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2022年8月9日

Decred (DCR): A Community-Directed Crypto Modified from BTC

Many people were first introduced to the idea of cryptocurrency thanks to Bitcoin. It’s the oldest continuously active cryptocurrency (2009), having boasted a reliable blockchain technology that wowed its early adopters. However, as stated by Company 0, Bitcoin’s perceived problems, which included inefficient governance, lack of development funding and excessive miner power, became more prominent as mining operations grew.

As a result, more companies created their own cryptocurrencies, seeking to offer improved features. A group of core developers, however, decided to modify Bitcoin’s codebase instead and create a community-directed cryptocurrency called Decred. Read on as we learn about Decred and how it’s designed to be better than Bitcoin.

What Is Decred?

Decred is a cryptocurrency built on Bitcoin's code, but with a unique governance process. Unlike many other cryptos, Decred lets all stakeholders vote on making changes to the blockchain.

Originally started as a Bitcoin fork, Decred has evolved into its own distinct project. The main identifying feature of this cryptocurrency is its community-based governance integrated within its system. All users can propose potential changes which stakeholders then vote on.

In addition to its unusual community-based governance process, the Decred system also stands out for its hybrid proof of work (PoW)/proof of stake (PoS) mechanism designed to create a more robust notion of consensus. PoW miners can receive Decred crypto rewards, called DCR, by processing transactions to open a new block on the chain. Anyone who has DCR coins can then stake these coins to become involved in the PoS validation. This verification lets them receive part of the block reward.

History of Decred

The Decred network is one of the earliest hybrid proof of work/proof of stake crypto models. Its history dates back to BitcoinTalk forums in 2013. The crypto was first introduced as Memcoin2 by users named tacotime and _ingsoc. White papers posted by a person calling themself Adam Mackenzie emphasized key features such as allowing users to vote and creating a hybrid proof of work/proof of stake system. This innovative idea quickly picked up steam, and a year later, Company 0 picked up the Memcoin2 project.

The founding core team of the Decred ecosystem is still somewhat unknown. The user named “tacotime” would go on to create Monero while continuing to remain anonymous. Under Company 0’s guidance, Decred was finally formally launched in early 2016.

Over the years, the crypto has undergone many changes. Since it allows user input, a variety of unique and creative ideas have been implemented. In 2017, the Decred blockchain started allowing Decred users to swap tokens with other blockchains. These atomic swaps let people exchange tokens without needing a third-party exchange system. Another helpful addition was the 2019 update that added smart contracts and off-chain transactions to the network. In 2020, the crypto launched the Decred DCRDEX exchange, which facilitates even more trades.

How Does Decred Work?

Decred uses a built-in system to manage community involvement fairly and efficiently. Called the Politeia proposal system, this interface lets all valid community users submit proposals. Proposals can be upvoted and downvoted, similarly to Reddit, to attract more interest from other users. Each Politea proposal is then voted on by stakeholders. Only those who have time-locked DCR are able to vote. To prevent spam or malicious actions, all proposals require a small fee, and administrators can remove proposals they deem to be spam. A proposal is only adopted if 20% of all eligible voters vote and 60% of these votes are a "Yes."

To create the DCR crypto token, the blockchain network runs on the BLAKE algorithm. This hashing algorithm involves using 32-bit words to produce 256-bit digest sizes. It's a fairly early crypto algorithm that still has a lot of benefits. Decred uses it because it functions very fast in software while being very flexible for hardware. The BLAKE-256 algorithm has also gained industry approval for its efficiency- and security-oriented solutions.

The final key to how Decred works is in its blockchain reward allocations. Every block is divided up into multiple rewards to accommodate the hybrid proof of work/proof of stake model. The miners who actually process the transactions by completing computations get 60% of the total block reward. The stakeholders who validate new entries by staking crypto get 30% of the total block reward. The final 10% of each block reward goes into the Decred treasury, which saves assets for development funding to ensure that outside influences can't sway the blockchain's direction through funding.

Decred vs. Bitcoin

As one of the earliest cryptos, Decred is often compared to Bitcoin. There are quite a few similarities between the two cryptocurrencies. The initial Decred chain was a Bitcoin fork, so it uses a similar hash function to create tokens. Both cryptos also have the same maximum supply of 21 million tokens. Since they're so similar, they have roughly the same amount of privacy, security and complexity.

