What is Decred (DCR) in simple terms: history, course and how to buy


2019-08-22 00:00:00:

Decred (DCR) unveils an outage of an open source autonomous decentralized cryptocurrency built on blockchain technology. The main goal of the developers of this cryptocurrency and its main difference from most other similar projects is to provide network users with the ability to manage, make key decisions and directly influence the functioning and development of the platform.

More specifically, we are talking about an altcoin that was created by the Bitcoin team. It is for this reason that this cryptocurrency has a lot in common with Bitcoin, since it was developed on the same protocol. However, in order to achieve a greater level of decentralization, the developers made a number of key changes in it.

Decred mainnet launched on February 8, 2016. Experts assessments of the new cryptocurrency were divided from the outset. Many have come to the conclusion that Decred contains all the main qualities that Bitcoin should have originally had. From a user point of view, Decred is the best implementation of the principles of decentralization and democratic network management, which allow you to quickly respond to attacks or emerging needs of the users themselves.

Criticism of the project basically boils down to the fact that the developers of Decred have not created anything fundamentally new and revolutionary. Other cryptocurrency platforms can also satisfy the needs of their own users using their own approaches, so it becomes not entirely clear why invest in a newly emerging development instead of another cryptocurrency that has a certain weight in the market.

In this regard, there is an opinion of the creators and many users of the Decred system, according to which the project will ultimately inevitably achieve success thanks to the protocol that provides network users with the opportunity to transform and improve the system. According to this point of view, in the future, Decred cryptocurrency will take a leading position in the market thanks to its democratic approach and close cooperation with the community.

Note that the main feature of this coin is the ability of society to take part in the development of the cryptocurrency market in general, and in the popularization of Decred, in particular. Those who own a certain number of coins have a say in the future of the system. Thus, the holders of the cryptocurrency are supposedly shareholders.

History of cryptocurrency

The history of the Decred project begins four years earlier than its development was officially completed. In 2013, six developers worked to create a new extension for the Bitcoin system called btcsuite. The key development goal was to improve the platforms reliability. However, the innovations were not accepted by the users of the Bitcoin network, as a result of which this development team decided to turn their own efforts to create a completely new platform, which became Decred.

The official launch of the new project was announced on February 7, 2016, and by the spring of next year, the developers presented the release of the first version of the software of this platform.

The rate of the new cryptocurrency was initially quite volatile, obeying the fluctuating sentiments in the virtual currency market . In the fall of 2017, the cost of Decred began to increase and reached its peak by the beginning of 2018. After that, the rate began to decline again. The Decred community strongly believes that the value of electronic coins will inevitably rise in the future, preferring to keep their assets until better times.

How it works and what distinguishes Decred from other cryptocurrencies

The Decred cryptocurrency was developed as an attempt to solve a number of problematic points that many cryptocurrency platforms and, above all, the undisputed leader of the virtual commerce market, Bitcoin faced. Considering that over time these problems have acquired clearer outlines, but users of the Bitcoin system did not want to look for ways to solve them, there was an urgent need to create a new system that would take into account the shortcomings and weaknesses of the old one.

In order to understand what drove the developers of Decred, it is necessary to establish what are the key problems in the Bitcoin system.

  1. System management problem. From the very beginning, all decisions on the Bitcoin network are made by miners. The community of miners is engaged in the formation of new blocks in the chain and is responsible for the implementation of transactions. Accordingly, miners have the ability to control the network. However, it must be borne in mind that in the Bitcoin system, miners pursue goals that are different from the interests of most Bitcoin token holders and project creators. Basically, miners, developers and coin holders are three separate groups with completely different points of view regarding the future path of the platform. These contradictions have not been resolved to date.

It should be said separately about the situation related to the development of the Bitcoin network client. In many cases, the network updates under development are met with negative reactions from miners. There is a high probability that miners can simply block any development in this direction and thus completely stop the development of the network.

  1. The problem of supporting project developers. First of all, this problem has to do with the Bitcoin network, since many other blockchains have managed to get rid of this deficiency. Nevertheless, in the Bitcoin system, development still exists at the expense of voluntary contributions from network members, which is an extremely unstable and unreliable source of funding and operation.

An absurd situation arises when developers find themselves in complete financial dependence on miners and token holders, with whom, as mentioned above, they may have completely different goals. As a consequence, any improvement in the system is questionable. At the same time, users also cannot express their will regarding changes in any way, by voting, for example.

