Investigating Decred: Everything A Keen Trader Wants To Know In 2024

This cryptocurrency guide covers the concept of Decred as a digital currency. We explain the brief history of the company and why the coin was created.

After reading this article, you’ll understand the intent behind Decred’s technological design. If you want to see how Decred compares to Bitcoin, see our head-to-head comparison of DCR vs. BTC.

Alternatively, if you already know about Decred as a cryptocurrency, see what cryptocurrency experts say about the coin and it’s blockchain.

Interested trading or buying Decred? Here are brokers and exchanges available in that offer Decred and other cryptocurrencies:

Disclaimer: Availability subject to regulations.
Between 74-89% of retail investor accounts lose money when trading CFDs.

What Is Decred?

Decred (DCR) is a cryptocurrency that was designed to provide a solution to the scalability problem that plagued Bitcoin.

The hard fork of Bitcoin and Bitcoin Cash was caused by a huge rift in the community and ended in bad blood.

Decred is designed to prevent this kind of rift from happening in the future by giving the community a vote on the future of the currency. It is decentralized and self-governing, so a hard fork cannot take place unless the majority of stakeholders agree to it.

This unique approach to the challenges posed by hard forks could help Decred carve a place for itself in an increasingly competitive cryptocurrency market.

Interesting Facts About Decred

• Decred was founded by company 0’s CEO, Jake Yocom-Piatt, and began trading on February 10, 2016, and the team contained many former bitcoin developers.
• Prior to the launch of Decred, there was a pre-mine that amounted to 8% of the total supply. 4% of this was held by company 0 to compensate developers. The remaining 4% was airdropped for free to new users.
• Rather than fund the coin through an ICO, the developers initially funded the project from their own pockets. They were able to either purchase DCR at a rate of $0.49 per coin or exchange it for work performed at the same rate.
• Decred uses a combination of Proof of Work and Proof of Stake consensus methods. This is a fairly unique system designed to prevent either miners or large stakeholders from dominating the network
• Decred has a 10% subsidy on all block rewards. This is to pay for future improvements to the network and the fund is accessible by anybody whose ideas are accepted, not just the core team.

How Is Decred Designed?

Decred is designed to build upon the perceived flaws of Bitcoin. Specifically that Bitcoin is at risk of becoming too centralized and that it was too easy for large mining interests to dominate the dialogue over the future of the blockchain.

One of the biggest challenges that Bitcoin has faced over recent years is how to resolve the scalability problem. This often fiery debate has led to deep rifts within the Bitcoin community.

The debate became so toxic that when Mike Hearn parted ways with Bitcoin he described the community as being in “open civil war”. This disagreement eventually led to the controversial Bitcoin Cash fork.

How Is The Decred Blockchain Different From Its Rivals?

In order to prevent a similar problem occurring in the future, Decred gives its users the ability to vote on proposals regarding the future of the blockchain.

To ensure that both miners and ordinary users have a say in how the blockchain develops, Decred joins Dash in combining Proof-of-Work and Proof-of-Stake consensus methods.

Decred uses a decentralized lottery to select PoS miners to vote for PoW blocks. The PoS and PoW subsidies account for 60% and 30% of each block subsidy, with 10% being set aside to compensate developers for future work.

This system is similar to the Proof-of-Activity system developed by Iddo Bentov, Charles Lee, Alex Mizrahi, and Meni Rosenfeld.

What Are The Advantages Of Proof-Of-Stake Algorithms?

To benefit from PoS mining, DCR holders need to “lock” their funds for a period of time. In return for locking their funds, they are rewarded with a ticket that represents a single vote.

Each ticket is then called upon to vote on proposals at random with a mean time of 28 days. Once a ticket has been used to vote the stakeholder receives a small reward and the return of the ticket price (the locked funds).

In order for your vote to be cast, your wallet needs to be online 24/7. If your wallet is not online and your ticket is called it gets marked as “missed” and you will not receive a reward.

What Do Decred Stakepools Offer Users?

Users who cannot have a voting wallet permanently turned on can take advantage of Stakepools. These allow a stakeholder to generate ticket purchase transactions that give a stakepool the voting rights for your ticket.

They will vote on your behalf and usually get a small fee for participation (usually under 7%) that is taken from the PoS reward.

This method of voting has two advantages:

• It allows users to direct the use of the development funds acquired from the 10% subsidy.
• It allows Decred to sidestep the controversy that resulted from the Bitcoin Cash hard fork. It is impossible for a hard fork to take place without the support of the majority of the community.

