Dash Crash- All Possible Scenarios
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Dash price has been unstable for several months in 2016 leading up to 2017. Its price had hanged under or just above the $10 mark. In January of last year, its price started to increase steadily to reach $20. But by March, its price went parabolic amidst the Bitcoin hard fork event doubts.
But the big questions are will Dash always be valuable or will Dash ever be worthless? Are we going to witness a Dash Crash in 2018? There are some speculations from experts regarding Dash’s future, both good and bad. On that note, let’s take a look at what are the possible scenarios that can make Dash crash.
6 Scenarios of Dash Crashing Due to Technical Issue
Mining network fails
Cryptocurrencies are an incredible gathering of technologies as well as being a social phenomenon that’s quite unique, to say the least. What keeps Dash secure and stable is its mining network. The network is designed to behave in complete equality in exchange for rewards. Once the mining network of Dash expands, it could lead to the following:
- Drive assumption through its mining hashpower.
- Critical pieces of the Dash blockchain puzzle will be exposed leading to a Dash fall.
During a hard fork, the Dash chain splits, making a possible scenario of each chain competing for mining hashpower. Because of consensus, any hard fork should be resolved. However, there’s a probability that a fork can cause a confidence crisis that will result in a Dash crash.
Mining network block reward/security level ratio decreases so much that it becomes unprofitable to mine
Will Dash crash in this scenario? Let’s say miners are not making a big profit, and Dash coin supply will be divided into two, so will the total of money they will allocate to Dash mining. Basically, what this means that when mining is no longer profitable to miners, they will stop the activity. So, if the block reward or security level ratio is not wildly decreasing, one can expect for the hashing power total to be divided by 2.
However, if some miners think that this fluctuation in hashing power could become a threat to the Dash network security, the value of Dash coin will have a significant change.
Can quantum computers destroy the dash network or infringe dash security?
In reality, quantum computing is still in its early stages of development and its commercial and reality viability to customers who are willing to shell out astronomical prices are still decades away. However, Dash and other cryptocurrencies use encryption. Every public and private key is created via an encrypted algorithm designed to be ridiculously challenging to solve. Quantum computers possess the abilities to solve these ridiculously difficult to solve algorithms, hence destroying the encryption concept. So, therefore, the rudiments behind Dash would be dissolved, paving the way to a Dash crash.
A soft fork issue occurs
A soft fork is when old nodes recognize new blocks as valid, therefore making a soft fork backward-compatible.
A soft fork could turn into the shortest chain, therefore the network could reject it when only a minority of the network’s hash power supports it.
- There’s also a possibility for it to act like a hard fork resulting in one chain being removed.
- It’s irreversible without hard forks.
- If a portion of the block is not certain to follow new rules, this block will be effective to old nodes which are not aware of the new rules, but the new nodes will overlook them.
- It can lead to a chain split or avoid a chain split.
A hard fork issue occurs
During a hard fork event, a blockchain splits which in turn divides it into two parts. When this happens, Dash coin holders can’t do anything but watch and wait for the fork to unfold itself. So what are the possible scenarios when this occurs?
- If a Dash coin splits into several cryptos, there’s a high probability for one or even both chains to lose a substantial amount of value.
- There’s a possibility of pausing withdrawals and deposits due to a blockchain split.
- Miners can lose money in case of replay attacks that tend to exploit the sudden formation of two chains.
- Having different Dash coin version will lead to user confusion.
- Hard forks were the result of the overwhelming minor arguments in the Dash community. Instead of agreeing, developers, the community, and code are breaking into different groups which will not sit well on Dash’s future, where bigger challenges that will require further codebase upgrades will be met.
Hackers with bots create a blockchain failure
Both Dash and blockchain are susceptible to hacking. Every mined Dash coin makes succeeding Dash coins more difficult to create. Running and cooling computers used for mining will take up a lot of electricity, which is the top operational cost to a Dash miner. Because of that, many Dash miners tend to use other resources to mine such as Dash bots mining malware.
