What is Decred? (DCR)
The Beginner’s Guide
One of earliest cryptocurrencies, Decred copied Bitcoin’s code and modified it in an effort to empower and reward the token holders who contributed changes to its network.
In this way, Decred experimented with ways to encourage user participation in its governance process and offered a novel idea for doing so.
With this in mind, the Decred team engineered Decred as a hybrid-consensus mechanism with components from both Proof-of-Work (PoW) and Proof-of-Stake (PoS), with the PoW miners verifying transactions and the PoS stakers proposing and voting on network upgrades.
Decred uses a proposal system called Politeia to tie this all together, where stakeholders vote on project funding, new initiatives, and various other changes to the protocol’s code.
The project’s native cryptocurrency, decred (DCR) competes with other crypto monies, such as bitcoin (BTC), dogecoin (DOGE), or litecoin (LTC), while adding additional features such as the ability to participate in governance, interact with the community and use it to fund the network upgrades.
To stay up to date on Decred, you can check out the project’s frequently posted updates on their blog.
Who created Decred?
Decred originated in 2013 as a product of pseudonymous developers tacotime and _ingsoc, with the release of its whitepaper “Memcoin2: A Hybrid Proof-of-Work, Proof-of-Stake Crypto-Currency.”
In 2014, the project was introduced to an open-source development firm led by Jake Yocom-Piatt called Company 0 (C0), who helped launch its mainnet in February 2016.
At launch, 8 percent of tokens (1,680,000 DCR) were pre-mined and split evenly amongst the developers at C0 (4 percent of total supply) and a list of airdrop participants (4 percent of total supply).
How does Decred work?
Decred was created by copying Bitcoin’s code and thus the cryptocurrency offers similar features, with varying modifications.
For example, Decred’s block time is 5 minutes long (compared to Bitcoin’s 10), its mining difficulty adjusts roughly every 12 hours (compared to Bitcoin’s two weeks), and its block reward is allocated to miners, stakers and a treasury (as opposed to 100 percent issued to Bitcoin miners).
|Block Time||5 minutes||10 minutes|
|Mining Difficulty Adjustment||12 hours||2 weeks|
|Block Rewards||Initial reward was 31.19582664 DCR and halves every 6,144 blocks (~21 days)||Initial reward was 50 BTC and halves every 210,000 blocks (~4 years)|
|Block Reward Allocation||60% Miners, 30% stakers, and 10% to a treasury||100% Miners|
|Max. Supply||21,000,000 DCR||21,000,000 BTC|
Hybrid Consensus: PoW/PoS
Central to Decred is its hybrid Proof of Work (PoW) and Proof of Stake (PoS) consensus mechanism that keeps the distributed network of computers running its blockchain in sync.
Similar to other PoW cryptocurrencies, Decred miners expend energy to solve computational puzzles to validate transactions and add blocks to the blockchain.
Decred’s PoS then allows those who stake DCR to validate and confirm those transactions and also participate in the network’s governance process.
Stakers are given ‘tickets,’ a non-transferable asset specific to the Decred network, with 20 tickets being available each block. Five of those tickets are then randomly chosen, and their owners then validate the correctness of blocks proposed by miners.
Once blocks are finally settled and added to the blockchain, the block reward is issued to the parties involved as follows: 60% to miners, 30% to stakers, and 10% to a treasury.
Politia is a governance system implemented by Decred that aims to create an open environment for new ideas and a voting system for accepting and implementing them.
Users who wish to offer potential upgrades or policy changes can do so using the Politeia public proposal web platform that facilitates the submission, tracking, and discussion of suggested changes to Decred governance.
Why does DCR have value?
DCR plays a key role in maintaining and operating the Decred network, and consensus participants are rewarded in DCR for expending resources to secure the network.
So, while DCR can be sent, received, and held, the tokens may also be staked to vote on future project developments and to participate in the consensus process.
Similar to other cryptocurrencies, the supply of DCR is limited, meaning that according to the software’s rules there will only ever be 21 million DCR. Of note, DCR tokens are issued every 5 minutes with the amount released decreasing by one percent every 21 days.
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Why use DCR?
Users may find Decred appealing based on its innovative governance structure and are looking to find alternatives to Bitcoin
Investors may also seek to buy DCR and add it to their portfolio should they believe the market will one day favor protocols built to facilitate easy online payments.
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