What is Decred?
Decred is a decentralized and autonomous platform built with an emphasis on open governance, community input, the sustenance of funding and development. It operates using a hybrid platform of “proof of work” (PoW) and “proof of stake” (PoS) mining system.
Through the hybridization of the consensus system, the platform aims to create a solid balance between users and miner’s participation towards the end goal of achieving a solid currency and dependable ecosystem. This means that they want to achieve a system where every stakeholder has a voice.
This system was created with the goal of preventing a privileged few from taking dominance and controlling the governance of the platform. The domination could be as a result of wielding a larger part of the mining pool in the proof of work algorithm.
It is a community-based project that puts the community decision as superior. The platform operates a proof of activity algorithm as the combination of both PoW and PoS is called “proof of activity” PoA.
Decred is a unit of currency and is designated as DCR. This platform is built on its own blockchain technology with the sole aim of providing good governance.
Decred, the short form of Decentralized Currency is a very open platform that strives to ensure that every member of the community is united now and in years to come. It is a self-dependent platform as every member plays a role in making decisions, making it a fully decentralized platform.
What problem does Decred solve?
The issue that Decred aims to solve is the issue of governance. Decred like so many other cryptocurrencies was developed to provide solutions to the shortcomings of the Bitcoin technology.
The issue of governance was one of such issues and it was mainly due to the fact that the system operates a proof of work algorithm to verify the transaction and to produce new coins.
Decred aim is to prevent the possibility of centralization i.e. the possibility of someone or a group of people ruling and directing the affairs of the network. The proof of work algorithm is the means through which transactions are confirmed and distributed on the ledger.
Confirmations of transaction require a lot of computing power and electricity is needed to solve the tasks given. The amount of money the machines used for solving these tasks is costly coupled with the electricity bill of which only a few privileged individuals can afford.
Most times, people join their resources together to buy machines that could do the job better and faster. With this in play, there is a higher tendency that these individuals would control a larger part of the network since the most important part of the system depends on them. As a result, centralization is bound to occur.
Once centralization occurs, the essence of the blockchain which is decentralization is defeated. Governance, which includes voting and decision making as regards how the platform should be run would be solely by a group of people and not the community any longer.
How does Decred solve this problem?
In a bid to solve the issue of centralization, Decred created an algorithm known as the Proof of Activity. The Proof of Activity is the hybridization of the Proof of Work and the Proof of Stake.
Since the proof of work is set to be the reason for a possible centralized system, the platform decided to employ the use of the proof of stake along side it. Although, both algorithms have their own shortcomings when used together, they cover up for the other.
The problem with the proof of work algorithm is that it is costly and can lead to centralization while the problem with the proof of stake is the ‘nothing at stake’ which is the generation of confirmed records without the stakeholder having no work to do.
The hybrid protocol that Decred operates on demands that every block is mined with the right value and verified by more than three individuals. This way, both the stakers and miners are rewarded for work done.
Everyone on the platform that owns a DCR can participate in staking. The DCR would be used for the purchase of tickets as the ticket is the only pass to be a part of the POS protocol. Each individual ticket would be mined with a block which can accept only twenty tickets per time.
At this point, you can either wait in queue for your turn or you pay an extra fee to get mined in time. After mining, the ticket would wait for the completion of about 256 blocks which is an average of 20 hours before entering into the pool.
Upon entry, tickets would wait in turn to be selected. There is usually about 50% possibility of being selected in twenty-eight days and 99.5% possibility of being selected in 120 days.
Upon selection, a user would be given the task of validating a block. Afterward, the amount paid for the ticket in the first place would be paid back and a reward would also be given for the work done to both the miners and stakers. The miners take 60% while stakers take 30%. The remaining 10% goes to the community.
With this protocol in place, it is not possible for a mining pool to gain utmost power. Miners cannot take over power because they depend on the stakers to mine a block while stakers cannot take over power because they have their DCR in the system in form of tickets.
They both depend on themselves to get rewarded. Everyone in the system gets to participate either in voting a bill to law or initiating a bill. If a bill is raised for an improvement, the system has an assembly chosen and tested by the people of the community that would either turn it to law or return the bill.
What makes Decred better than its competitors?