Nowadays, most of the biggest Dash bots malware’s purpose is to mine Dash coins. Although it may seem that their intent is somewhat innocent, it’s still using unauthorized use of other’s device or computer. Any miner’s activity can be stopped like you’d do on any other malware program thus making it vulnerable to hacking.
11 Scenarios of Dash Bubble Bursting Due to Trading Issues
Dash trading bot
Using Dash trading bots when trading is risky. Every time you give your funds to a third-party to manage it for you, risks are there. Trading bots have been around for only a few years and the market using it is still illiquid and immature, thus the threats are higher that could lead to a Dash fail.
Additional dangers of Dash trading both include:
- Faulty software.
- Getting victimized by scammers.
- Big losses because of flash crashes.
Big Players Dump Big Amounts
Pump and dump have been around even before Dash. In the case of the digital coin, the price of Dash are artificially inflated by traders who are hoping to make a quick profit at the cost of other Dash investors. This manipulation is the reason why dash prices are falling.
Unintentional Dash trading bots
Dash trading bots are designed to generally do something with specific instructions.
- It will be able to provide all important resources for traders to be active and resourceful.
- It’s helping the industry of cryptocurrency thrive and be more competitive.
On the other hand, a flash crash occurs when orders withdrawals on the cryptocurrency market intensify price to drop rapidly.
Unintentional Dash trading bots will not result in a flash crash as they don’t follow the same rules. Therefore, there will be no change in the general trading pattern systematic. There may be some effect on the prices, but it will stabilize later on.
Trading comes with numerous risks. Coins can take a plunge unexpectedly just like last year when Dash price fall without warning. However, mining is not an exception either since you will see lesser returns the more people invest in mining.
It seems that both trading and mining will work best as long-term investments. In addition, if a person can afford both, it just makes sense to take advantage of both. In that way, one will be able to cover the other’s risk while still being exposed to the potential rewards from trading.
Speculative Bubble Burst (Keynes)
Will Dash prices go up or down? According to some analysis, Dash is primed for a speculative bubble burst. But the question on everybody’s mind is when. March 2017 was an exciting and big month for the crypto as it has seen a lot of marked successes.
- The Market Cap of Dash increased to over 50%.
- Dash even overtook a few coins to reach number 3 on CoinMarketCap.
So the question of whether or when will Dash crash, is something people are yet to see.
Short squeeze aftermath
A short squeeze refers to a rapid increase in a stock’s price resulting in short sellers wanting to out.
- Short sellers make money when prices drop since they have an option to cash in the difference between the reduced price of the stock and the stock’s price sold on margin.
- When prices go up, there’s a big possibility for the buyback cost to increase beyond the stock’s original selling price. The short sellers need to sell it quickly if they want to avoid bigger losses.
A long squeeze includes just a stock. This occurs when a sudden price drop prompts more selling and putting pressure on the stock’s long holders to sell their stocks in order to avoid further losses.
- In case of a long squeeze, value buyers will bid the backup shares once they see the price drop is thought to be too low.
- A stock falling rapidly will be deemed as value play.
- A stock rising rapidly will be deemed as high-risk.
A flash crash is a very fast, volatile and deep drop in security prices that occur within a very short time. It’s usually a result of combined black-box and high-frequency trading.
Will Dash fail during a flash crash? The cryptocurrency industry took a massive hit last year’s flash crash. Coins that can be used in the real-world and those with lesser speculative investment approaches was not heavily affected. Dash fared rather well compared to most of the digital coins because of the following reasons:
- Dash emphasizes more on the real-world use of its coins.
- The masternodes of the crypto as an investment means incentivized in contrast to selling.
Major crashes in exchanges in the past
Panics from increased imitation in the market lead to crashes. Here are the top 3 major exchange crashes in the past.
- The Chinese Stock Market Turbulence is the result of the stock market bubble popping which began in June 2015 and ended in February 2016.
