Proof-of-Work

Dash was envisioned as an improvement to Bitcoin, and while both have some technical differences between, the two share some similarities. For instance, both of them use Proof-of-Work as a consensus mechanism. Proof-of-Work is used to determine how the blockchain reaches consensus, which is when a majority of the participants in the network agree on validating information. As a result, it confirms it and adds it to the blockchain. This consensus mechanism uses an advanced form of mathematics called cryptography; the mechanism uses mathematical equations that are so difficult that only powerful computers can solve them. 

In the Proof-of-work system, thousands of individuals compete to become the first to solve the cryptographic algorithm. Still, only the user that first solved the equation and “mined” the block is rewarded for the services they provide to the network. While this system is used to ensure the network’s security, it is theoretically possible to successfully tamper with a blockchain. Nonetheless, to do so, you would need to take control of more than 50% of the network, and only then verify a tampered block. In other words, it is nearly impossible to achieve such a feat.

Cryptocurrency mining

The process of solving complex computer equations is commonly known as mining or cryptocurrency mining. This is achieved by dedicating a certain amount of computing power to the task to create a cluster of transactions or blocks into a growing chain of blocks. Thus, forming the blockchain.

To form said blockchain, each block is linked with other blocks with similar information; it is this action that makes blockchain technology so secure and trustworthy. Once the information is recorded on a block, it becomes irreversible, which means that once a transaction is sent, it is sealed and cannot be reversed. Information cannot be altered without having to change every block that came after it making it impossible to tamper block without it being noticed by other participants on the network.

The way that cryptographic puzzles are created allows them only to be solved by trial or error. Computers can guess millions of different combinations per second, which requires such a large amount of electricity. So generally speaking, the individual or individuals that have the most powerful and expensive hardware devices will always have the edge on the rest of the network, and thus a higher chance of winning the reward. 

Mining is a competition between miners, all of them trying to mine the next block. There have been cases where more than one miner successfully solved the mathematical equation at the same time. When this situation happens, the network decides which block to be added, thus creating an orphaned block. This block is a legitimate block that doesn’t have any transactions in it. In Dash, since the blocks are generated every 2.5 minutes, the chances of creating orphaned blocks increase exponentially. 

Mining hardware

Mining was envisioned as a very democratic process where anyone with a computer could contribute to the network and get rewarded for their services, reality tuned out to be very different. The individual or individuals that have the most powerful and expensive hardware devices will always have the edge on the rest of the network, and thus a higher chance of winning the reward.

Over time more specialized pieces of hardware with the sole purpose of mining have been created, thus making far less accessible for the average joe although mining can still be approached in different ways. 

The simplest and most general hardware available for mining is the general-purpose CPU present in every computer. A CPU is designed to be versatile but offers less efficiency than a GPU, which is designed to calculate millions of vectors in parallel rapidly. While specific CPU instruction enhancements related to cryptography such as AES or AVX can provide a decent boost, GPUs offer a significant performance increase due to their multiple pipelines capable of processing the predictably repetitive calculations associated with cryptocurrency mining. Finally, ASICs are relatively inflexible and can only process the specific function(s) for which they were designed, but at an even faster rate than the more general-purpose GPUs and CPUs.

Mining algorithms

Now, up until this point, Dash and Bitcoin share similarities in mining, nevertheless the critical difference relies on the type of algorithm that they implement for Proof-of-Work. For instance, Bitcoin uses an SHA-256 algorithm for mining, while Dash uses the X11 hashing algorithm for mining and real-time difficulty adjustment algorithm named Dark Gravity Wave. This algorithm prevents malicious mining centralization and hash power fluctuation. 

With the development of more specialized pieces of hardware for mining, it didn’t take too long for miners to realize that if they combined forces via parallel processing, they could exponentially increase their mining power. And thus, mining pools were created.

At the moment, more than 50% of Bitcoins hash rate is used by five mining pools alone; if they ever decided to launch a 51% attack on the blockchain, they would be able to do so. To combat these and other issues, Dash applies both the Dark Gravity Wave and X11 algorithms.

What is the X11 mining algorithm?

X11 chained Proof-of-Work algorithm was developed by Evan Duffield in 2014 alongside the creation of Dash (launched in January 2014 as Xcoin). The algorithm was partially inspired by the chained-hashing approach of Quark, adding further “depth” and complexity by increasing the number of hashes, yet it differs from Quark in that the rounds of hashes are determined a priori instead of having some hashes being randomly picked.