However, Decred and Bitcoin aren't identical. The biggest differences are in the way the blockchains are run. Bitcoin has a small board of developers who direct the blockchain's progress and implement new changes. Meanwhile, Decred takes input from the entire community, so it's even more decentralized. Furthermore, Decred doesn't rely solely on a PoW consensus system as Bitcoin does. Its hybrid model provides some additional sustainability and scalability, and it also gives users additional ways to receive block rewards.

In addition to the philosophical differences in how the blockchains work, there are also plenty of smaller differences in their finances and functionality. Decred’s production moves much slower than Bitcoin’s. Its block time is roughly half that of Bitcoin’s, and far fewer DCR tokens have been fully mined. Since DCR isn't as popular as BTC, it tends to be much more affordable. As of August 2022, BTC is roughly 600 times the price of a DCR token. DCR is typically a little more stable than BTC, so the price doesn't jump around quite as much.

Features of Decred

Decred is a popular crypto option because it contains so many helpful features. Here are some of the main highlights of working with this type of cryptocurrency.

Decred Mining: Proof of Work Consensus

PoW is Decred’s primary mining system. Miners use computational energy to solve hash functions, and then they create blocks. Miners get 60% of each block they mine. This consensus provides crypto security and incentivizes efficiency and speed. Unlike other cryptos, however, mined blocks aren't instantly posted to the chain.

Decred Coin Staking: Proof of Stake Governance

To validate transactions, Decred uses a staking system. Coin owners can get tickets that give them the chance to validate a block. For every block, five out of a pool of 20 tickets are chosen, and then the ticket owners verify the blocks. These validators receive 30% of the reward for each block. The PoS system makes it a little easier to protect against centralization because voters can invalidate blocks when necessary.

Decred Treasury

The Decred treasury is a store of crypto tokens with which Decred users can implement various changes on the blockchain. This treasury is constantly growing, because a small portion of each new block goes into the treasury, which is currently valued at around $21 million. Since the crypto is self-funded, it is less at risk of outside investors having undue influence.

Decrediton

Decred seamlessly syncs with several different native wallet options. One of its most popular is Decrediton. This graphical UI wallet makes it easy for users to access a variety of features. You can quickly see your DCR total, make on-chain transactions, participate in voting or stake new blocks. It’s available for Windows, macOS and Linux.

Bug Bounty Program

Decred also gets users involved in their security. The bug bounty program lets people submit warnings for any bugs they find. There’s a payout system that’s based on how likely the bug is to occur, how much the vulnerability could impact the crypto and whether the user also submits a patch. People can make anywhere from $500 to $30,000 worth of DCR. This provides a lot of benefits for both the blockchain and the community. It helps make security more robust, and gives people an avenue for earning extra DCR.

Block Explorer

To make the blockchain as transparent as possible, Decred offers block explorer options. Users can look up individual blocks and view their transactions. They can also look at votes, ticket purchases and other details. Despite providing a lot of interesting user data, the block explorer doesn’t give away user identity because Decred still prioritizes user privacy.

Sustainability

People commonly favor PoS consensus for its sustainability. DCR’s hybrid model gives users the benefits of PoW while still reducing environmental impact. Since stakeholders validate blocks, fewer resources are used to generate new tokens.

DCR Tokenomics

As of August 7, 2022, DCR tokens are selling at around $37. The coin’s all-time high was $249 in 2021, with an all-time low of $0.43 in 2016. Decred has a circulating supply of 14.2 million tokens, and its market cap is $500 million as of the time of this writing. Though it isn't one of the top coins on the market, DCR consistently ranks within the top 100.

DCR generally exhibits low volatility because its governance process encourages users to stake their tokens. Since people get incentives for holding onto their DCR, the coin is less susceptible to panic selling or day trading. DCR is usually closely compared to BTC, so it's no surprise to see that DCR prices tend to rise and fall roughly with BTC. However, DCR’s peaks and valleys are far less drastic.