How Does The Voting Process Work With Decred?

It’s important to note that the Decred blockchain has two different block intervals for the voting process.

There is a Stake Version interval of 2016 blocks (around 1 week) and a rule change interval (RCI) of 8064 blocks (4 weeks).

Decred uses a two-phase voting process for implementing consensus changes that would create a hard fork. The first step of the voting process is to meet the upgrade threshold on the network.

What Happens After The Decred Hard Fork?

After a hard fork code is released a majority of the network needs to have updated to the new code. 95% of the most recent blocks need to be the latest block version and 75% of votes cast within a single SVI must use the newest code.

Once this criterion is satisfied, voting can begin on the first block of the next RCI.

For the next four SVIs, all votes are tallied and there are five possible results as per the chart above.

If there is a majority (75% of the non-abstaining vote) the new consensus actives at the next RCI. If there is no majority of yes or no votes or a 90% abstention, the proposal undergoes a revote.

The vote will fail if 75% of the non-abstaining votes are no or if the proposal expires before reaching a majority, the proposal is then taken off the agenda.

How Does The Decred Blockchain Track Votes?

In order to keep track of these votes, Decred will make use of Politeia. Politeia can broadly be described as Git with timestamps.

It is designed to record all proposals, comments, and amendments of the blockchain in order to provide a record of governance.

The goal is to mimic the records websites of real-world governments, like senate.gov or house.gov.

Who Is Data Managed By?

Politeia has been created as a general tool that allows users to create and maintain data in a version-controlled and time-stamped environment.

This government system is combined with a 10% subsidy for development taken from all block rewards.

The funds acquired from this development subsidy are open to anybody who wishes to help improve Decred, not just the development team. Users vote on how the development funds are allocated.

Decred vs Bitcoin: Similarities & Differences

How does Decred compare to the leading cryptocurrency, Bitcoin? What are the key differences?

See below for our head-to-head comparison.

A Brief History of Decred

Many of the developers behind Decred are the same people who helped design the grandfather of all cryptocurrencies, Bitcoin.

These developers were frustrated with what they saw as a centralized development team imposing their will upon the community. The frustrations led Alex Jacob-Pitt and the other developers to found Company 0 and launch Decred in February 2016.

Their aim was to create a truly decentralized cryptocurrency that could not be dominated by mining interests or even its own developers.

To do this they took the unique step of allowing the Decred community to vote on the future direction of the cryptocurrency.

How Was Decred Funded?

As the team felt that an initial coin offering would be unfair to users, Decred was self-financed by members of company 0.

Once the technology was complete, the team conducted a pre-mine consisting of 8% of the total supply of DCR (1.68 million DCR).

Rather than allocate this entire balance to development costs Company 0 kept 4% to pay developers and organized an airdrop of the remaining 4% to the community. Each of the 3,244 participants received approximately 258.94 DCR.

In October 2017, Company Zero announced Politeia, a public record of voting proposals with timestamps, to help organize proposals that the community would vote on.

What Drives The Price Of Decred?

Despite its unique features, Decred is still governed by the same rules as most other cryptocurrencies.

For most of its existence, it experienced relatively flat growth followed by an uptick towards the beginning of 2017.

Like many other cryptocurrencies, the price of DCR skyrocketed toward the end of 2018. The factors that drive the price of Decred are broadly the same as those that affect other cryptocurrencies.

The Influence Of Media Coverage

One of the primary drivers for any cryptocurrency is media attention. News about cryptocurrency, in general, can help indirectly increase prices as new investors become involved.

News about Decred, in particular, will also tend to spark interest and therefore investment in the cryptocurrency. Generally, rises caused by media coverage are followed by a corrective period.

It is possible for a brave investor to try and sell just as the price peaks and then buy back on the dip, although this is a risky approach and could easily result in losses rather than gains.

New Decred Platform Features

One of the key price drivers for Decred will be the implementation of new features. When the cryptocurrency implemented the Lightning Network it saw its value double.

Generally, new features will encourage investors to take note of a currency. Even rumors that something new will be implemented can cause prices to increase.

Listing Decred On Cryptocurrency Exchanges

Being listed on a major exchange like Binance or Bithumb can have a huge influence on the price of a cryptocurrency.

For example, when Zcash was listed on Bithumb it saw a huge increase in value.

