Why is Everyone Talking About Decred?
When Bitcoin burst onto the scene all the way back in 2009, few could have imagined the impact it would have. Now there are hundreds of new cryptocurrencies vying for control of the market. Each is designed with its own specific niche or purpose.
Decred (DCR) was designed in order 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 happening in the future by giving the community a vote on the future of the currency. The blockchain is designed to be 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.
6 Interesting Decred Facts You Might Not Know
- Decred was founded by company 0’s CEO, Jake Yocom-Piatt, and began trading on February 10th 2016 and the team contained many former bitcoin developers.
- Prior to the launch of Decred, there was a premine 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.
Data from U.S. Equity Research estimates the cryptocurrency market is expected to grow at a 32% rate by 2023.
According to RnRMarketResearch:
Growth is propelled by the benefits of compliance-free peer-to-peer transaction, cross-border remittance transfer, increase in use cases, volatility in the stock market, fluctuating monetary regulations in different countries, transparency, and immutability of the distributed ledger technology and benefits such as faster transaction and reduction in total ownership cost.
Furthermore, bitcoin core developer, Peter Todd, has previously talked about the possibility of voting in cryptocurrency:
Something like coin voting ‒ that could give you much better feedback on what people actually want. Right now, we don’t really have a good way of getting feedback.
John Creasy has gone even further, arguing that:
Decred is Bitcoin as it should have been.
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. These 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 they took the unique step of allowing the Decred community to vote on the future direction of the cryptocurrency.
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 conduct 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, essentially Git with timestamps, to help organize proposals that the community would vote on. Politeia is to ensure that there is a public record of all proposals and comments that anybody can view that is stored off blockchain.
What is Decred?
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. To rectify these problems Decred is designed to be as democratic as possible.
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. 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.
In order 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 of 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.
In order 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. 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 have a small fee for participation (usually under 7%) that is taken from the PoS reward.
This method of voting has two advantages. First, it allows for users to direct the use of the development funds acquired from the 10% subsidy. Secondly, 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.
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. 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.
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. 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 BitcoinHow does Decred compare to the leading cryptocurrency, Bitcoin? What are the key differences? See below for our head-to-head comparison:
|Decred (DCR)||Bitcoin (BTC)|
|Purpose||To help provide a solution to the scalability problem that plagued Bitcoin||Decentralized digital currency|
|Founder||Alex Jacob-Pitt and a number of other contributors||Satoshi Nakamoto (alias)|
|Market Cap||Over $630 million||Over $250 billion|
|All time High||$126.80 (January 2018)||$19,908 (December 2017)|
|All Time Low||$20.01 (November 2017)||$0.06 (July 2010)|
|How long did it take to hit $100?||22 months||51 months|
|Notable Supporters||Jeff Currie (Goldman Sachs)
Peter Theil (Venture capitalist)
Christine Lagarde (IMF)
Marc Andreessen (Early internet Pioneer)
|Mining Method||Gominer |
|Consensus Method||Proof of work|
Proof of Stake
|Proof of work|
|Network Hash Rate*||Up to 10,000Gh/s||Over 40 BTC per hour|
|Difficulty increase||Every 2016 blocks||Every 2016 Blocks|
How is Decred Made?
Governments or banks are centralized institutions that physically print money. Like other cryptocurrencies, Decred takes a decentralized approach and new DCR is created by the community through 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).
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. In order 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.
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. 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. This 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.
What is the Price of Decred?
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.
One of the primary drivers for any cryptocurrency is media attention. News about cryptocurrency, in general, can help indirectly increase prices as new traders 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 a loss rather than a gain.
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 traders to take note of a currency and even rumors that something new will be implemented can cause prices to increase.
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 is the Price Outlook for Decred? And What Do Experts Say About These Prices?
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. There is the potential for larger rises on the back of new. You should expect a lot of ups and downs and while some people do buy low and sell high, this is a far more risky approach than holding for the long term and you may end up losing money.
While Decred has yet to achieve mainstream attention, some experts are still positive about the potential impact that their approach could have. 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.
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 believes that while Decred will continue to be popular with niche traders and enthusiasts it will be some time before it gains the support needed to be accepted as a payment method by major retailers.
Decred Market Sentiment
We’ve gathered data from leading exchanges to determine the general feeling in the Decred market. Its calculation is simple; using data from the exchanges listed below, we gather buy and sell volumes for a given time period and weight this against the total transaction volumes.