  1. The problem of mining principles. This problem is key for the Bitcoin system and for a large number of other platforms. Miners are rewarded for the formation of new blocks, regardless of how many transactions were carried out. That is, blocks will also be added that do not carry useful data, which are empty, which contributes to excessive load on the system.

By the way, it must be said that ordinary miners have not taken part in the block formation process for a long time. The initiative in this sense has long been intercepted by large companies, which potentially have the ability to capture more than half of the capacity of the Bitcoin network, which will allow them to gain control over the network as a whole. There are no algorithms for protection against such a scenario in the Bitcoin system.

There is also a problem with the block reward after the last bitcoin is released. Many experts are already wondering whether miners will be content with rewards for making transactions or simply stop their further activities, completely leaving the system without security, thus provoking its collapse.

During the development of the Decred project, its creators took into account these and other problems. The team of creators mainly consists of people who in the past were users of the Bitcoin system and, unable to find an opportunity to eliminate weaknesses in it, decided to create a new network.

As mentioned above, due to the growing popularity and profitability of mining, large companies have penetrated into this area, possessing disproportionately larger financial and technical resources than an ordinary miner. This led to the fact that the majority of ordinary users were removed from the mining process and large players were able to control the network. Considering that all decisions are made by large miners, any system updates are possible only with their support. According to the Decred developers, this situation practically completely deprives the platform of opportunities for further development.

If the community does not give its consent to a radical change in the operation of the algorithms and code of the system, part of the users can jointly develop their own open source blockchain hard fork, which is actually happening. Thus, the once united community is divided into separate streams, whenever a problem arises on which there is no consensus.

Decred developers do their best to avoid such a situation, although they leave the opportunity for hard forks. Decreds platform runs on a protocol that allows users to vote on any changes to the systems operation before those changes take effect.

The Decred network voting protocol is based on a hybrid system that combines proof of work and proof of stake protocols. The principle of its operation is that each block is created with a randomly selected number, which is used only once, after which it must be confirmed by at least three verifiers. This approach allows in a certain way to cover the weaknesses of both protocols. Miners are rewarded for generating new blocks, and verifiers are rewarded for attesting.

Mining is carried out in accordance with the same algorithm as in the Bitcoin network. There is a constant search for a one-shot sequence of characters that reduces the hash below the difficulty limit.

Every Decred coin holder can participate in the proof of stake protocol. To do this, special tickets are bought for these coins, allowing you to take part in the protocol. These tickets are written to the block by miners. Each block contains twenty tickets, so there is a certain order of inclusion of users. However, you can pay a commission for early activation. If a block with a users ticket is formed, such a ticket is outside the lottery pool. It is considered "unripe". After passing through 256 blocks, which takes about twenty hours, the process is repeated.

A "ripe" ticket is included in the pool and remains in it until it is selected. The Decred system works in such a way that in the first twenty-eight days the users ticket is selected in half the cases, and during the four months while the ticket is valid, this probability rises to 99.5%.

If a ticket is selected, the user who owns it participates in block verification and receives a reward along with the ticket price.

This process encourages users to make long-term investments in the Decred system, since when purchasing a ticket, they pay coins that are in the system for several weeks. The advantage is that during the lifetime of the ticket in the pool, there is no need for the constant operation of the users computer, as in many other proof of stake systems. Instead, the user connects to the stake pool voting on their behalf. As soon as the ticket is selected, the funds received are returned to the user.

Since the Decred system combines the ability to mine and place bets, each member of the network has the opportunity, by voting, to directly influence the choice of ways to improve the functioning or forks of the platform. Each user has the opportunity to suggest their own add-on, which is reviewed by a team of verified web users. It is a kind of advisory body within the system called the Decred Assembly.

It must be said that the algorithm for submitting proposals was changed after the introduction of the Politeia system in 2018 (more details on it below). Users are currently voting on initiatives worth funding with block rewards.

If a Decred improvement proposal is fully developed and tested, it is included in the next version of the system source code as inactive code.

The first stage of voting on the need for a new improvement requires obtaining consent from the majority of the community to update the network.

The voting process begins after the end of the mining of the last 1000 blocks with a code update of at least 95%. At the same time, it is necessary that at least ¾ of the confirming votes of the last 2016 blocks be updated. After recruiting the required number of participants, the voting process begins.

