. In other words, Dash coins are not fungible.
Monero coins are fungible. Every coin on the Monero network has equal value. Users cannot trace any transaction to any coin, and thus the value of every unit is intact.
Hierarchy of Nodes
On Dash, there are two types of nodes; the regular nodes and Masternodes. Hence, a user hosting a masternode is higher on the network than a user with a regular node. This could lead to issues associated with centralization.
All nodes are equal on Monero; no user is above the other irrespective of the amount of XMR coins they hold.
Anonymity of transactions on Dash is enabled by a Private Send function which uses CoinJoin service to mix transactions outputs with the goal of hiding the real identity of the sender.
The Monero protocol uses ring signatures, stealth addresses, and ring CT to obfuscate the addresses of the sender and recipient and the details of the transacted amount respectively.
With about 8.4 million DASH in circulation, Dash has a market cap a little over $1.4 billion USD making it the 13th most valuable coin by market capitalization at the time of writing.
Monero has over 16.5 million XMR in circulating supply and a market cap of about $1.8 billion USD. By market capitalization, Monero is the 9th most valuable coin in the market as of today.
Advantages and disadvantages Dash have over Monero and vice versa
While Dash and Monero are both dominating the market as the top privacy oriented coins, it can not be said that these coins deliver 100% of what the crypto community expects for a coin of their standard.
They both have their advantages and disadvantages and highlighted below are the advantages each coin has over the other.
Advantages of Dash over Monero
Dash incentivizes the nodes on the blockchain by giving users a share of the transaction rewards once they own up to 1000 DASH.
The lack of incentivization on Monero is reflective of its slow scalability.
The Dash Instant Send feature allows for transactions to be processed within 1.5 seconds, faster than Monero or most other digital coins for that matter.
Dash coins are compatible with any Bitcoin-compatible wallet because of the shared source code, hence finding a wallet for your Dash coins would not be a problem.
Monero however, may have compatibility problems with multi-currency wallets because of its cryptographic protocol.
Dash is more practical as it aims to become a commerce coin to be used like fiat currency. Thus, mass adoption is more likely for Dash than Monero as the latter, on the other hand, is more focused on being an untraceable coin neglecting usability and scalability.
Dash has a more sustainable development plan; the network is self-funded with the 10% from transaction rewards. The Monero team, on the other hand, relies on donations from the crypto community to develop the platform; crowdsourcing for funds might not be a sustainable concept.
Advantages of Monero over Dash
When it comes to actual anonymity in transactions, Monero beats Dash hands down with completely untraceable and unlinkable transactions. This is not to say Private Send is not secure but the trio of ring signatures, stealth addresses, and ring CT outperforms the Dash protocol.
Monero is completely decentralized, and there is no superclass of nodes or users who control the system and enforce rules. Users on Dash have to trust the Masternodes who not only govern the blockchain but are responsible for the special functions as well.
Anonymity is a default function on Monero. You do not need to use any special feature to activate privacy of transactions like in the case of Dash.
Every coin is equal on Monero. No coin is tainted because of how or where it was spent. To merchants, one unit of XMR is the same as the other. On Dash, however, as long as transactions are published on a public digital ledger, fungibility will be unattainable as “cleaner” coins will always be valued over coins that have been used in illegal transactions.
The developers of both coins have so far done a great job as both coins are dominating the niche. Nonetheless, it is difficult to say which coin is better than the other.
There is no objectively “better” coin, and ultimately, the choice is dependent on the preference of the user.
What do you want out of a privacy-centric currency?
Is anonymity optional or paramount to you?
Would you prefer a more scalable platform?
Your answers will guide you in picking the coin that is better for you.
Which coin do you personally think is better? Monero? Dash?
Leave a comment and tell us which!
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Disclaimer: You should do your own due diligence, research and analysis before you invest any money in cryptocurrencies. Cryptocurrencies are highly volatile and classed as high-risk investments. You should never invest any money unless you’re prepared to lose your capital. The author of this article holds the said assets and might be biased towards them.