Hey guys :) I’m back once again with yet another comprehensive list of questions and answers; this time for the promising Bitcoin-like governance cryptocurrency – Decred (DCR).
In the following article, I lay everything out on the line so that you can fundamentally understand what Decred is and what sets it apart from Bitcoin and other governance-focused cryptocurrencies.
I hope you enjoy it.
Oh, and if you haven’t already seen my latest articles on Dash (DASH), Zcash (ZEC), and Cardano (ADA), be sure to check those out as well.
The list of Q&A is pretty long so first comes the list of questions that I have prepared the answers to:
- What is Decred?
- Who and When Created Decred?
- How is Decred different than Bitcoin?
- Can You Mine Decred?
- How to Stake Decred?
- Is Decred Anonymous?
- Does Decred Have an Explorer?
- Where to Store Decred?
- Where to Buy & Sell Decred?
1. What is Decred?
Decred website homepage
Decred (short for Decentralised Credit) is a decentralized, autonomous digital currency that places emphasis on on-chain governance, development funding, and consensus mechanisms.
The Decred (DCR) cryptocurrency is touted as a sort of “Bitcoin 2.0” as it has adopted many of the same principles and successful features as Bitcoin, and coupled them with ‘improved’ governance, a self-funding treasury system, and modular codebase.
Decred intends on improving upon Bitcoin’s shortfalls including:
- Centralization constituencies of Bitcoin Core development and Proof-of-Work miners who veto changes to the consensus rules.
- Absence of a clear method for making decisions, leading to unwanted chain splits (hard forks).
- Funding problem, which has been addressed with venture capital investment, bringing with it conflicts of interest.
Decred addresses the above-mentioned shortcomings in hopes to become a better, community-directed, superior store of value cryptocurrency.
Important Decred Attributes:
- Secure
- Adaptable
- Sustainable
Secure
Decred takes an innovative approach to securing its blockchain by employing a hybrid Proof-of-Work/Proof-of-Stake system that layers security to bring the best of both worlds to one blockchain. In Decred’s hybrid security solution, its layered consensus mechanism makes it orders of magnitude more expensive to attack than pure Proof-of-Work or pure Proof-of-Stake blockchains.
Adaptable
Decred’s claim to fame is its built-in governance systems that empower its community of stakeholders with formal voting rights to make consensus changes and manage project-level decisions. Decred’s governance systems make it adaptable and offer's complete autonomy to its stakeholders, allowing Decred to evolve and incorporate new technology over the long run.
Decred (DCR) holders can vote on and contribute to the following decisions through PoS voting by time-locking (staking):
- Consensus rule changes (on-chain)
- Validation of PoW miners’ work
- Treasury project funding (developer work, communications, events, research, etc.)
- Policy (constitutional amendments, procedures, standards, etc.)
Sustainable
Decred is a self-funding cryptocurrency project that continuously funds its treasury with 10% of each block reward. This is an ongoing solution that will continuously fund Decred for generations to come. Coupling Decred’s self-funding treasury is a flexible contractor model that allows contributors to receive compensation for their work. This makes Decred a sustainable and self-funded Decentralized Autonomous Organization (DAO).
2. Who and When Created Decred?
Decred founder, Jake Yocom-Piatt
Decred (DCR) was founded and conceived by Jake Yocom-Piatt in 2013 and was later launched by himself and Company 0 in February 2016.
Prior to founding Decred, Jake was a huge proponent for Bitcoin and worked closely on its development and contributed to the Bitcoin ecosystem for 2.5 years. His latest development for Bitcoin was a Bitcoin full node implementation called btcsuite, which was not well received by the Bitcoin Core development team.
After some less-than-pleasant interactions with Bitcoin Core developers, Jake decided to create from scratch an implementation of Bitcoin that would offer an alternative to the Bitcoin Core monoculture.
He and his company, Company 0, launched Decred with its mainnet going live on February 8, 2016.
The Evolution of Decred
Decred launched without any initial coin offering (ICO) or venture capital (VC) funding, it was entirely self-funded by Company 0 for 2 years.
However, Decred did launch with a premine equating to 8% of the maximum DCR supply. The maximum supply of Decred is the same as Bitcoin, 21 million. Therefore, the Decred premine of 8% saw that 1,680,000 DCR was minted into circulation upon launch.
Out of this amount, 4% was used to compensate the developers (at a rate of $0.49 per DCR), and 4% was air-dropped to 2,972 people who signed up (each received 282.63795424 DCR).
Following the premine and Decred’s launch, DCR was mined with conventional Proof-of-Work (PoW) using the BLAKE-256 hash algorithm. However, early on Decred’s development, the project focused on implementing the process to amend the consensus rules.