The process continues for twenty-eight days (8064 blocks). The voting is attended by ticket owners and miners who can approve the update, vote against or abstain. To complete the voting, 8064 blocks must pass or 40320 participants must vote. The support of ¾ members is required to implement the update. If the number of those who approved the update or who opposed it is not enough, voting is repeated in the same order until a decision is made or the period for considering the issue ends.

As soon as users make an approval decision, the update immediately takes effect. Since the upgrade is already included in the new version of the source code, it takes effect immediately. In order to provide free access to management and open source code, all management information and additional information is located outside the blockchain.

Politeia system

Lets take a closer look at the Politeia system. So Politeia is the platform management mechanism in the Decred system. It operates on the basis of the proof of stake protocol. As already mentioned, this system operates separately from the blockchain. An important part of Politeia is the voting tickets mentioned above. To buy one ticket, the user needs to freeze five Decred coins in the system. Tickets are required for mining, as well as to vote on updates and system improvements.

The Politeia control mechanism has a number of specific properties, the main of which are:

  1. The functional purpose of the mechanism. Politeia was designed to make it easier for users to participate in improving the Decred platform. This mechanism allows network participants to propose their own options for improving the blockchain operation, which are submitted to the community vote. All offers in the Decred network can be divided into two types:
  • those that are made in order to provide any functionality (changes to the algorithms operating in the network);
  • those that require funds from the Decred platform budget. The budget is replenished by mining. For proposals of this kind, funds are allocated in a certain amount for the development. Waste of funds is permissible subject to the progressive development of the system.
  1. The Politeia system is anti-spam. This is necessary in case attackers intend to disrupt the systems operation by flooding it with a huge number of sentences that have no rational sense. In the form of protection, commission payments are applied that users pay when making an offer. The cost of making a proposal is 0.1 Decreed coins. If necessary, the amount of the commission can be changed.
  2. There is censorship in the Politeia system. The creators of the system themselves call it open censorship. It lies in the fact that none of the users can be blocked, as well as the proposals put forward by them, without an appropriate justification. When a proposal is made, a special token is generated, which is transferred to the author of the proposal. In case of blocking, the author, using this token, can submit his proposal for discussion by users who decide on the validity of blocking it.

To better understand the essence of the Politeia system, you should also describe the mechanism for accepting proposals. This mechanism has not yet been fully tested and may be slightly transformed in the future, in accordance with the wishes of the creators of the system and network users. So, the system works as follows:

  1. The user makes a proposal to improve or improve the operation of the system, for which he pays the cost of the commission.
  2. The proposal is submitted to the system administrators for verification. Spam cannot pass the check. Due to the constant flow of spam, the account that sends it may be blocked. It will be extremely difficult to unblock it, as the Decred community has a very negative attitude towards spammers.
  3. After approval by the administration, the proposal is laid out in the public domain, users can familiarize themselves with it and discuss it. However, voting does not start immediately. The user who made the proposal can make changes and additions to it, in which other users can also take part. Decreds developers are very attentive to the role of feedback in improving network performance.
  4. The proposer registers to start the voting process.
  5. Before voting begins, 2016 blocks must be formed. During the formation period, voting tickets are collected. The voting process involves tickets collected by the time 256 blocks remain to be formed. Tickets that arrive after that do not take part in the voting.
  6. After the completion of voting, the proposal acquires the status of approved or rejected. The voting results are considered valid, if 1 / 5 or more tickets have been used. A proposal is considered approved if ¾ or more users vote for it.
  7. If the proposal is related to expenses from the Decred budget, then development begins on it. However, one should not forget that when spending from the budget, it is necessary to provide real results of the work done. Funds are not issued as an advance.
  8. The payment is currently being handled by a special body called the Decred Holdings Group. In the future, according to the developers idea, the Politeia system will be fully automated and decentralized.

As already mentioned, this mechanism has not yet been fully tested. Each user can familiarize themselves with the functionality, but in the final version the system may differ in some way.

The Decred team has developed a short guide to working with the Politeia system. According to them, the proposed proposal should answer the following key questions:

  1. What is the sentence. This means a brief description of the innovation proposed by the user.
  2. For what reason (Why) the proposal was put forward. In other words, it is necessary to explain why the author thinks that his proposal will benefit the operation of the system. At the same time, no matter how significant changes are proposed, the answer to the question must be given in any case.
  3. How (How) changes will occur. The author must explain exactly how he will implement his own ideas.
  4. Who is the author of the proposal. It is necessary to provide brief information about the user who makes the proposal and justify why the project should be implemented by him (or they, if there are several authors). You can use a different format based on the nature of the proposal. It is assumed that the author of the proposed concept can keep his own name secret, provided that network users know his other accomplishments.
  5. When the specified proposal is finished. In this case, it is necessary to indicate both the general deadline and individual development stages.

