Bitcoin\u2019s impact on Dash\u2019s protocol and tokenomics<\/h3>\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>\n The US dollar has lost 86%<\/a> of its buying power in the last 50 years.<\/p>\n Since 2020, the US dollar has lost approximately 43% depending on which data you consider. And that\u2019s one of the best fiat currencies in the world. The next 10 years will almost certainly be worse because of the huge increase in deficit spending. So, although cryptocurrencies like Dash and Bitcoin are very volatile, it is thought that in the long term, they will greatly appreciate in value because of the hard limit on how much can be mined\/printed.<\/p>\n Altcoins usually follow Bitcoin when it comes to price action, and DASH is no different. As you can see, the daily price patterns have several similarities,<\/p>\n This is where Dash and Bitcoin differ significantly. Bitcoin makes a new block (a group of certified and proven transactions) every 10 minutes. Dash makes a new block every 2.5 minutes. But the real innovation is the second layer of servers (nodes) called Masternodes. In layer one, Dash uses a very similar PoW consensus protocol to secure blocks and transactions. But the second layer introduces a host of new features.<\/p>\n InstantSend.<\/strong> In the Dash ecosystem, we don\u2019t have to wait 10 minutes for a new block like Bitcoin. We don\u2019t even have to wait 2.5 minutes for layer 1 Dash to make a new block. The Masternode system absolutely locks the transaction in less than 2 seconds, and the transaction is final and safe. When the new block is published, all the InstantSend transactions are made even more secure.<\/p>\n Chainlocks.<\/strong> One of the possible attack vectors for all cryptocurrencies that are similar to Bitcoin is called a 51% attack. If you buy or rent enough servers (nodes) running Bitcoin on layer 1 (where mining occurs to publish the next block) you can split the chain so the layer 1 network is no longer certain which chain is the \u201creal\u201d chain. This is a perfect opportunity for the double spend or counterfitting scam. From a practical point of view, buying or renting that much computing power on the Bitcoin network would be ridiculously expensive. But for many other cryptocurrencies, the 51% attack is a real threat and it has happened<\/a> a number of times<\/p>\n Dash has made that impossible because of the Chainlocks feature<\/a>.<\/p>\n CoinJoin (aka PrivateSend)<\/strong>\u00a0Bitcoin is not private at all. But any user of Bitcoin or similar cryptocurrencies can gain greater privacy by using a mixing service. The use and operation of mixing services has become controversial recently. Andreas Antonopolis does an excellent job of describing the complexity and controversy.<\/p>\nWhat about price\u00a0impact?<\/h3>\n
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How Dash has built a more functional protocol than\u00a0Bitcoin<\/h3>\n