This was primarily because it had gained exposure to the lucrative South Korean market.

What Do Decred Experts Say About Decred?

In the short term, the price outlook for Decred, like many other cryptocurrencies, is incredibly unpredictable.

The cryptocurrency market is still relatively young and prone to volatility. Therefore, you shouldn’t be surprised by large price fluctuations.

On a medium- to long-term basis, Decred will likely continue to rise. While Decred has yet to achieve mainstream attention, some experts are still positive about the potential impact that their approach could have.

Word From A Bitcoin Core Developer On Decred

Peter Todd, a Bitcoin core developer, has previously said that he would be in favor of some form of coin voting in order to allow users to give better feedback on what they actually want from developers.

Academics have also proposed hybrid consensus as a way to improve the performance of blockchains.

Rafael Pass and Elaine Shi of Cornell Tech have argued that the hybrid consensus method could help solve some of the problems with existing PoW blockchains.

Other cryptocurrencies have also begun to look at implementing some form of hybrid consensus.

Vitalik Buterin’s Opinion On Decred

In 2017, Ethereum creator, Vitalik Buterin, released an implementation guide for Casper version 1, which would bring some elements of Proof-of-Service into the Ethereum blockchain.

Despite the promise that Decred holds it has yet to gain enough traction to compete with the likes of Bitcoin and Ethereum.

Jonathan Solomon, the founder of Digital Mint, believes that while Decred will continue to be popular with niche investors and enthusiasts it will be some time before it gains the support needed to be accepted as a payment method by major retailers.

How Is Decred Mined?

Governments or banks are centralized institutions that physically print money.

Like other cryptocurrencies, the Decred community creates a new DCR — a process known as mining.

In general, cryptocurrencies, such as Bitcoin, use Proof of Work as the primary token creation method.

Decred is different from most other cryptocurrencies in that it combined two different consensus methods, Proof-of-Work (PoW) and Proof-of-Stake (PoS).

What Is Proof-Of-Work?

This consensus method involves a user giving over their computer’s processing power in order to process network transactions and build the blocks that make up the blockchain.

To encourage users to mine they are rewarded when a new block is created. In the case of Decred, this reward is split between PoS users and the development fund.

Generally, DCR mining takes place using graphics cards using a mining pool.

What Is Proof-Of-Stake?

This consensus method is based on users “locking” some of their DCR funds in order to obtain a ticket (and therefore a vote) and a reward.

The locked DCR is considered to be the “Ticket Price” and cannot be transferred until it is unlocked. Once a ticket is created it is transferred to the ticket pool where it waits to be processed in a block.

Typically, ticket-holders pay a fee to ensure that their ticket is included in a block. Once a ticket has been processed in a block the user is able to vote and the ticket price, plus a small reward, is returned.

How Do Voting Rights Differ Between PoS And PoW?

Stakeholders also have the ability to vote a block mined using PoW invalid even if it conforms to the consensus rules of the network. This helps to discourage unfavorable mining behavior, such as mining empty blocks.

Each time a block is processed, users are given a reward of approximately 30 DCR. This reward is split between Proof of Work miners, Proof of Stake users, and the development fund.

Decred’s Reward System

The reward system serves two purposes. It encourages users to either use their computer power to process blocks or lock their DCR in order to obtain tickets.

It also helps regulate the creation of new DCR, which is then distributed to stakeholders and miners.

• Proof of Work – 60%
• Proof of Stake – 30%
• Development Fund – 10%

The 10% earmarked for the development fund is set aside to compensate developers for any future projects.

Any projects are voted on by the Decred community and anybody is able to access the funds, not just the core development team. This feature helps to ensure that Decred continues to be self-sustaining in the future.

Where Can I Trade Decred?

See our full guide to trading Decred, or start your research with reviews of these regulated crypto brokers available in .

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74%-89% of retail investor accounts lose money when trading CFDs. You should consider whether you can afford to take the high risk of losing your money.

Please Note: Availability subject to regulations. Cryptocurrency CFDs are not available to UK retail traders.

Further Reading

• See our Decred trading guide with all the details about how to trade the cryptocurrency and what the possible rewards and pitfalls are.
• Browse this list of cryptocurrencies and find out how you can trade them.
• Learn more about cryptocurrencies like Bitcoin, Ethereum, Dogecoin, IOTA, Monero, and NEO.

If you want to find out about different ways to trade cryptocurrencies, see these guides on CFD and options trading.