- The Market Selloff 2015-2016, where the average of Dow Jones Industrial went down to 33 points and started to spiral down for a few days.
- Brexit in 2016. When the UK opted to leave the European Union, investors lost over $2 trillion dollars.
5 general Dash crashes of the past
Dash is created just like Bitcoin but features a more secure and faster network because of the use of upgraded technology. But even so, it has had its share of crashes in the past.
- At the start of 2018, the cryptocurrency market and not just Bitcoin crashed. This includes all altcoins such as Dash.
- When Bitcoin underwent downward price corrections was the reason why Dash price is falling in the past.
- How far will Dash go down was the question on everybody’s mind March of last year, when Dash price became unstable for a few months during a BTC hard fork uncertainty.
- Pump and dump by big players in 2017 was the main reason why Dash price drop significantly which ultimately led to its crash.
- News of South Korea banning cryptocurrency exchanges early this year was the culprit why Dash prices are going down. Will Dash price go back up? Well, we need to see some changes in the post-crash adjustment to see some higher price action from the altcoin.
5 scenarios of trading exchange fraud and international crashes
- Flash crash on Bitfinex exchange that hit ETP, NEO, and OMG due to customers’ claims that their orders were not correctly executed leading to thousands of dollars of losses.
- Mt. Gox Bitcoin exchange lost around 850,000 BTC of their customers. The causes are deemed to be mismanagement, fraud, theft or a combination of these.
- The fake cryptocurrency exchange BitKRK exchange, named after South Korea’s biggest financial trading platform KRK, persuaded its users into its platform through promoting their businesses as a legit and regulated which KRK created.
- Online exchanges which are unregulated charges extreme commissions and makes it difficult for users to withdraw money. There are some exchanges that will even steal your money.
- Because cryptocurrencies have high volatility, there are promoters of these digital assets promising traders they have a way to beat the system by arbitraging the costs amongst numerous exchanges.
5 Scenarios of Dash Value Decreasing Drastically Because of Imposed Government Regulation
China Bans Dash (Illegal)
We may see China ban Dash and other cryptocurrencies as its government is already blocking market access through its massive Great Firewall of China. Thus, we are seeing a fall in cryptocurrency prices today.
The mining process of Dash is equally difficult and requires a significant amount of resources and energy. China’s energy prices are cheaper giving its local miners a big advantage. But, the Chinese government’s crackdown on digital currency has raised a few worries that mining operations in the nation will be required to shut down, a development that will surely create a massive void in the mining world. The following scenarios could potentially emerge because of this:
- Because ICOs are illegal as well as other peer to peer activities, we might see local Chinese authorities seize equipment and infrastructure related to it. This will lead to some miners going underground in order to withstand activities in an event of such crackdown.
- We might also see China’s miners move to either Hong Kong or Mongolia due to these countries existing number of miners, they are notable alternatives. Nonetheless, Hong Kong’s electricity price is far more expensive than China’s. This may result in preventing certain miners from successfully re-domicile because of some projects’ scale of investment.
- There’s also the possibility for some well-known mining jurisdictions such as Georgia and India, to take advantage of the situation and increase their share in the market.
Will Dash price decrease when its accessibility in China end? It’s worth mentioning that the crypto has faced a few challenges in the past and managed to arise better and stronger. Mining can be banned anywhere, but its industry is always expected to regroup and recover from it within a short period of time.
USA Bans Dash
Will Dash always be valuable? Irrespective of how you feel about digital currencies, it’s a fact that they pose a serious threat to any fiat currency’s future. Following major US banks’ banning credit purchase of Bitcoin due to risks, it is highly probable for Dash to be banned in the country as well. Banning Dash and will have stern consequences on the market. There will be a significant drop in its use since becoming a criminal in order to purchase Dash, will not likely be a mainstream idea.
Sudden Tax Regulation
We could soon see Dash’s unregulated status come to a close as countries all over the world have started to crackdown with tax regulations. Will Dash prices go down because of this? Well, it seems that now more than ever, the moves to tax cryptocurrencies could hinder its further development according to experts. Tax authorities are becoming highly interested in this digital asset because of its implausible appreciation.
