Bitcoin is the most reliable and oldest cryptocurrency and was launched in 2009. Many new investors prefer investing in this project because it’s less volatile as compared to other crypto projects. But miners are facing problems with installing a new setup because the complexity level of this blockchain network is getting difficult over time. So, what is decred and how does DCR work?
Moreover, it has a poor governance mechanism. In this situation, many developers have introduced a few crypto projects that fix these problems. But a group of developers decided to modify Bitcoin’s codebase rather than create a new project from scratch. Thus, they introduced a community-directed crypto project known as Decred.
What is Decred (DCR)?
As it’s mentioned, Decred is the modified version of Bitcoin. The primary goal of developing this network is to transfer the governance and decision-making rights to the community members. The miners and token holders have the authority to implement changes within the network.
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Decred uses a combination of Proof-of-Work and Proof-of-Stake consensus mechanisms to protect the network from hacking attempts while accurately recording the transactions processed on this network over time.
Decred introduced a number of unique features:
Decred Mining
Decred uses a Proof-of-Work consensus protocol for validating transactions. The miners need to solve different puzzles using computational power. 60 percent of each block is transferred to the miners.
Decred Coin Staking
The DCR holders can stake their tokens to participate in the validation process. 30% of each block is rewarded to these users for their participation. The DCR token holders can invalidate the blocks if they don’t comply with the network’s terms and conditions.
Decred Treasury
A small portion of each block is added to the Decred Treasury. The community members use these funds to implement changes within the network. Thus, the network is protected from undue external influence.
Block Explorer
Decred introduces Block Explorer features to ensure the network’s transparency. The users can easily check the transaction data and other details using these options. However, the network doesn’t reveal the user’s identity.
Bug Bounty Program
Bug Bounty Program is designed to strengthen the network’s security. The programmers can highlight bugs in the network’s code to earn $500 to $30,000 worth of DCR as a reward. Thus, the network can fix most of the vulnerabilities in time.
Sustainability
Decred uses fewer resources to generate new tokens because it uses a combination of PoW and PoS mechanisms. Thus, it consumes the positive features of PoW without causing any damage to the environment.
Decrediton
Decred uses Decrediton to allow users to perform on-chain transactions and check their DCR total instantly. The users can use this wallet on different operating systems including Windows, Linux, and macOS.
Decred Brief History
Decred was introduced by pseudonymous developers in 2013. Its whitepaper was published with the name “Memcoinc2”. Company 0, an open-source development firm, came to know about this project in 2014. So, they helped with launching its mainnet in February 2016.
The core team of this project is still unknown. A member of this team has also helped with creating Monero. The Decred team introduced the atomic swaps in 2017 allowing users to swap DCR tokens with other blockchains without having to deal with a third party.
The network started processing off-chain transactions in 2019 while supporting smart contracts. The Decred team also introduced the DCRDEX exchange to provide better trading options to its users.
Decred vs. Bitcoin
Decred shares many features with Bitcoin because it was initially introduced as a Bitcoin fork. Both networks use the hash functions for transaction validation and they both have a total supply of 21 million tokens.
Bitcoin’s governance is in the hands of a small board of developers whereas Decred transfers governance and decision-making rights to its community members. Thus, Decred offers better decentralization. Moreover, Decred uses a combination of Proof-of-Work and Proof-of-Stake consensus mechanisms for validating transactions.
Similarly, Decred has an average block time of 5 minutes while Bitcoin has an average block time of 10 minutes. Surprisingly, DCR offers more stability to investors as compared to BTC.
How Does Decred Work?
Decred ensures safe transactions through a hybrid network.
Proof-of-Work
The miners need to install a mining system to solve the computational puzzles. The network creates a mathematical equation whenever a transaction is requested. The members solve the equation using their computational power.
Proof-of-Stake
The token holders can also lock their DCR tokens to complete the transactions. The primary goal of these users is to confirm the transactions that are passed by miners. They receive 30% of the block reward for their participation. The token holders can also propose and vote on several changes within the platform.
The network introduces a governance system called Politeia that can be used to suggest new ideas and vote for the ideas proposed by other participants.
Decred Tokenomics
DCR is the native token of Decred that can be used for the transfer of value. The users can also stake their DCR tokens to earn rewards for transaction validation. Moreover, the DCR tokens are rewarded to the programmers through the Bug Bounty Program.
With a circulating supply of 14.3 million tokens, DCR has a market cap of $404.5 million. It consistently ranks among the 100 best cryptocurrencies in terms of market cap. Although its total supply is equal to Bitcoin, its production rate is slow.
Conclusion
Decred is a modified version of Bitcoin that is designed to enhance the adoption of cryptocurrencies. It uses a hybrid network to provide a secure and efficient platform to the users. It uses fewer resources to perform the transactions. If you need more information about how Decred works, feel free to get in touch with us.