Decred Road Map

Since Decred has community-based governance, it doesn't follow a strict road map like many other cryptos do. Users can start proposing changes at any time they want, so all sorts of surprising features can be added. That being said, there’s still some consensus about where everyone wants the blockchain to go. The company's developers are already working on implementing recent proposals, and users are discussing different solutions for updating the crypto in the future.

In general, the main focus of Decred right now is enhancing privacy and functionality. Most approved Politea proposals for 2022 discuss ways of enhancing the Decred community. There are plans to add more plug-ins for user authentication, notifications and DCR payments. Other future projects include privacy upgrades, more communication options for users and better support for the Lightning Network and decentralized exchanges.

Altogether, these plans will help enhance privacy and decentralization, while making the Decred governance process and crypto trading systems easier to use. Thanks to a fairly large treasury balance, they’ve been able to hire plenty of developers to work on their projects. Therefore, users can expect to see most of these proposals implemented fairly soon.

DCR Price Prediction

For the most part, DCR prices look promising. Its summer 2022 prices have hovered in the $20 to $60 range, which is lower than its all-time highs but still much higher than pre-pandemic prices. If it continues to mimic general BTC trends as closely as it has in the past, then DCR prices are likely to increase slowly but steadily throughout the rest of 2022.

A price increase of around $10 to $20 within a year is a fairly reasonable estimate. In the future, prices for Decred also seem likely to rise. The cryptocurrency has proven that it has a robust user base, and a lot of features crypto enthusiasts want. There will inevitably be some fluctuation, but the coin may eventually return to prices of more than $200 again.

There are some potential factors that could affect DCR pricing. Lately, there’s been a growing interest in both PoS crypto and user-led governance processes. As one of the oldest and most reliable cryptocurrencies with these features, DCR seems poised to take off. Just keep in mind that the public is still a little wary of community-based governance, so any big scandals — for instance, a mining company monopolizing staking — could harm crypto prices in general.

Where to Buy DCR

If you want to become part of the Decred community, you have a few different options. You can choose to get involved in mining to obtain coins directly, but for most users, it’s easier to purchase coins from someone else. The community does have its own personal exchange, DCRDEX, that you can try. However, going through a third-party exchange may offer the chance for more favorable rates.

It's worth taking the time to check out some of your other options. Bybit is one of the easiest platforms to purchase DCR on. All you need to do is follow the steps below.

Step 1: Sign up for a Bybit account if you don't have one already, and log in on the website or the mobile app that can be downloaded on the Apple App Store or Google Play Store.

Step 2: Link a debit or credit card to your account.

Step 3: Select the Buy Crypto option and select a crypto such as BTC or USDT. This is the crypto you’ll use to trade for DCR on the exchange.

Step 4: Go to the DCR Spot Trading page on Bybit.

Step 5: Look at the order book to see current buy and sell prices for DCR.

Step 6: Click the Buy tab on the right side of the page and enter your order details. This lets you select a custom price that you're willing to pay for DCR.

Step 7: Finalize your order and the DCR will be transferred to your wallet.

Is Decred A Good Investment?

For most investors, Decred is a good investment to consider. As one of the most iconic cryptocurrencies with community-based governance, it's worth checking out. The recent addition of more helpful user interfaces and crypto exchanges makes owning Decred a useful way to explore the concept and see if it's right for you. Thanks to their many initiatives like bug bounties and token staking, you can even invest your time into Decred to earn DCR.

Regardless of how you get your DCR, these crypto tokens can be a valuable addition to your portfolio. From a tokenomics viewpoint, DCR is essentially a lower-priced, less volatile version of Bitcoin. This makes it a very useful investment. You can use your funds to explore cryptocurrency investing without risking huge sums of money on a volatile cryptocurrency.

For any investor who wants a simple, reliable crypto, DCR is a solid choice. Though it probably won't be making you a fortune overnight, it's experienced steady growth and the price seems likely to increase long-term. As demand for easy-to-use cryptos with community involvement continues to expand, DCR is poised to grow.

Closing Thoughts

If you like the ethos of Bitcoin but want a cryptocurrency with more user involvement, Decred is a great option. This crypto allows you to really get involved in everything, from creating blocks to steering blockchain development. Even if you aren't overly interested in user-guided crypto, DCR's reliability and rate of growth make it a positive investment opportunity, especially with the current initiatives launched.