X11 is now a widely used hashing algorithm that was intended to make ASICs much more challenging to create, thus giving the currency plenty of time to develop before mining centralization became a threat. This approach was mostly successful; as of early 2016, ASICs for X11 now exist and comprise a significant portion of the network hash rate, but have not resulted in the level of centralization present in Bitcoin.

X11’s chained hashing algorithm utilizes a sequence of eleven scientific hashing algorithms for the proof-of-work. This is so that the processing distribution is fair, and coins will be distributed in much the same way Bitcoin does. The algorithm uses multiple rounds of eleven different hashes (Blake, BMW, groestl, jh, keccak, skein, luffa, cubehash, shavite, simd, echo), thus making it one of the safest and more sophisticated cryptographic hashes in use by modern cryptocurrencies. The name X11 is not related to the open-source X11 windowing system common on UNIX-like operating systems.

Advantages of X11

The increased complexity and sophistication of the chained algorithm provides enhanced levels of security and less uncertainty for a digital currency, compared to single-hash PoW solutions that are not protected against security risks like SPOF (Single Point Of Failure). For example, a possible but not probable computing breakthrough that “breaks” the SHA256 hash could jeopardize the entire Bitcoin network until the network shifts through a hard fork to another cryptographic hash.

In the event of a similar computing breakthrough, a digital currency using the X11 PoW would continue to function securely unless all 11 hashes were broken simultaneously. Even if some of the 11 hashes were to prove unreliable, there would be an adequate warning for currencies using X11 to take measures and replace the problematic hashes with other more reliable hashing algorithms.

Dark Gravity Wave

Dark Gravity Wave (DGW) is an open-source difficulty-adjusting algorithm for Bitcoin-based cryptocurrencies created by Evan Duffield. It was first introduced in Dash and has since appeared in other cryptocurrencies throughout the years. The X11 hashing algorithm for mining and real-time difficulty adjustment algorithm named Dark Gravity Wave is paired to prevent malicious mining centralization and hash power fluctuation. 

Evan Duffield created Dark Gravity Wave as a response to a time-warp exploit found in Kimoto’s Gravity Well. In concept, DGW is similar to the Kimoto Gravity Well, adjusting the difficulty levels every block (instead of every 2016 blocks like Bitcoin) based on statistical data from recently found blocks. This makes it possible to issue blocks with relatively consistent times, even if the hashing power experiences high fluctuations, without suffering from the time-warp exploit.

Block reward

Unlike Bitcoin, which allocates 100% of the block reward to miners, Dash has a block reward that contemplates masternodes and the governance budget. Every time a block is mined, 45% of the reward goes to the miner, 45% goes to a masternode, and the remaining 10% is reserved for the governance budget. The dash features superblocks, which appear every 16616 blocks (approximately 30.29 days), that release the accumulated 10% from every block for the governance budget. 

How to mine Dash

While the Dash mining industry isn’t as developed as Bitcoin’s, there are still some options that make it reasonably accessible for the average joe. There are fundamentally three mining setups: 

  1. Solo mining
  2. Mining pool
  3. Cloud mining service

Let’s analyze each of them.

Solo mining

If you want to go solo and mine on your own, it is essential to take into consideration some things. Using specialized hardware designed for mining X11 or ASICs will be far more efficient and powerful than using regular computers. With ASICs, you’ll have a better chance of earning rewards, than to use your standard CPU or graphics card.

For you to be able to be successful and make a profit out of mining, you’ll need to consider investing ASIC mining rigs. And while you don’t have to share your mining rewards with anyone else. Investment has to be handled on your own. This includes buying separate power supply and fans to prevent the mining rig from overheating or needing to pay for the electricity required to run the rig. It is also important to mention that you won’t necessarily always earn a reward; there will be periods where you won’t earn anything at all.

To start solo mining, you’ll need to follow all of the following steps:

  1. Create a Dash wallet: Before you start mining, you’ll have to set up a private wallet where you can securely store your DASH. You’ll need to research the different options and chose the one that suits you the most; luckily for you, we have a guide where discuss the different Dash wallets.
  2. Choose your hardware: This is a crucial decision to take; you’ll have to carefully analyze the various options and choose the one that is suits you best. You must take into factor cost, efficiency, power consumption, and other variables. Will, you set up a rig with multiple CPUs or investing in an ASIC miner? These are the questions you must answer.
  3. Installing software: If you chose an ASIC miner, your mining rig would most likely come with pre-installed mining software. On the other hand, if you have decided to mine with a graphics card, you’ll need to download and install free mining software. Always make sure to research your options, and only download from trusted websites.
  4. Ready, set, mine!: Carefully follow the instructions included on your hardware of choice and start mining! Remember to store your rewards in a secure wallet, also regularly monitor the performance of your mining rig and the price of Dash to ensure that you make a profit out of it.

