Dash Whitepaper - Privacy Centric Cryptocurrency

Dash Whitepaper - Privacy Centric Cryptocurrency

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Currency
Dash
Symbol
DASH
Founders
Evan Duffield, Kyle Hagan
Dashcoin is a cryptocurrency started on July 5, 2014. Dashcoin is a fork of Bytecoin and it also utilizes CryptoNote algorithm. 
The goal of Dashcoin is to automatically create a perfect mirror image of Bytecoin, the first CryptoNote based cryptocurrency, at any given moment of time. 
The only difference is the supply amount.

Abstract
A cryptocurrency based on Bitcoin, the work of Satoshi Nakamoto, with various improvements such as a two-tier incentivized network, known as the Masternode network. Included are other improvements such as Darksend, for increasing fungibility and InstantX which allows instant transaction confirmation without a centralized authority.

Introduction
Bitcoin is a cryptocurrency that has emerged as a popular medium of exchange and is the first digital currency that has attracted a substantial number of users. Since it’s inception in 2009, Bitcoin has been rapidly growing in mainstream adoption and merchant usage. A main issue with the acceptance of Bitcoin in point-of-sale situations is the time required to wait for the network to confirm the transaction made is valid, alternatively payment companies have created methods to allow vendors to take zero-confirmation transactions, but these solutions utilize a trusted counterparty to mediate the transaction outside of the protocol.

Bitcoin provides pseudonymous transactions in a public ledger, with a one-to-one relationship between sender and receiver. This provides a permanent record of all transactions that have ever taken place on the network. Bitcoin is widely known in academic circles to provide a low level of privacy, although with this limitation many people still entrust their financial history to it’s blockchain.

Dash is the first privacy-centric cryptographic currency based on the work of Satoshi Nakamoto. In this paper we propose a series of improvements to Bitcoin resulting in a decentralized, strongly anonymous crypto-currency, with tamper-proof instant transactions and a secondary peer-to-peer network incentivized to provide services to the Dash Network.

Masternode Network
Full nodes are servers running on a p2p network, that allow peers to use them to receive updates about the events on the network. These nodes require significant amounts of traffic and other resources that carry substantial cost. As a result, on the Bitcoin network a steady decrease in the amount of these nodes has been observed for some time and as a result block propagation have been upwards of 40 seconds. Many solutions have been proposed such as a new reward scheme by Microsoft Research and the Bitnodes incentive program.

These nodes are very important to the health of the network. They provide clients with the ability to synchronize and quick propagation of messages throughout the network. We propose adding a secondary network, known as the Dash Masternode network. These nodes will have high availability and provide a required level of service to the network in order to take part in the Masternode Reward Program.

Darksend
We believe it’s important to have a standard trustless implementation for improving the privacy of it’s users in the reference client that provides a high degree of privacy. Other clients such as electrum, Android and iPhone will also have the same anonymity layer implemented directly and utilize the protocol extensions. This allows users a common experience anonymizing funds using a well understood system.

Darksend is an improved and extended version of the CoinJoin. In addition to the core concept of CoinJoin, we employ a series of improvements such as decentralization, strong anonymity by using a chaining approach, denominations and passive ahead-of-time mixing.

The greatest challenge when improving privacy and fungibility of a cryptocurrency is doing it in a way that does not obscure the entire blockchain. In Bitcoin based crypto currencies, one can tell which outputs are unspent and which are not, commonly called UTXO, which stands for unspent transaction output. This results in a public ledger that allows any user to act as guarantor of the integrity of transactions. The Bitcoin protocol is designed to function without the participation of trusted counter-parties, in their absence, it is critical that auditing capabilities remain readily accessible to the users through the public blockchain. Our goal is to improve privacy and fungibility without losing these key elements that we believe make a successful currency.

By having a decentralized mixing service within the currency we gain the ability to keep the currency itself perfectly fungible. Fungibility is an attribute of money, that dictates that all units of a currency should remain equal. When you receive money within a currency, it shouldn’t come with any history from the previous users of the currency or the users should have an easy way to disassociate themselves from that history, thus keeping all coins equal. At the same time, any user should be able to act as an auditor to guarantee the financial integrity of the public ledger without compromising others privacy.

To improve the fungibility and keep the integrity of the public blockchain, we propose using an ahead-of-time decentralized trustless mixing strategy. To be effective at keeping the currency fungible, this service is directly built into the currency, easy to use and safe for the average user.

Instant Transactions via InstantX
By utilizing Masternode quorums, users are able to send and receive instant irreversible transactions. Once a quorum has been formed, the inputs of the transaction are locked to only be spendable in a specific transaction, a transaction lock takes about 4 seconds to be set currently on the network. If consensus is reached on a lock by the Masternode network, all conflicting transactions or conflicting blocks would be rejected thereafter, unless they matched the exact transaction ID of the lock in place.

This will allow vendors to use mobile devices in place of traditional POS systems for real world commerce and users to quickly settle face-to-face non commercial transactions as with traditional cash. This is done without a central authority. An extensive overview of this feature can be found in the InstantX white paper.

Conclusion
This paper introduces various concepts to improve the design of bitcoin resulting in improved privacy and fungibility for the average user, less price volatility and quicker message propagation throughout the network. This is all accomplished by utilizing an incentivized two-tier model, rather than the existing single-tier model in other cryptocurrencies such as Bitcoin. By utilizing this alternative network design it becomes possible to add many types of services such as decentralized mixing of coins, instant transactions and decentralized oracles using masternode quorums.
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