It should be understood that these questions are advisory in nature and may not be taken into account. Ultimately, the specifics of the proposed changes and additions play a key role.

Lightning Network Application

Like many other cryptocurrency platforms, Decred uses the Lightning Network. The Lightning Network protocol allows you to process ongoing transactions outside the blockchain, which significantly reduces the overall load on the system and significantly increases the speed of payments. The Lightning Network protocol involves the interaction of two permanent network participants who create a common account and transfer an equal amount of funds to it. If these users are going to exchange funds, they inform each other about the changes in the account by sending a special bill.

For example, user # 1 and # 2 created a common account, to which they transferred 100 coins. Thus, there are 200 coins on this account. If user # 1 transfers 30 coins to user # 2, he sends a bill of exchange, according to which the account now has 70 coins of the first user and 130 of the second. There is no need to send a message to the blockchain. At the same time, users have the opportunity to make transactions within 200 coins.

Since the Lightning Network protocol operates on the basis of ordinary bills, all operations are carried out instantly and have nothing to do with the formation time of new blocks. In addition, using the Lightning Network, you can make small payments in fractional parts of a coin. Another advantage of using this protocol is that the withdrawal of some operations outside the blockchain contributes to improved scalability.

Another feature of the Decred system is that it has double protection against hostile intrusion. While it is necessary to control 51% of the hash rate to gain control over most cryptocurrencies, in the case of Decred, it is also necessary to simultaneously control the voting process. To obtain the predominant part of Decred coins and capture 51% of the total hash rate, an expenditure of such enormous amounts is required that such an event loses any meaning due to its disadvantage.

Advantages and disadvantages

The above facts allow us to say that the Decred cryptocurrency platform has a number of advantages, the main of which are the following:

  1. An increased level of network decentralization achieved through the use of a hybrid verification protocol based on the combination of proof of work and proof of stake protocols.
  2. Availability of mining for every user without the use of complex and expensive computing equipment. Mining Decred can be done using ordinary GPUs.
  3. The ability to accept in the process of development and improvement of the system for all users, thanks to the use of the proof of stake protocol. As a result, the network changes exactly the way the participants want it.
  4. The platform is constantly improving, any weaknesses in the source code are quickly discovered and effectively fixed.
  5. The system uses Schnorr software to sign transactions, which allows for complete confidentiality of all financial transactions.
  6. Each operation has an expiration date. In other words, any unfinished trade will be canceled after a specified period of time.
  7. The Decred system supports the ability to carry out atomic transactions, which makes it possible to avoid the involvement of a third party in the asset exchange process.
  8. Decred is fully compatible with the Bitcoin system.
  9. Very handy personal wallets. In addition, the user can choose the method of storing funds, taking into account the degree of their qualifications.

Despite the considerable number of advantages, the Decred system also has weaknesses. These include the following facts:

  1. The Decred cryptocurrency platform is still at a development stage and loses in its rating to many other major players in the virtual currency market.
  2. The Decred coin still has a fairly low value, which negatively affects the attraction of potential investors. In addition, Decreds growth dynamics does not reach the indicators of Bitcoin.
  3. Decred is still not taken seriously enough by a significant portion of the virtual currency world. Many do not recognize the big future for this blockchain.

All about mining Decred

The mechanism of mining Decred cryptocurrency is fundamentally different from the mining of most other virtual currencies. In particular, this is due to the use of a hybrid verification protocol, which was already mentioned earlier. At the same time, mining is directly related to the platform management process.

The process is as follows:

  1. The miner forms a new block in the chain. In this case, the proof of work protocol is used, just like in Bitcoin.
  2. Users with voting rights can confirm or reject the newly formed block. If confirmed, the miner receives a reward. If the block was rejected, it receives nothing. Six users who have purchased tickets in the Politeia system (mentioned earlier) are taking part in the voting. The selection of ticket holders is based on the lottery principle. The miner gets only 60% of the remuneration. Another 30 are sent to users who voted to approve the block, in proportion to the number of votes. The remaining 10% goes to the budget

The issue in the Decred system is limited to twenty one million tokens. It is assumed that it will be possible to resume the release if users vote for it.

