The name of the Dash coin algorithm is X11 and it’s a modified proof of stake algorithm (in contrast to bitcoin’s proof of work algorithm) that underpins this cryptocurrency and enables it to guarantee anonymous transactions and faster payment. These are the advantages that it offers over the likes of bitcoin: privacy and speed. Dash coin also depends on a technology called CryptoNote which features in several other digital currencies.
The Dash coin algorithm is not the only difference with Bitcoin. Bitcoin uses a single-layer system where miners do all of the work finding the currency, but Dash coin takes a two-layer approach. Miners look after system work like producing new coins, and now the first level. In the second level sit the master nodes. They are responsible for the InstantSend and PrivateSend options, and certain other administrative functions. It’s only possible to run a master node by acquiring 1000 dash coins, and this is seen as a bond or guarantee.
The Dash coin algorithm helps to ensure that the rewards for being a master node and for mining are distributed appropriately. A master node always gets 45% of the total reward that’s paid for mining DASH coin, and the same amount goes to the miner. The other 10% is set aside to fund further network improvements.