So what happens if miners make a loss under a regulated cryptocurrency?
- Simply put, even if your investments to Dash result in losses, you will still be required to file for a tax return.
- Even if you plan on giving your investment as a gift, you will still need to pay taxes.
- Thinking of paying your debt through your investment? Well, you still need to pay taxes before you transfer it to any creditor.
Enforced Money Monopoly
Dash works on the idea of the decentralized ledger. Unlike with banks with centralized ledgers that it brings up to date to exchange costs, cryptocurrencies like Dash give everyone in its network access to its ledger. This means that all transactions made will have far less resistance since there’s no need for ledgers to be exchanged between organizations. Although this comes with some benefits such as instant transactions, it destroys the stability of the Dash currency.
Will Dash go down in case of this scenario? How individuals assign a value to the currency is based on what they think fit. If plenty of people are selling, Dash value will increase because there’s a higher demand for it. But if many people are buying stuff, then Dash value will decrease since there’s less demand for it. This is the reason why many speculators believe that cryptocurrencies like Dash are returning to the gold standard of method exchange. Since crypto is held by every miner it’s quickly behaving just like a commodity and is no longer reflecting a central relative value.
All Dash Transactions Will Be Tracked
Cryptocurrencies are very popular because of the anonymity it brings about when it comes to using them in exchange for goods and services. However, the US Government, in particular, has requested to an investigation to the millions of personal data of cryptocurrency exchange users. They are worried that this digital asset is being utilized for tax evasion, money laundering, and drug dealing.
As Dash, Bitcoin, Ethereum, and all other cryptos become more mainstream, it is inevitable for more government to scrutinize it. With plans of crackdowns and regulating it, all traders will be required to involuntary divulge their identities along with it past and future transaction records. This could potentially lead to a Dash crash, as traders will lose trust on the network.
5 Scenarios of Dash Value Decreasing Drastically Because of Taxation Issues.
Capital Gain Tax Applies
Any investment in Dash is looked upon by the government just like with any investment in other fiat currency, share or stock would be. So for example, if an individual is generating profits by means of disposal of their Dash coin such as exchanging, selling or even gifting their assets, they will need to declare it to the government as a capital gains tax. There is absolutely no way to avoid this.
Property Tax Applies (digital property rights or profit as sort of royalties)
Dash technology allows people to own digital assets that are totally intangible. However, amidst the growing technology, there are concerns regarding the application of property rights laws that some say has little to no direction when it comes to how a digital asset is to be addressed. Furthermore, software is used by devices to enable transactions digitally are sometimes tied to user agreements that only a handful of consumers actually read. Often times, this leads to users not being aware of uncertainties that surround the property rights and ownership accompanying their digital assets.
VAT and other sale taxes on Dash transactions purchases are enforced
Countries like the United States, UK, Germany, Japan and Singapore just to name a few are already planning on implementing VAT or sales tax on underlying transactions purchases using cryptocurrencies. Each country has their own sets of guidelines in terms of how they classify a cryptocurrency. Here’s an example of how countries will apply VAT and other sales taxes:
- United States: Sales tax is more common in the US and it varies in every state. Although a state has yet to issue guidelines on the taxation of Dash, according to the Securities and Exchange Commission, a personal transaction that has an exchange rate gain of $200 or less, there will be no gains to be claimed.
- United Kingdom: The country classifies Dash and other cryptocurrencies as taxable vouchers, meaning VAT will be applied to all sales.
- China: The country with the biggest hashpower have not come up with any clear guidelines yet on how they will issue taxes on transaction purchases. But its central bank has issued bans on any transactions with Bitcoin for payment processors and banks.
Property Transfer Tax Applies and is Enforced or can be Enforced
Cryptocurrencies are considered by the United States IRS as a property and not as a currency, meaning if you own Dash coin, you may have to pay taxes on the profits you’ve gained as its value increases. If Dash loses value, there may be a deduction from the loss, just like with stocks.