In addition to the mining mechanism, a few words should also be said about its technical side. First of all, we mean the necessary equipment, software and the choice of a reliable pool for mining. Regarding the wallet, it can be downloaded from the official Decred website.

I must say that although mining with video cards is possible, it no longer brings the desired profit. For this reason, the best option would be to use ASIC devices, of which there are a great many in the modern market.

Regarding software, special software is not required when using ASIC hardware, as is the case with GPUs, but the operating system is of considerable importance. Most experts recommend opting for Linux.

So, before you start mining Decred, you should purchase ASIC hardware. It should be understood that despite the many options, given the increasing complexity and decreasing rate, many of the ASIC devices on the market will not bring the desired profit. Considering all the pros and cons, in the opinion of most miners, the two most suitable options should be considered - Whatsminer D1 and Antminer DR5.

MicroBT Whatsminer D1 is an ASIC device created by Pangolin Miner. Currently, this option is recognized by many as the most efficient for mining cryptocurrency, which is true not only for Decred. This device has a hash rate of 48 TH / s and has a power of 2.2 kW. Its cost ranges from four to five thousand US dollars.

Antminer DR5 is an ASIC device that replaces the older DR3 model. Manufactured by Bitmain. According to its characteristics, to some extent it loses to the above-described model from Pangolin. Antminer DR5 hashrate is 34 TH / s. The power of the ASIC device is 1.8 kW. Such a model costs in the region of three and a half or four thousand dollars. The lower price than the competitors price somewhat compensates for the loss in technical characteristics.

Next, the miner needs to select a pool for mining virtual coins. Currently, there are many options that can be suitable for both experienced miners and those who are just learning this lesson. First of all, you need to keep in mind that you should not be engaged in the extraction of Decred in splendid isolation. According to the creators of the project, this method will not bring profit.

And today there are a number of suitable options for both beginners and experienced miners. An important point: you should not mine Decred cryptocurrency alone. According to the developers of this coin, this approach is not profitable. The most reliable mining pools for Decred, according to miners, are as follows:

  • Luxor Mining. Differs in great simplicity and convenience, moreover, it requires a relatively low commission.
  • Has a reputation for being one of the very best, but it will have to tinker with the setup.
  • Reliable platform with average commission costs. Among the shortcomings - some users complain about the low hash rate.

There are many other pools, but you should test them yourself for reliability.

How to buy, sell and where to store Decred?

As of this writing, Decred cryptocurrency is ranked thirty-first in the coinmarketcap cryptocurrency rating and has a market capitalization of $ 276,007,609. Decreds exchange rate against the dollar is $ 27.03 per DCR, against the euro - 24.14 euros, against the Russian ruble - 1770.17 rubles for one Decred coin.

Buying and selling cryptocurrency Decred does not present any difficulties and is currently possible on most major cryptocurrency exchanges. In addition, you can buy coins directly on the official website or through online exchangers.

There are several ways to store savings in Decred cryptocurrency. Each of them has both advantages and disadvantages, so everyone chooses the option on which to stop. So there are:

  1. Decrediton is a desktop wallet developed by the creators of the Decred platform. Compatible with most popular operating systems such as Windows, Mac OS and Linux.
  2. Web client is the most popular storage method among users. This option is easy to use. In addition, it contains the whole range of functions necessary for operation. One of the advantages is that no additional software is required to use it and it can be registered on the official website of Decred. However, it should be borne in mind that this option has a number of features. In particular, its security directly depends on the level of protection of the users personal computer. In addition, using this storage method, you cannot place bets, in other words, this option is not suitable for mining.
  3. Command line wallet. This is Dcrwallet - a program that provides a wallet for Decred. Through it, you can manage transactions, control accounts and addresses, take part in voting at rates, purchase tickets.
  4. Third party wallet - Exodus. Decreds official website says that this option is a convenient and reliable way to store and manage assets based on blockchain technology.

The future of Decred cryptocurrency

In summary, it should be noted that the strongest point of Decred cryptocurrency is its development team and dedicated community. Almost all development participants are professionals in their field, crypto enthusiasts who came to the project from other large cryptocurrency platforms.

Considering the many advantages, such as a unique mining system, absolute decentralization and the ability to vote for users to improve network performance, Decred has every chance of achieving great success in the cryptocurrency market.