3 Reason To Invest In Decred
- Unique hybrid consensus method
- Strong community and development team
- Democratic blockchain could lead to a stronger currency
Unique Hybrid Consensus Method
By combining Proof-of-Work and Proof-of-Stake consensus methods, Decred has put itself ahead of the curve. The only major cryptocurrency to do this is Dash, and even then, the approach taken by Decred is arguably more democratic as it does not require a large amount of capital to participate.
By ensuring that both Stakeholders and Miners rely on each other for rewards, Decred can help prevent either group from completely dominating the network and controlling the debate.
Strong Community and Development Team
While Decred is still relatively small compared to say Bitcoin or Ethereum, the team behind it have involved the community every step of the way. This is important because it means that people investing in the currency are less likely to suddenly sell everything. Many traders in DCR have done so because they believe in the future the currency represents. The community involvement in development decisions also means that people are likely to hold onto DCR so that they can vote on future decisions. This could increase the value of DCR as a long-term asset.
Democratic Blockchain Could Lead to a Stronger Currency
One of the biggest problems for Bitcoin in recent memory has been the scalability debate. The argument tore a huge rift in the community and left a lot of bad blood. The argument eventually led to the Bitcoin Cash hard fork. A stronger level of user involvement in the direction of the blockchain could help prevent arguments around issues like scalability from escalating to that level. Furthermore, active user involvement in the future of the blockchain will theoretically make it easier to implement radical solutions that a small team of developers may not have considered.
2 Reasons Not To Invest in Decred
- Decred does not have much market share
- Decred has potential – but this is no guarantee of success
Decred Does Not Have Much Market Share
Despite the promising technology behind it, Decred has failed to garner mainstream appeal. This is partially because of the name recognition that large coins like Ethereum and Bitcoin enjoy and partially thanks to the relatively low number of exchanges that trade in Decred. This means that it is difficult to predict when, if ever, Decred will finally make a breakthrough.
Decred Has Potential but This Is No Guarantee of Success
Decred is still a small currency and unless it can gather mainstream support it will take a long time for Decred to make a breakthrough. A strong community and good development team can take a coin a long way but they will hit a stopping point if they can’t garner mainstream attention. The development fund could provide a potential fix for this problem if the community decides to devote a portion of it towards advertising the currency in an attempt to get it listed on more exchanges.
How Can You Buy Decred?
So, after weighing up the pros and cons you’ve decided that investing in Decred is the right choice. The next step is to figure out how to buy DCR.
Acquiring Decred isn’t as simple as buying Bitcoin, Litecoin or Ethereum. If you want to purchase one of the “big three” then it's as easy as logging onto an exchange and purchasing your tokens directly with fiat currency. Some exchanges will even let you use a credit or debit card. Decred, like many other altcoins, is generally obtained by trading it for other cryptocurrencies through an exchange. The easiest way to do this is to trade Bitcoin for Decred.
Most users opt to go through an exchange like Bitfinex. This involves purchasing cryptocurrency with fiat currency and storing your tokens in a virtual wallet. While this approach is common it carries a number of risks. You should make sure to do your research before selecting an exchange.
If you want to buy Bitcoin to trade for Decred then one choice is an exchange called Coinbase. There are a lot of options out there but Coinbase is one of the best choices for newcomers to the cryptocurrency world. It has an easy-to-understand interface and you even have the option to buy BTC using your credit or debit card. Coinbase’s fee rate is competitive. Purchasing BTC will typically result in a 3.99% fee if using a credit or debit card and a 1.49% fee for most kinds of bank transfers.
Coinbase requires an ID and your address when registering. This is to comply with anti-money-laundering (AML) and know your customer (KYC) legislation. While not technically a legal requirement in most countries, ID checks are considered best practice by many exchanges. It helps prevent the exchange from being used to conduct criminal activity. However, there are legitimate reasons not to want your ID revealed to an exchange and privacy-conscious traders will want to take a different route.
If you are unwilling or unable to reveal your identity then you may want to choose to purchase Bitcoin through LocalBitcoins. This peer-to-peer exchange does not require any identification and it allows users to purchase Bitcoin with almost any currency.