Basically, the taxation system of the United States is based on what a person declares to be his losses, income, and assets. So, if you purchased a house worth $1million and declares your income for the year you purchased that was $30,000, red flags will be triggered and the US government will dispatch someone to look over your finances to see if you’re lying or covering up for something. But if you declare reasonable assets, income and losses, you will not get audited.
Trading Tax, Like Tobin Tax
Economists are puzzled by the volatility and rapid change in the prices of cryptocurrencies since there is no central reason governing the movements of their price. So in order for investors and traders have factors to consider in evaluating them, a Government regulation is being considered by many countries where Dash and other crypto trading is prevalent.
The lack of regulation in countries like China, helped it to become one of the first to adopt Bitcoin mining and trading. However, in early 2017, it made a drastic setback as Chinese government got worried by the massive capital getting out of the Country through Bitcoin trading. Because of this, China forced strict regulations on cryptocurrency trading.
Other Taxes Which Might Apply
Some transactions using cryptocurrency and their possible tax implications:
- Exchanging services or products using crypto as payment or as salary is treated just like an ordinary income at the coin’s fair market value during the time you receive it.
- Conversion of crypto to other currencies like US dollars at a gain is also a taxable event.
- Any airdrop is considered as an ordinary income during the time of the airdrop. The coin will use that value as its basis.
- Coins mined is also considered as an ordinary income equaling that of the fair market value of the coin during the time it was mined successfully.
Can ZCash gain popularity and make Dash obsolete?
Dash is influenced by the “CoinJoin” technique wherein a number of users put their resources into the same transaction so that the chances of their privacy will increase. Dash has been very successful in transaction anonymity.
Nevertheless, the technology of ZCash seems to give users a higher level of privacy. Their platform provides users the ability to remain anonymous. Since most cryptocurrencies use private keys, which includes codes that identify users. This leaves their transaction details vulnerable even to government authorities since it is probable for an address to attach to some transactions over time.
So if a private key attaches to some transactions, some parties might refuse to receive their funds. This is the perfect time for ZCash to come to the rescue.
Will Dash go down and become obsolete? Both cryptocurrencies are great on privacy, but Dash comes with very interesting features:
- Mining reward structure.
- Their Evolution product comes with a well-thought-out development plan.
Could Dash become the most popular cryptocurrency and cause a flippening and crash of other currencies?
Flippening refers to a likely event wherein Dash surpasses BTC to become and becomes the industry’s most valuable coin in terms of market capitalization. To date, there are more than a thousand cryptocurrencies available to mine and Dash has been on the list of the 10 most important crypto besides Bitcoin.
- Dash offers greater anonymity than Bitcoin.
- It’s on a network of decentralized master code making transactions virtually untraceable.
- The coin can be mined using GPU or CPU.
- Its technological features include InstantX and Darksend.
Could diehard Bitcoin community members spread the fake news to save their investment in Bitcoin when a flippening occurs?
It is possible. Bitcoin fanatics freaked out when Ethereum is about to take over Bitcoin as the world’s number one cryptocurrency. The mood on BTC forums at best was vigilantly optimistic and completely hopeless at worst.
We have also seen Bitcoin became the target of fake news such as BTC have high fees and it was falling when other cryptos were crashing down.
Could new blockchains such as the Zen network give crypto asset transfers the same properties as a Dash transfer?
- Zen aims to create a smart blockchain focusing more on finance.
- The platform is designed specifically for issuing tokens, giving it more power and options like the capability of paying network fees through its use rather than the use of a network’s native currency.
- It approaches issues on scalability elegantly as well as problems on contract runtime and management of resources, giving Zen the much-needed edge over its competitors.
What kind of flippening can occur? Could Ethereum become the most valuable cryptocurrency rather than Bitcoin or Dash?
Crypto fanatics dubbed the scenario where Ethereum overtakes Bitcoin to become the most valuable cryptocurrency as “The Flippening”. This has been abuzz in the community of digital currency since last year.
