Decred: A Comprehensive Guide to the Hybrid Cryptocurrency for Decentralized Governance

Decred: Everything You Need to Know

Decred DCR is a cryptocurrency that aims to create a more decentralized and democratic platform for blockchain governance, mining, and development. Decred was launched in February 2016 by former Bitcoin developers who wanted to address some of the issues they saw in the Bitcoin protocol, such as the centralization of power among a few large mining companies, the lack of stakeholder participation in decision making, and the difficulty of implementing changes and improvements to the network.

Decred stands for “decentralized credit” and its name reflects its vision of creating a cryptocurrency that is owned and controlled by its users, rather than by a centralized authority or entity. Decred uses a hybrid consensus mechanism that combines proof-of-work (PoW) and proof-of-stake (PoS) models, allowing both miners and coin holders to have a say in the direction and future of the project. Decred also has a dedicated voting platform called Politeia, where users can submit proposals, vote on them, and discuss them with other members of the community.

How does Decred DCR work?

Decred DCR works on a platform that focuses on three key aspects: governance, mining, and funding. Each of these aspects is designed to ensure that Decred remains decentralized, democratic, and sustainable.

Governance

Decred’s governance system is based on the principle of “skin in the game”, meaning that users who have invested in the project have more influence and responsibility in shaping its future. Decred uses a ticket-based voting system, where users can buy tickets with their DCR coins to participate in the PoS consensus mechanism. Each ticket represents one vote and can be used to approve or reject changes to the protocol, such as hard forks, upgrades, or new features.

Tickets are mined as part of the blocks on the blockchain, and each block can contain up to 20 tickets. Once a ticket is mined, it has to wait for a random period of time before it is selected to vote. The average waiting time is 28 days, but it can vary from 1 day to 14 days. When a ticket is selected to vote, it has to do so within 256 blocks, otherwise it expires and loses its voting power. A ticket that votes successfully receives a reward of 6% of the block reward, plus the original ticket price. A ticket that expires or misses its vote receives only the original ticket price back

Decred’s voting system allows users to have a direct say in the development and direction of the project, as well as to prevent unwanted or controversial changes from being implemented without consensus. For example, in 2017, Decred was one of the first cryptocurrencies to activate Segregated Witness (SegWit), a scaling solution that increases the block size limit and improves transaction efficiency. SegWit was activated on Decred with 98.6% approval from ticket holders, while on Bitcoin it faced a lot of opposition and delays from miners and other stakeholders.

Mining

Decred’s mining system is based on a hybrid PoW/PoS consensus mechanism, which combines the strengths of both models and balances the power between miners and coin holders. Decred uses PoW to generate new blocks on the blockchain, but miners receive only 60% of the block reward. The remaining 40% is split between PoS voters (30%) and the Decred Treasury (10%). This way, miners are incentivized to follow the will of the coin holders, as they need their votes to validate their blocks and receive their full reward.

Decred uses a modified version of Bitcoin’s PoW algorithm, called BLAKE-256. This algorithm is designed to be more resistant to ASIC mining, which is a type of specialized hardware that can mine faster and more efficiently than regular computers. ASIC mining can lead to centralization and domination of the network by a few large mining companies or pools. By making ASIC mining less profitable, Decred aims to encourage more diversity and decentralization among its miners.

Funding

Decred’s funding system is based on a self-sustaining model, where 10% of each block reward goes to the Decred Treasury, a fund that is used to pay for the development and maintenance of the project. The Decred Treasury is controlled by the coin holders, who can vote on how to allocate the funds through Politeia proposals. Anyone can submit a proposal to request funding for a specific task or project related to Decred, such as software development, marketing, research, or community building. The proposals are then reviewed and voted on by the ticket holders, who decide whether to approve or reject them.

The Decred Treasury ensures that Decred has a reliable and independent source of funding, without relying on external donations, sponsorships, or pre-mines. It also ensures that the funding is transparent and accountable, as all the transactions and proposals are recorded on the blockchain and visible to everyone. The Decred Treasury allows Decred to support its own growth and innovation, as well as to reward its contributors and collaborators.

Who is the team behind Decred DCR?

Decred DCR was created by a team of former Bitcoin developers, who were dissatisfied with the way Bitcoin was governed and developed. The team was led by Jake Yocom-Piatt, the project leader and co-founder of Company 0, a software development company that specializes in cryptocurrency and blockchain technology. Other notable members of the team include Dave Collins, the lead developer and co-founder of Company 0, Marco Peereboom, the new systems development lead and co-founder of Company 0, and Jonathan Zeppettini, the international operations lead and co-founder of Decred Holdings Group.

Decred DCR is not owned or controlled by any single entity or organization, but rather by its community of users, developers, and contributors. Decred has a decentralized and open-source development model, where anyone can join and participate in the project. Decred has a diverse and global community, with over 100 contributors from more than 10 countries working on various aspects of the project, such as software development, design, research, marketing, support, and outreach.

What are the use cases for Decred DCR?

Decred DCR is a cryptocurrency that can be used for various purposes, such as:

Store of value: Decred DCR can be used as a digital asset that can store and transfer value across time and space. Decred has a limited supply of 21 million coins, which makes it scarce and resistant to inflation. Decred also has a low inflation rate, which decreases over time as the block reward reduces. Decred also has a high security level, as it uses a hybrid consensus mechanism that makes it more resilient to attacks and forks.

Medium of exchange: Decred DCR can be used as a digital currency that can facilitate fast and cheap transactions across borders and platforms. Decred has a high scalability level, as it uses SegWit to increase its block size limit and improve its transaction efficiency. Decred also has a high interoperability level, as it supports atomic swaps, which allow users to exchange DCR with other cryptocurrencies without intermediaries or fees.

Governance token: Decred DCR can be used as a governance token that can grant users voting rights and influence over the direction and future of the project. Decred has a high decentralization level, as it uses a ticket-based voting system that empowers coin holders to have a direct say in the development and decision making of the project. Decred also has a high innovation level, as it uses Politeia to enable users to submit proposals, vote on them, and discuss them with other members of the community.

Conclusion

Decred DCR is a cryptocurrency that aims to create a more decentralized and democratic platform for blockchain governance, mining, and development. Decred combines PoW and PoS consensus models, allowing both miners and coin holders to have a say in the direction and future of the project. Decred also has a dedicated voting platform called Politeia, where users can submit proposals, vote on them, and discuss them with other members of the community. Decred also has a self-sustaining funding model, where 10% of each block reward goes to the Decred Treasury, a fund that is used to pay for the development and maintenance of the project. Decred is not owned or controlled by any single entity or organization, but rather by its community of users, developers, and contributors. Decred can be used for various purposes, such as store of value, medium of exchange, and governance token.