If you decide to use LocalBitcoins you should remember to vet other users thoroughly. The exchange has a review function and you really should use it. Some unscrupulous users have been known to attempt to scam new traders. If you are unsure about a user or see bad reviews then it is generally safest not to make the trade. Some LocalBitcoins users will even meet in person to conduct business in an attempt to ensure both parties are being honest.
However you choose to acquire your Bitcoin the next step is to convert it into DCR.
Tux Exchange is a relatively young exchange and it doesn’t yet have many pairs – but it is one of the best places to trade BTC for DCR. The exchange offers a 0% maker and 0.3% taker fee on all trades. In order to use Tux Exchange, you will first need to transfer your Bitcoin to the Tux wallet.
Always ensure that you transfer to the exact address listed or you may lose your funds.
To do this, you first need to go to the Wallet section and scroll down until you find your Bitcoin wallet. You then transfer the funds from your own wallet to this address and wait for the transaction to process. When your Bitcoin transfer has been approved it will appear in your wallet and you’re now ready to buy DCR.
Next, you need to click the “market” tab and scroll down until you see DCR. You will see charts detailing current price trends. If you continue to scroll down you will eventually see options to buy and sell. Simply enter the amount of DCR you want to buy and how much BTC you are willing to pay for it and Tux Exchange adds the total up for you. Once you’re happy with your trade click buy and the order goes onto the exchange.
Now you simply need to wait for your order to be fulfilled and you will have successfully figured out how to buy DCR.
Simply enter the amount of DCR you want to buy and the cost in BTC will appear in the total.
Keep in mind that exchanges are not safe and you will need to be serious about your security. Always enable two-factor authorization and avoid keeping all of your coins in a single wallet. Also, remember that you should never leave your coins in an exchange wallet unless you are planning to exchange them. If you don’t own the keys to your wallet then you don’t own the tokens inside it. The best way to secure your Decred is in a hardware wallet or by putting them in cold storage.
Cold storage involves keeping your cryptocurrency in an offline wallet that only you have access to. Remember that you are entirely responsible for your own security. You will also need to take extra care to ensure that your computer is secure and password and protected. Any breach could result in your coins finding their way into the wallet of a hacker.
Managing your own Decred isn’t an easy task. Not only do you have to navigate the exchanges but you will also need to take extra care to keep your computer secure. You will need to take extra precautions to protect yourself against phishing scams, viruses, and other risks. You will also need to keep very careful track of your wallet’s access codes. If you misplace those then your DCR investment will be trapped in a wallet you can no longer access.
On top of this, there are risks that you have no control over. Whenever you use an exchange you are relying on them to protect you and your DCR. The problem is that they sometimes fail to do this properly.
The most well-known example is the MtGox debacle. In 2013, MtGox was by far the largest Bitcoin exchange with control over 70% of the market. The cracks started to show in May 2013 as FinCEN seized their accounts. This led to many users losing the ability to withdraw USD from the exchange. The situation continued to deteriorate as hackers attacked MtGox and stole around $500 million worth of Bitcoin, forcing MtGox to file for bankruptcy.
Sadly, it seems as though exchanges have not learned their lesson. In August 2017, Bitfinex was hit by a similar hack. The attackers emptied random wallets and stole around $72 million worth of cryptocurrency. In order to prevent individual users from losing everything, Bitfinex decided to spread the losses, reducing everyone’s account balance by 37%.
Many traders find this level of uncontrollable risk to be unacceptable and you’re probably asking yourself whether there is a better way to trade Decred. Unfortunately, the answer is no, not at the moment. However, there is a safer way to trade many other cryptocurrencies by using a regulated broker such as Plus500. The Plus500 platform gives you the ability to trade contracts for difference (CFDs) for a wide variety of cryptocurrencies and they are regularly adding new ones.
How to Trade in Cryptocurrency CFDs
One preferred method is to not buy cryptocurrencies at all but instead, trade Contracts for Difference (CFDs) through a regulated broker.
A CFD is a contract between you and the broker. Instead of directly buying cryptocurrencies, you would buy a CFD and take a short or buy position. If the market moves in your favor then you will receive money based on your CFD. If it moves against you then you will have to pay. This allows you to take advantage of cryptocurrencies without ever having to take on the risk of owning a single token.
Where to Trade Crypto in
Crypto brokers available in :
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 73.0%-89.0% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.