What Is Decred (DCR)?

Decred (DCR) is a blockchain-powered cryptocurrency platform that aims to establish decentralized governance and community-based decision-making. Initially released on February 6, 2016, the Decred protocol adopted a hybrid proof-of-work (PoW) and proof-of-stake (PoS)-based consensus algorithm (in 2017).

Decred is a deflationary cryptoasset – as the maximum supply of DCR coins has been algorithmically capped at 21 million. According to its developers, the Decred platform has been created to solve issues related to mining centralization on the Bitcoin network.

Solving Problems Related to Mining Centralization

While many Bitcoin supporters such as Andreas Antonopoulos claim that the BTC blockchain is sufficiently decentralized, Decred’s creators have argued that bitcoin mining process has become centralized. 

The Decred team has noted that bitcoin mining activity has consolidated to a relatively small number of groups that can afford to cover the operational costs because their mining facilities may be located in areas that provide low-cost electricity. 

As pointed out by Decred’s developers and several other crypto industry participants, there are a select few mining groups that may be holding large amounts of bitcoin. These small groups could potentially control “the supply and demand of bitcoin”, according to Decred’s development team.

Establishing New “Decentralization Goals”

In order to address this “fundamental” problem in the Bitcoin protocol, Decred’s creators have decided to revise the cryptocurrency’s “decentralization goals.” In addition, the developers of Decred aim to develop a platform that will allow “easy convertibility” between two different currency types.

Decred’s platform will also feature “incremental” privacy and security, meaning that changes will be made to the crypto’s protocol after considering the “complexity” of various implementations. Moreover, the security of the digital asset platform will be maintained in a proactive manner and “on-demand” (in response to actual attacks on the network).

Decred Constitution: Continue to Improve Platform’s Governance Model

As mentioned in Decred’s constitution, the cryptocurrency’s community remains focused on making continuous improvements to the platform’s governance model. The Decred team also intends to create a decentralized digital asset exchange (DEX) that allows users to conduct atomic swaps.

Enabling atomic swaps on a DEX could eliminate or substantially reduce the costs associated with trading cryptoassets that belong to different blockchains. This, according Decred’s developers, who note that Decred’s network may be suitable for investors that prefer greater “autonomy.” This, as traders may conduct fast and secure peer-to-peer (P2P) transactions using Decred’s native DCR coins.

Decred Project Aims to Promote “Financial Independence”

As a community-backed project, DCR coins may be mined in several different ways – including cloud mining. Notably, Decred’s new mining algorithm allows users to profitably mine the crypto using ASICs. 

Decred’s community members come from a wide range of technical and business-related backgrounds – including application developers, experienced traders, and research analysts. As one of the leading crypto platforms – with a market cap of $350 million (at the time of writing) – one of Decred’s main goals is to allow investors to become financially independent.

Decred Developers Aim to Create a Scalable and Decentralized Platform

As explained, Decred’s platform has been created to resolve the problem of miner centralization that may affect existing PoW-based cryptocurrencies. Additionally, the Decred team intends to address the blockchain scalability problem – as major cryptos such as Bitcoin can only (currently) handle an average of 3.75 transactions per second (TPS).

DCR, Decred’s native cryptoasset, has been developed to primarily function as a medium-of-exchange (MoE). Due to the extreme price fluctuations of cryptoassets, DCR coins might not be a reliable MoE or store-of-value (SoV).

DCR Coins Traded As High As $122 During Bull Market in 2017

When DCR coins were first introduced, they were trading at around $0.95. During the crypto bull market of late 2017 and early 2018, the price of DCR coins skyrocketed to $122. In mid-December 2018, DCR coins were only worth around $15, however the crypto’s price has now recovered to around $34.

On October 23, 2018, Binance, the world’s largest crypto exchange in terms of trading volume, began listing the DCR coin. Other major digital assets exchanges such as OKEx, Polonier, Upbit, Bittrex, and Huobi also support DCR coins.

“Met with Hostility and Resistance”

In an interview conducted in late September 2018, Marco Peereboom, the Chief Technical Officer (CTO) of Company 0, a company focused on improving the Decred protocol, explained that he began learning about bitcoin and other cryptocurrencies in 2011. 

Peereboom also revealed that he had previously worked on one of the first releases of the Bitcoin Core client. While contributing to the cryptocurrency’s codebase, Peereboom claims he was “met with hostility and resistance.” This, as he argued that certain Bitcoin Core developers were not receptive to new ideas.

Bitcoin (BTC) Miners Have Too Much Power

The former Senior Architect at Dell Computers believes the Bitcoin (BTC) community suffers from a “severe lack of governance” as they’ve made “a whole bunch” of “poor decisions.” Notably, Peereboom also thinks that bitcoin miners have a lot of control and power as they have write access to the BTC ledger. 

In order to create a more balanced crypto network, there should be “a mechanism to override” what miners may write to the blockchain, Peereboom suggested.

Maintaining the Integrity of the Decred Blockchain

As noted by the Company 0 CTO, DCR stakeholders can override what has been logged on the Decred blockchain by exercising their “veto rights.” In the event that miners engage in malicious or dishonest behavior, DCR holders may use their veto power to take actions which would help maintain the integrity of the Decred blockchain.

The Decred protocol also ensures that miners do not earn rewards for generating new blocks if they have engaged in malicious activities.

Purchasing Tickets to Vote on Governance-related Matters

In order to vote on the Decred platform, users may purchase tickets for around 9 DCR coins (prices are subject to change). Users may purchase up to twenty additional tickets for every new block mined on the Decred network.

Decred’s ticket pool contains a large number of unused tickets, which are used in random drawings each time a new block is produced on the crypto network. Five tickets are drawn randomly after a block is mined, and all new tickets are counted towards Decred’s decentralized voting process. One of the main objectives of voting in this manner is to ensure that miners are acting honestly.

“Ceding Control Over Accumulated Project Subsidy” Worth $23 Million

All voting is performed on-chain and all Decred ticket holders may vote on governance-related matters. Votes submitted by Decred’s community members are registered on the platform’s blockchain. Full-nodes on the Decred network can then verify that all users are abiding by the rules specified in Decred’s governance protocol.

In mid-October 2018, Decred’s developers released Politeia, the cryptocurrency’s updated proposal system. The new proposal involved “ceding control over the accumulated project subsidy” by Decred’s development organization. The total subsidy amount was valued at around $23 million (570,000 DCR coins).