As a result of this focus, in April 2017, Decred 1.0.0 launched with the hybrid proof-of-work/proof-of-stake consensus mechanism. Then, just two months later, Decred became the first cryptocurrency to undergo an upgrade that was deployed automatically following a user voting approval process.
Now to this day, Decred has established itself as an open and progressive cryptocurrency with a decentralized system of community-based governance integrated into its blockchain.
3. How is Decred different than Bitcoin?
Bitcoin logo
The main differences between Decred and Bitcoin are:
- Consensus Mechanism - PoS+PoW vs PoW
- Governance System - Built-in on-chain governance vs No governance
- Funding Method - Self-funding treasury system with DAO vs Donations and VC funding
- Hashing Algorithm & Block Reward - BLAKE-256 vs SHA-256
Consensus Mechanism
Decred employs an innovative hybrid PoW+PoS model that aligns incentives between miners and voters. In this system, Both miners and token holders have a direct say in the progression of the project. 60% of newly generated tokens go to the PoW miners, 30% to PoS voters, and 10% towards a development subsidy.
Bitcoin, on the other hand, employs a PoW model where 100% of the block reward goes to miners, leading them to have a lot of say in the project’s direction.
Governance System
Decred has a built-in formalized governance system that enables everyone to contribute thoughts and ideas and make formal decisions through PoS voting. This system enables Decred to adapt, upgrade, and make changes while avoiding hard forks.
Bitcoin does not have a built-in governance system and is therefore fairly resistant to changes and upgrades unless they are absolutely necessary. This is largely why Bitcoin has undergone many hard forks, which disrupt and divide the community, and is why Decred was created in the first place.
Funding Method
Decred has a self-funding treasury system in which 10% of each block reward is continuously allocated to the Decred treasury to fund development, marketing, events, research, and more. Usage of treasury funds is decided by stakeholders who vote on budgets, policies, and the direction of the project as a Decentralized Autonomous Organization (DAO).
Bitcoin does not have a self-funding treasury system. Instead, 100% of the block rewards go to miners, and Bitcoin’s development is done by passionate developers who either work for free, are funded through donations, or are funded by Bitcoin-related companies.
Hashing Algorithm & Block Reward
Decred uses the BLAKE-256 hash algorithm in which blocks are discovered by miners roughly every 5 minutes. Decred's block reward started at 31.19582664 DCR and it adjusts every 6,144 blocks (approximately 21.33 days) by reducing by a factor of 100/10.
Bitcoin uses the SHA-256 hash algorithm in which blocks are discovered by miners roughly every 10 minutes. Bitcoin’s block reward started at 50 and adjusts after every 210,000 blocks are mined (approximately every 4 years), where the block reward then halves.
4. Can You Mine Decred?
ASIC miner
Yes, you can mine Decred (DCR) because it is a hybrid PoW-PoS blockchain, which means you can both mine and stake DCR. When a block is mined, miners receive 60% of the newly generated DCR tokens; the remaining 30% goes to PoS voters and 10% towards the treasury.
Decred uses the BLAKE-256 hashing algorithm to mine and validate blocks on the Decred blockchain. This hashing algorithm can be done using GPUs, which was primarily used when Decred first launched. However, since then, ASICs have been developed to mine Decred and mining with a computer’s GPU is no longer profitable.
That said, there are two ways to mining Decred (DCR); solo mining and pool mining.
Solo Mining DCR
Solo mining requires the use of ASIC miners to be profitable and is therefore only recommended for advanced crypto miners. Also, Decred’s network hash rate is regularly up to 10,000Gh/s, making solo mining very competitive and should only be tackled by those with advanced mining hardware.
Pool Mining
Pool mining allows Decred miners to pool their hashing power together and share the block rewards. With pool mining, you can contribute your computer's GPU hashing power to the pool and receive a reward based on the amount of work your miner performs in the pool. Also, pool mining returns a more steady amount of Decred rather than the “all or none” of solo mining.
5. How to Stake Decred?
There are two ways to stake Decred (DCR):
- Solo Staking
- Staking using a VSP (Stakepools)
To participate in Decred’s PoS voting, stakeholders simply stake (lockup) some DCR in return for a ticket. Each ticket gives its holder the ability to cast a single vote. Upon voting, each ticket returns a small reward plus the original ticket price of the ticket. The average time it takes a ticket to vote is 28 days, but could take up to 142 days. In other words, this is the amount of time DCR stakers are required to stake to receive a reward.
