What is Decred?
Decred (DCR) is an open-source, decentralized, self-financing cryptocurrency. The aim of the project is to create an autonomous cryptocurrency that develops and changes according to the vote of its miners and token holders. Decred is based on the Bitcoin protocol, but with some fundamental changes.
According to the Decred team, the plethora of different Bitcoin hardforks has gradually destroyed the Bitcoin ecosystem. The Decred development team wants to eliminate any similar risks associated with blockchain branches, all decisions are made by voting in the network.
Decred (DCR) development began in 2013 when a trial version was released, but the platform had many shortcomings that had to be resolved by the team over the course of the following two years. The Decred network was officially launched on 07.02.2016. Decred was created in part to solve the scalability problem that exists on the Bitcoin network. The DCR cryptocurrency enabled the first successful consensus on-chain voting ever. The project pays great attention to maintaining the anonymity of both users and the developers’ team. The identities of most Decred developers are unknown, but according to information on Bitcointalk.org forum, the team includes 14 blockchain engineers, 19 marketers, and 8 designers.
How does Decred cryptocurrency work?
Decred developers created a unique hybrid voting protocol and launched many other interesting technological solutions. They use a democratic voting system and a so-called mining-lottery that makes the ecosystem safer, faster, and more equitable. All innovations implemented by developers are attempts at solving the problem of decentralization.
The network implements the voting protocol using a hybrid system that combines the Proof-of-Work (PoW) and Proof-of-Stake (PoS) consensus mechanisms. PoW uses a BLAKE-256 hash algorithm. The developers equalized miners’ and holders’ rights, enabling users who do not have ASICs to participate in network maintenance and earn rewards.
Roles are distributed as follows:
PoW miners - receive a reward for providing computing power to validate transactions on the network and generate new DCR tokens;
PoS holders - have the opportunity to vote for important events and receive rewards for checking transactions. This approach allows holders to have voting rights during project development.
Decred passive income
Cryptocurrency "lottery": Token holders can use their coins to buy “tickets” that will allow them to participate in the “lottery”. The winning ticket gives the right to verify transactions and receive a reward. Each ticket becomes a part of the block. Up to 20 tickets can be contained in one block and the ticket holder has 2 options: either wait their turn or pay a commission for the ticket to be immediately included in the block. After mining, the winning ticket is considered exhausted and stored outside the lottery pool until 256 blocks are processed, which takes approximately 20 hours. After that, the ticket enters the pool and becomes a participant in the draw again.
The ticket is valid for 4 months, and the lottery system is designed to give a 50% guarantee of winning after 28 days from the start, raising the chances to 99.5% by the ticket expiration date. The ticket owner receives the right to vote on the most important network development decisions that determine the future of the technology.
The voting algorithm was changed after the introduction of the Politeia system in 2018.
The control mechanism of Politeia has a number of specific properties and was designed to make voting and platform improvements easier.
All voting on the network can be divided into two types:
- Proposals for providing functionality (making changes to existing algorithms)
- Proposals that require spending money from the budget of the Decred platform. The budget is replenished due to mining
Politeia has a special spam protection system, in case hackers attempt to disrupt the system by filling it with large numbers of meaningless votes. Users must pay a сommission when they make a new proposal for protection, which costs 0.1 DCR. If necessary, the amount of сommission can be changed. The concept of censorship exists in the Politeia system: a user cannot be blocked along with his proposals without adequate justification. When creating a proposal, a special token is generated and transmitted to the author of the proposal. In the case of a blocking, the author can submit his proposal to the users’ discussion with the help of the token, and they will review a decision about the blocking.
The mechanism of Politeia is constantly being improved. At the moment, the scheme proceeds as follows:
In the future, the Politeia system will be fully automated and decentralized.
How to get DCR (Decred mining)
In addition to buying on the exchange, Decred can be obtained in several other ways:
PoW / PoS mining - users can get coins as a reward for providing computing power or for participating in voting within the network. For maximum efficiency, developers advise setting up dual mining, as well as using GPU farms and ASIC devices. Unlike the Bitcoin network, where PoW miners receive 100% of the reward, 60% of the generated coins in Decred go to PoW miners, 30% to PoS miners (coin holders), and the remaining 10% are intended for project promotion and development.
This distribution of funds allows equality between miners and coin holders, as well as to allocate part of the funds for the network development.
Developers can also earn rewards - the community has developed a program for independent users who are ready to create something new to improve the Decred network. Everyone can take part in improving the network and receive rewards in DCR.
Finally, users can get coins in exchange for a product or service provided - online merchants can use payment systems that will provide quick integration for receiving cryptocurrencies through e-commerce platforms accepting DCR as payment. You can buy DCR on various exchanges and store it in Guarda wallet.