What Is Decred?
Decred (DCR) is a cryptocurrency that makes decentralized governance and decision making on the blockchain a priority. The goal of Decred is to have a cryptocurrency that runs autonomously but with miners and currency holders voting on and enacting improvements. Decred has certain characteristics derived from the Bitcoin protocol that it is based on to help achieve its decentralization goals.
On February 8, 2016, Decred launched its mainnet, with reviews among crypto enthusiasts being mixed. Some considered Decred to be everything Bitcoin was supposed to be from the beginning. It was seen by many as the pinnacle of decentralization and democratic decision making for peer-to-peer networks, enabling it to respond quickly to attacks and requests from the community for new features.
What Are the Problems That Decred Solves?
Decred’s developers are early Bitcoin adopters who spotted inefficiencies in the way Bitcoin operates. With growing mining operations, Bitcoin has centralized its decision-making process, with the big mining companies holding greater power over the Bitcoin improvement process. Also, while some improvements to Bitcoin can be implemented through a soft fork, virtually all improvements that involve a substantial change to the Bitcoin software require a hard fork from the old blockchain.
A fork, however, has to be agreed on by the community before it can be carried out. So Decred is targeting reduction and elimination of hard forks, especially the ones that are capable of dividing the community. While a hard fork can be carried out on Decred, Decred’s voting protocol ensures that any change being made is voted on first by users before activation. It can then go live if and when the vote passes.
Hybrid Proof of Work & Proof of Stake
The voting protocol on Decred is accomplished on the blockchain through a hybrid design that combines a proof of work and proof of stake protocol. In the hybrid system, each block must be mined at the perfect time and have at least three verifiers to ratify it. The hybrid system reduces the weaknesses of proof of stake individually.
Anyone who owns DCR can partake in the proof of stake system. With your DCR, you can buy tickets that let you participate in the proof of stake system. Your ticket will be included as part of a block by a miner, and since there are only 20 tickets in each block, you may have to wait or alternatively pay a fee to speed up the process. Upon completion of mining, your ticket becomes “immature” and is held outside the lottery pool until 256 blocks have passed.
Once that is done, the ticket enters the pool, waiting to be chosen. Decred is designed to afford a 50% chance of being chosen in the next 28 days and over 99.5% chance of being chosen before a ticket expires (usually 4 months). Once chosen, you will help to validate a block and receive the ticket price plus a staking reward for participating.
The staking process encourages long-term investment in the Decred project because DCR will be tied up in the system for some time while you stake. Thankfully, unlike other proof of stake systems, there is no need to keep your computer on throughout the time your ticket is in the pool. Rather, you can join a staking pool that will vote on your behalf if your ticket is chosen and will return dividends to you.
Decred competes with traditional cryptos like Bitcoin and Litecoin. In addition to these, it also competes with other projects that have a decentralized governance focus. One example of a governance-focused crypto is Aragon. However, the main focus within the Decred community is about the project becoming the defacto currency, whereas Aragon is centered around decentralized autonomous organizations (DAOs).
In an already volatile cryptocurrency market, DCR’s price has even been more volatile than normal. After its launch in February 2016, the price began to fall in BTC and USD value over the year. The price, however, began to rise in early 2017, reaching an all-time BTC high of ~0.0178 BTC. In that six-month period, DCR rose 38x in BTC and 95x in USD. It is still not clear what may have been responsible for such a dramatic price increase.
After that impressive run, the price started to fall again all the way to the great bull run in late 2017/early 2018. Within that period, DCR reached an all-time USD price of over $120. During the 2018 bear market, the downward trend with DCR stopped in April/May and almost reached previous highs once more. There were no noticeable happenings that coincide with this price movement. The price has fallen steadily since then and currently sits at around $16.50 (~0.00463 BTC).
Where can DCR be Bought?
DCR can be bought and traded on exchanges like Binance and Bittrex. It can also be bought on UPbit in a trading pair with KRW.
Where to Store DCR
The Decred team released the Decrediton wallet to store DCR. Decrediton is a graphical UI, so using it is easier than with a Command Line Interface and it is compatible with Windows, Mac and Linux operating systems. It is possible to stake coins through this wallet. Other third-party options for storing DCR include Coinomi, Exodus and Atomic.
Hardware wallets are, as always, a great choice if you are particular about security. The Ledger products support DCR and Trezor is set to integrate Decrediton in the near future.
The community is Decred’s largest strength. The development team is made up largely of former developers from major crypto projects, most notable of which is the developers of btcsuite, a Bitcoin version written in the Go programming language. The open-source code for Btcsuite has been used for other projects as well.
It is hoped that the Decred team can build additional features that will make the project more useful to community members. This will encourage a more widespread adoption of Decred as good decisions are driven by good governance. If the Decred community fails to organize or engage to speed up developments, it risks being overtaken quickly by new and exciting cryptocurrencies with innovative, out-of-the-box features that crypto-enthusiasts and users will take to.