Although there are a lot of analysts who are very optimistic about the future of Ethereum and Dash, there are some expressing their concerns that the cryptocurrency’s bubble is about to burst. Nevertheless, the influence of both platforms could have across the globe is worth emphasizing as well.
Bitcoin could have the potential to transform the cryptocurrency universe, Ether’s influence could be more extensive because of how it utilizes smart contracts.
Could a crash of Zcash, Bitcoin and others lead to a crash of Dash?
All major exchanges offer trading of Bitcoin for altcoins instead of for USDT or fiat. With that said, since Bitcoin is the most popular coin for trading with altcoins, volume and market cap, it is the basis of the cryptocurrency market and thus comes with some stern gravity.
With this in mind, Bitcoin can lift up, suppress and even depress Dash and all other altcoins. Furthermore, a lot of bots trade in Bitcoin so when there are big changes to the popular coin, you can see a cascading effect on the economy of cryptocurrency.
10 Other Possibilities of Dash Losing Value
Fear of the total breakdown of the crypto market can lead to a massive sellout. Traders, as we’ve seen in the recent months, chose the move to sell. Will Dash prices go down? Yes, because what this does is further hurt the cryptocurrency economy since the downward pressure to the market is being added by more and more people.
Continental power outages
Dash and most cryptocurrencies rely on dependable power supplies. The Bitcoin alone uses power as much as the entire country of Bulgaria. Switch off the transformers and Dash and all other crypto has a problem.
The impact of Asian countries
One of the first to adopt the concept of crypto were Asian countries, and often this is the reason why some adverse news from the region leads to panic selling in other parts of the globe. With the recent turn of events, the market behavior of cryptocurrencies has been going on a downward spiral because of the current pressure from South Korea and China to regulate cryptocurrencies.
You can profit from ICOs, but they do remove the value of other markets. Another type of inflation is flooding the cryptocurrency markets with new tokens which weakens it. Exchanges can only offer so much liquidity and every coin vies for market share. When new crypto becomes a hot commodity, an apparent shift in the volume of trading is typical.
China stifling cryptocurrencies
You can find the largest community of miners in China and has played a major role in Bitcoin’s development. But the Chinese government is on a mission to shut down any cryptocurrency activity, from trading to banning ICOs.
- This move caused reshaping in the mining industry as well as drive costs up.
- The looming number of regulations has put a weight on cryptocurrencies, hence the reason why Dash prices are going down.
Countries like South Korea are on the hunt on money laundering activities and is scrutinizing some banks. The government is also considering the possibility of closing down crypto exchanges. The United States SEC has also begun clamping down on a number of sales from digital tokens last year.
Fraud and criminal activities in Russia
Since its beginning in the early 2000s, Russian criminals have been using digital currencies like e-gold to for border credit card fraud. The country’s Central Bank is interested using cryptocurrencies in order to regulate Russia’s bank system, which is known to be notoriously corrupt.
Can dash be hacked? The technology of blockchain is a haven for any hacker with access to massive botnets, which are computers that have been infected by a Trojan horse virus. This allows the hacker to remotely access and controls the machine used for mining. These botnets’ number can go as high as hundreds of thousands of machinery and are typically used to drive huge traffic that can result in websites crashing down.
Big players can paint a picture high transaction volume through selling and reselling back and forth on little margins in order to inflate the price of Dash. These whales do this to sell at the best possible price before encouraging a Dash crash via selling off massive amounts from their Dash stock.
The season not to be jolly
We saw a downhill slide on the value of cryptocurrencies at the end of 2017. December is that time of the year when most investors are more likely to cash in on their reward to cash. And conveniently just a day before Christmas, coins have experienced a major blow that made a great impact on its market behavior.
This is all you should take into account concerning dash crash. Thanks for reading this article, we hope this was helpful for you. Make sure to check out our website for more information about various cryptocurrencies. Until next time…