The Bitcoin whitepaper, “Bitcoin: A Peer-to-Peer Electronic Cash System” was released by Satoshi Nakamoto 10 years ago on October 31, 2008 detailing how to create a peer-to-peer, decentralized, digital currency.
The genesis block was then mined shortly after in January 2009 introducing Bitcoin to the world, but it was a limited number of participants in the early days. The first Bitcoin transaction was when Satoshi Nakamoto sent 10 Bitcoins to Hal Finney and the first real world transaction was when Laszlo Hanecz bought two pizzas for 10,000 Bitcoins, which is now celebrated as Bitcoin Pizza Day.
Bitcoin, as laid out in the white paper, solved the problem of digital money being decentralized and independent from the government by having individuals incentivized to run their computing power to solve a difficulty-adjusting algorithm. Previous attempts at e-money were either prone to hacking or shut down by the government due to their centralized nature. Bitcoin developed a way to avoid censorship, but also be a verifiable database by utilizing a ledger that was distributed across thousands of computers and cross-checked against each other. Bitcoin found a way to accomplish this enormous task by charging users nominal amounts for transactions that confirmed in 10 minute blocks, compared to the expensive and long transaction times of traditional bank payments.
Bitcoin soon faced competitive pressure
As Bitcoin developed and its exchange price increased, other coins soon emerged via forks such as Litecoin, Dash, Monero, Bitcoin Cash, and others with their own modifications such as changing the supply of coins, the blocktime, blocksize, algorithms and more. Bitcoin was rising in popularity and soon began to be accepted in more location, but did draw negative attention for the misplaced belief that it was used by individuals conducting illicit activities. Nevertheless, Bitcoin continued to grow and develop as the most popular cryptocurrency, and even got near the exchange price of $20,000 USD, but did eventually run into difficulties.
Bitcoin’s transactions started to build up so much that its 1 MB blocks became periodically congested and caused the transaction fees and confirmation times to spike, which contributed to Bitcoin losing market share from around 85% in February 2017 to 39% in June 2017. A scaling solution, the New York Agreement, was developed to introduce Segwit and double the blocksize (Segwit2x) with future plans for an off-chain scaling solution, Lightning Network. However, Segwit was implemented and the increase in blocksize never occurred, which caused a rift in the community and the split between Bitcoin and Bitcoin Cash. Both are still seeing significant adoption, but Bitcoin is pitching itself more as a store of value and settlement layer with higher fees and confirmation times and Bitcoin Cash is pitching itself as a transactional cryptocurrency with lower fees and confirmation times. Nevertheless, the split only furthered the fact that many individuals were moving into other coins that provided better transaction fees, confirmation times, and additional features such as more secure privacy. Bitcoin’s market share has still not fully recovered and currently hovers around 54.1% on coinmarketcap.
Dash introduces improvements
Dash was created by Evan Duffield in 2014 originally as a fork of Litecoin and then switched to a fork of Bitcoin when a significant bug was discovered in the Litecoin codebase. Dash introduced the X11 algorithm and Dark Gravity Wave difficulty-adjustment algorithm that recalculated every block, rather than every 2016 block as with Bitcoin, to make mining and thus fees more accommodating. Dash also introduced PrivateSend to grant users additional privacy if they chose, along with InstantSend to instantly lock transactions for minimal amounts. Some of these features have been possible because Dash also introduced Masternodes, Sporks, and one of the first and longest running DAOs to the cryptocurrency community. Dash is also able to leverage its unique structure and Treasury to focus on improving usability, the first major steps of which are planned with the release of Evolution, which will be a series of upgrades to make using Dash more consumer friendly such as usernames and contact lists.
These attributes have allowed Dash to solve many payment solution problems for many individuals by enabling Dash to fund its own development and adoption campaigns. This allows Dash to create the network effects that currencies rely on and to not become beholden to third party funding or sporadic volunteers. There are almost 4,000 Dash-accepting merchants around the world since Dash features some of the lowest transaction fees and confirmation times among the top cryptocurrencies. By focusing on everyday transactions, Dash is achieving the original goals of the Bitcoin whitepaper to create a peer-to-peer, decentralized, and digital currency.