Mining pool

Joining a mining pool means you join forces with other fellow miners, combining computing power to mine Dash. This means that you’ll have a higher chance of earning a reward as opposed to going solo. This also means that the DASH rewards are going to be shared amongst the members of the mining pool. While that does mean that you’ll receive a lower amount, it also means that you’ll receive payout much more frequently.

Before you join a mining pool, you must take into consideration that each mining pool is run differently and other variables:

  1. The pool’s reputation is something you must certainly consider. For how long has the pool been operating? Does it have a reputable operation? This does not necessarily mean that newer options are not reliable; you just need to study your options carefully.
  2. The larger the pool, the higher chances you have of earning Dash. The mining pool’s size is something you must always consider. Because, although that means more rewards, it also means you have to share the profits amongst more members, thus reducing your personal Dash rewards and gain.
  3. Mining pools often charge fees for joining the pool; you’ll need to carefully revise which is the price and how often it must be paid.
  4. Finally, some mining pools have minimum payouts. What this means is that there is a minimum threshold that applies to your balance before you are allowed to transfer your Dash mining rewards to your private wallet.

To start pool mining, you’ll need to follow all of the following steps:

  1. Create a Dash wallet: Before you start mining, you’ll have to set up a private wallet where you can securely store your DASH. You’ll need to research the different options and chose the one that suits you the most; luckily for you, we have a guide where discuss the different Dash wallets.
  2. Choose your hardware: This is a crucial decision to take; you’ll have to carefully analyze the different options and choose the one that is suits you best. Take into factor cost, efficiency, power consumption, and other variables. Will you set up a rig with multiple CPUs or investing in an ASIC miner? These are the questions you must answer.
  3. Installing software: If you chose an ASIC miner, your mining rig would most likely come with pre-installed mining software. On the other hand, if you have decided to mine with a graphics card, you’ll need to download and install free mining software. Always make sure to research your options, and only download from trusted websites.
  4. Choose your preferred mining pool: As previously stated, you must take into consideration a series of variables and characteristics for choosing your preferred mining pool. Some mining pools might require the use of specific software to mine. 
  5. Ready, set, mine!: Carefully follow the instructions included on your hardware of choice and start mining! Remember to store your rewards in a secure wallet, also regularly monitor the performance of your mining rig and the price of Dash to ensure that you make a profit out of it.

Cloud mining service

Getting access to the latest mining rigs seems very expensive, especially acquiring and then maintaining the rigs. But to avoid all of the hassles but still getting to use the newest hardware for mining, cloud mining is the choice. Providers such as EOBOT, HashFlare, or Genesis Mining allow you to lease Dash mining rigs for a set period. 

Leasing the mining rigs is far cheaper than buying them. Although, this also means that you will be avoiding the hassles that come with giving maintenance to these devices and the electricity cost that comes with them. Nonetheless, these services come with some downsides, like depending on them to deliver, surrender a level of control to the service that you chose, or getting scammed. That is why you always have to research the service that you are hiring. 

The cloud mining pool’s reputation is something you must certainly consider. For how long has the cloud pool been operating? Does it have a reputable operation? This does not necessarily mean that newer options are not reliable; you just need to study your options carefully.

To start mining on a cloud service, you’ll need to follow all of the following steps:

  1. Create a Dash wallet: Before you start mining, you’ll have to set up a private wallet where you can securely store your DASH. You’ll need to research the different options and chose the one that suits you the most; luckily for you, we have a guide where discuss the different Dash wallets.
  2. Choose your preferred cloud mining company: Do your research to find out what services are available and what benefits they offer. Remember that cloud mining scams are a genuine risk, so it’s essential to make sure you’re dealing with a reputable provider.
  3. Select a mining package: Take a look at the mining contracts on offer from your chosen company. How much do they cost? For how long will it run? What mining equipment will be used? What sort of payout can you expect? Is it possible to customize a package that better suits your requirements?
  4. Choose your preferred mining pool: After selecting a mining package, sometimes you’ll be asked to choose a mining pool. As previously stated, you must take into consideration a series of variables and characteristics for selecting your preferred mining pool. 
  5. Ready, set, mine!: Now that you are mining, just make sure that you are securing your assets in a secure wallet.