What is a Decred Coin?
The Decred coin is the cryptocurrency of the eponymous Decred platform. It uses a hybrid consensus system to strike a balance between miners and users with the goal of creating a robust currency.
Who is Behind the Project?
Decred works with a flexible contract model that allows new individuals, groups, and companies to work on the project. Currently, Decred consists of a large group of members who are involved in the project. These include 12 developers and 5 designers or graphic artists, while another 3 take care of the coordination of the community. The project leader is Jake Yocom-Piatt.
Decred’s main developers also worked as developers for Bitcoin. Among others, they are responsible for btcsuite, a respected Bitcoin implementation in Go that has been used by several high calibre projects, including BitGo, Factom, Ethereum and the Lightning Network.
What Problem Does the Company behind Decred Coin Hope to Solve?
Decred is a cryptocurrency that seeks to solve the problem of governance. The problem of finding a balance between miners and users can be difficult, as has been shown in Bitcoin, which only allows miners to participate in polls.
But critics point out that miners are not objective and do not necessarily care about the good of the currency. It would be much more likely that they would opt for their own financial benefit without worrying about the long-term consequences. Therefore, Decred wants to give the stakeholders more decision-making power.
But why the stakeholders? According to the company, they are the ones most affected by network changes. Unlike the miners who work for the proof-of-work consensus, their financial interests are directly linked to those of the network.
The miners also invest, but not directly into the network, rather only in the hardware they need to mine. But they could also use this hardware to break down other cryptocurrencies. Investment is, therefore, not directly linked to the success of the company.
In addition, the stakeholders are ultimately the end users of a cryptocurrency and those for whom the system was created. For a decentralized network, the end user should have the last word.
How Does the Decred Coin Solution Work?
Decred uses an innovative hybrid system similar to proof-of-work to solve this problem. As a result, stakeholders have more power overall than miners. This ensures that, if justified, they can effectively overrule miners’ decisions.
If at least 60% of the stakeholders vote against a specific block generated by a miner, that block will be invalidated. The miner then receives no block reward as a penalty, as he is assumed to be malicious or irresponsible. In this scenario, stakeholders protect their investments by protecting the network and are rewarded with part of the block premium.
This means that stakeholders have the ultimate say in what happens within the network. This also applies, for example, to the initiation of a soft or hard fork. To vote, stakeholders need to buy Decred Coin, which they then deposit into a kind of lottery from which five winning tickets are drawn.
These five people then have the opportunity to vote on the currently generated block and can present their suggestions and ideas to vote on. During the lottery selection process the placed coins are blocked.
The system seems a bit complicated at first, but it ensures that foreign interests, such as those of stock market and wallet providers, do not distort the decision-making process and allow a disproportionate voice over the network.
The block rewards are split as follows: 60% goes to proof-of-work miners, 30% to the stakeholders who voted on the block, and 10% is paid into a development fund. Before starting to develop potentially controversial topics, the development team asks users to vote. This allows the team to work only on updates that the community desires.
Decred Coin by the Numbers (as of 20.01.2018)
The company behind Decred has a market capitalization of $728,068,103. The daily trading volume amounts to US $4,915,140. Of the available 7,012,670 Decred coins, there are 6,592,670 in circulation. The absolute limit is 21,000.00 coins.
At the time of writing, the coinmarketcap.com website places the Decred coin 45th in the mineable coin ranking.
Conclusion on the Decred Coin
Decred deals with a problem that many cryptocurrencies are struggling with. The problem is not new at all and is repeatedly taken up and discussed by many experts. Decred’s model appears fair, as it puts the people with most at stake in the limelight.
After all, that was one of the main reasons for cryptocurrency: the concept that people should regain control of their money. Whether other cryptocurrencies or even Bitcoin will take the example of this governance solution remains to be seen.