Decred is a community-based project and as such, it has a greater edge over its competitors. The use of both the proof of work algorithm and proof of stake algorithm is the edge the platform has over its competitors. It does not give room for possible centralization as everyone in the ecosystem is dependent in one and the other.
The miners cannot mine without the stakers and the stakers cannot get their tickets mined without the miners. This way, there is interdependence on one and the other, unlike other platforms that operate functionally based on what the miners do or do not do. In essence, governance is based on consensus rather than on certain sects.
Also, Decred’s implementation of the lightning network makes it one of the few cryptocurrencies to employ its use. This allows for an easy and seamless transaction between users which is still not a reality with other coins.
How can Decred be categorized?
Decred can be categorized into the following – digital currency and governance integrated. A quick examination of them will give a better insight into how the whole mechanism (categories) works. The categories are:
- Digital currency: Decred is a digital currency, a means of exchange, which users use to buy, sell or transact. It is a form of money employed by the platform and its referred to as DCR token. Without this token, nothing happens on the platform. Decred is a type of digital currency which allows people to exchange goods and services with money without involvements from commercial banks or any third party. This currency is generated through the proof of activity algorithm and it is the means through which the platform is run and maintained.
- Governance integrated: The fundamental problem which Decred aims to solve is the issue of governance. The platform heralds community consensus and operates as such. Here, governance is by the community at large. As long as you have the DCR token, you are legible to participate in the affairs of the network. It preaches true decentralization. The system it operates prevents any form of loopholes as it combines the use of the proof of work and proof of stake to achieve true governance.
With a future plan of creating a proof of assembly algorithm, Decred currently has an assembly that passes an improvement into action. This assembly is voted and tested by the community themselves and also, they are not permanent.
The voting system on the platform is well organized as it preaches a majority carries the vote gospel.
Decred has plans for a project called Politeia which is a system of government it hopes to operate on in the nearest future. This project aims to make governance open for all and accessible to all.
What is Decred’s vision on security?
Decred operates on the blockchain technology and the strength of the blockchain technology lies is community consensus. Based on the algorithm employed, there is hardly any point in time the system is less busy.
This way, there is no room for an external attack. At every point in time, transactions are being confirmed and distributed on the blockchain ledger with every node having a copy.
More so, the algorithm also prevents the possibilities of groups of people having the largest mining pool as present in platforms that operate the proof of work. This way, hackers cannot target the system of a particular group of people per time.
For instance, if a group with the largest mining pool is attacked, the system is indirectly attacked. The reason this algorithm works best is because it does not give miners the total power of confirming transactions and generating new coins. Miners depend on the stakers to function and vice versa.
Furthermore, the system makes use of seed words. Every user has a seed word peculiar to the user alone. It’s like a password through which transactions are carried out.
You also cannot log in to your account and wallet without the seed word. This is to be kept private and secured from a second party. On the Decred network, transactions are not reversed. If you lose your seed word to a second party, and such individual transfers all your funds, such funds cannot be reversed again.
Example of Decred use cases/applications.
There are quite a number of cases Decred has been employed and many of its application. These cases vary and range from friendly illustrations to approachable illustrations. The essence of the applications is to make people see the promises and importance of the Decred. The applications invites new adopters and also, gives more insight into the Decred system. Here are some of the vast applications involved;
- Voting: the system of voting in the Decred platform advocates true democracy and as such, the platform can be employed by election bodies, organizations, a board of trustees to carry out a free and fair election. Since the protocol is a majority wins own, it is safe to operate in places that work with that system. Since the platform is built on the blockchain, there is no room for manipulation of any kind as once a vote is cast, it cannot be reversed or deleted.
- Business: the lightning network, a feature of the Decred platform, give room for businesses, investors and the likes to carry out seamless transactions between one and the other. This feature enables trust between buyers and sellers. Rather than having to wait for hours before payment is confirmed, it can be done in seconds. Apart from the speed of transaction, it can also be used as a means of payment. That is, you can use DCR to buy and sell goods and services.
- Government: since the system is built majorly to have one government for the sake of all, Decred can be employed to ensure that democracy is actualized in the government. It can be used to make decisions, to raise an improvement, to pass a bill and many other functions. Also, it can be used to store highly classified information making it immune to hack or alteration.
- Safe House: with the use of the seed word, once can keep valuables and vital data securely without external access. As long as the words are not shared with a second party, then whatever is kept is kept for good.