There are various other stipulations and details regarding Decred staking, but if you are interested in staking DCR, there are two ways:
Solo Staking (Solo PoS Voting)
Solo staking is generally done by more advanced users as it requires your Decred wallet to be up and running 24/7. Currently, solo PoS staking is only possible using the Decred command-line tools using the CLI wallet dcrwallet.
VSP Staking (Staking with Voting Service Providers)
Staking with VSPs are for users who are unable to keep a personal voting wallet online. A list of Voting Service Providers (VSPs) can be found on the Decred.org website. Using a VSP is completely safe as you can delegate your vote to a VSP’s always-online wallet without ever giving the VSP access to your funds.
To participate in VSP voting, you must use one of these wallets:
6. Is Decred Anonymous?
No, Decred is not anonymous.
Like Bitcoin, Decred is pseudonymous. Your identity is not tied to your Decred wallet address but all transactions are broadcasted to the public Decred blockchain and are available for the whole world to see. It is possible for other peers on the network to trace transactions back to you. However, since Decred is pseudonymous, your identity can remain unknown as it is not tied to your Decred address.
Although it is possible for peers to deduce your identity by conducting an on-chain analysis of whom you’ve transacted with. For instance, if you send Decred to a cryptocurrency exchange with know-your-customer (KYC) information, your identity can be traced back to your Decred wallet address.
However, there are some methods for increasing Decred privacy including:
- Use Tor and a VPN service when broadcasting your transaction.
- Use a newly generated address for every single transaction.
- Do not use exchanges that require KYC information.
- Avoid leaving identifiers in public places (ie. leaving your phone or computer unlocked, leaving a printed QR code somewhere, etc.)
- Use the lightning network for privacy (on-chain analysis doesn’t work on second-layer solutions such as lightning).
This is why it’s important to consider using the above-mentioned methods to increase your privacy when using Decred.
7. Does Decred Have an Explorer?
Decred Block Explorer
Yes, Decred has an official block explorer called the Decred Block Explorer.
The Decred Block Explorer is extremely detailed and features the following search functions:
- Blocks
- (height, transactions, votes, tickets, revocations, DCR, size, version, age, time)
- Mempool
- (votes, tickets, revokes, transactions)
- Ticket Pool Visualization
- (ticket purchase distribution, ticket price distribution)
- Charts
- (ticket price, ticket pool size, ticket pool value, stake participation, block size, blockchain size, transaction count, PoW difficulty, circulation, fees, privacy participation, duration between blocks, total work, hashrate, missed votes)
- Agendas
- Proposals
- (author, vote status, vote count, time)
- Markets
- Attack Cost
- (PoW attack, PoS attack)
- Parameters for Decred Mainnet
- (chain parameters, subsidy parameters, stake parameters, rule change parameters, address parameters)
- Treasury
- (balance, received, spent, transactions)
- Decred transaction to decode or broadcast
- Testnet
8. Where to Store Decred?
Decred (DCR) is a popular and well-established cryptocurrency with a wide selection of reputable cryptocurrency wallets to choose from.
However, not every DCR wallet is the same. The only wallets that support Decred staking and governance are Decred’s core software wallets.
Decred Core Software Wallets w/ Governance & Staking:
- Decredition (Desktop)
- Mobile Decred Wallet (iOS & Android)
- Command-line app suite (Desktop)
3rd-Party DCR Wallets listed on Decred.org:
- Exodus (desktop, mobile)
- Coinomi (mobile)
- Ownbit (mobile)
- AnyBit (mobile)
- Atomic (desktop, mobile)
- Guarda (desktop, mobile, web)
- Ledger (hardware)
- Evercoin (mobile)
- Trust Wallet (mobile)
The above-listed wallets are all listed on the official Decred website, but there are still various other cryptocurrency wallets that also support Decred not listed here.
9. Where to Buy & Sell Decred?
Decred (DCR) can be bought and sold on a peer-to-peer (P2P) basis but the most popular way to buy, sell, or trade Decred is through cryptocurrency exchanges.
You can buy DCR with cryptocurrency or fiat at the following top exchanges. In most cases, you will have to fund your account with fiat, buy Bitcoin or Ethereum, and then use BTC or ETH to buy Decred (symbol DCR).
- Binance - BTC
- Kucoin - BTC, ETH
- Bittrex - BTC, USDT, USD
- Huobi Global - BTC, ETH, USDT, USD
- OKEx - BTC, ETH, USDT
In addition to the exchanges listed above, Decred (DCR) is also traded on a wide array of other exchanges and platforms that enable people to buy, sell, or trade cryptocurrencies.
Hope you enjoyed that read :) Let me know if I have missed something in the comments.
