Decred (DCR) is a cutting-edge digital currency that operates on its own blockchain, utilizing a unique hybrid PoS (Proof of Stake) and PoW (Proof of Work) consensus algorithm. This innovative approach enhances decentralization and fosters a balanced ecosystem for miners, stakers, and holders alike.
Decred is a decentralized cryptocurrency that entered the digital asset market in February 2016. It boasts a unique hybrid blockchain model that prioritizes network security, transaction speed, and low fees. What sets Decred apart is its community-driven approach, allowing for active participation in project development through a DAO.
Decred was created by a group of developers who were previously members of the core team responsible for coding Bitcoin Core, which gives it some similarities to the pioneering cryptocurrency. Moreover, Decred also integrated specific features from the open-source code of Bytecoin, making it somewhat of a fork of this digital currency.
Who are Decred founders?
The concept of Decred was unveiled on December 12, 2015. Company 0 ("Zero"), known for their work on alternative full nodes for Bitcoin, played a role in designing and implementing the DCR coin and its blockchain network.
The creators of Decred emphasized that their aim was not to rival Bitcoin, but rather to enhance existing mechanisms, promote greater decentralization, and provide an alternative that would foster a more competitive environment in the digital asset market.
The project’s founders include:
Jake Yocom-Piatt is a co-founder of Decred and CEO of Company 0. With decades of experience in blockchain technology and cryptocurrencies, he has contributed to the code used in creating the BTC network and other services like Lightning Network.
Marco Peereboom serves as the CTO of Company 0, leading teams of developers who enhance the security and technological infrastructure of Decred.
On February 8, 2016, Decred's Mainnet was launched, accompanied by the introduction of the project's constitution, which outlined rules and principles for its operation. The founders emphasized that after the release of all necessary software, the project's governance would transition to a democratic process, involving the entire Decred community through a mechanism of direct voting, rather than being controlled by individual individuals, programmers, or miners.
Decred implementation
During the years 2017-2018, Decred introduced a range of features, including:
- Hybrid consensus algorithm PoS&PoW.
- The Politeia platform, allowing for decentralized project governance and voting.
- Advanced cryptographic methods based on secp256k1 and Schnorr signatures, similar to Bitcoin.
- PoW mining utilizing the BLAKE256 algorithm (GPU and ASIC).
- Diverse wallet options.
- Staking.
- Support for the Lightning Network L2 protocol that acts as a layer on top of the blockchain for instant transactions.
Decred blockchain and hybrid consensus algorithm
One of the standout features of Decred is its use of a hybrid PoS&PoW consensus algorithm, which serves as a tool to balance the interests of all project participants and promote greater decentralization.
Decred's blockchain architecture and functionality are similar to that of Bitcoin, but it has a unique governance system built into the protocol. All token holders adhere to the consensus rules and participate in voting on proposed changes and the allocation of funds from the shared treasury. These funds are used to finance marketing initiatives and technical developments.
Proof-of-Stake is implemented through a voting process, which enhances security and complements classic PoW mining. Anyone can become a staker by locking up a portion of the native DCR coins.
Proof-of-Work miners, like those in other networks, validate transactions, confirm them, and create blocks. They are rewarded more than stakers, as they incur costs for mining equipment. However, the allocation of funds from the shared treasury is determined by stakers through voting on the Politeia platform, where initiatives are funded based on the results of the voting process.
In Decred, the reward for each block is distributed as follows: 60% goes to Proof-of-Work (PoW) miners, 30% to stakers, and 10% is directed to a shared treasury.
As of now, over 14.835 million coins have been minted out of the total supply of 21 million. Decred's market capitalization is nearly $420 million, with a weekly trading volume of over $1 million.
Previously, Decred's L1 network had a low throughput, processing only 14 transactions per second (TPS) until a major network upgrade took place on May 9, 2019. Since then, the network has achieved significant improvements in its transaction processing speed. Transactions are even faster in Decred's L2 network (Lightning Network), with speeds of up to 1 million TPS, surpassing even the transaction rate of the Solana blockchain.
Privacy in Decred transfers
While Decred is not considered an anonymous cryptocurrency like Monero, developers added privacy features in August 2019 based on community demand.
One of these features is "CoinJoin," which combines multiple transactions into a single one, making it harder to track the sender and transaction amount. Another feature is CoinShuffle++, a simple peer-to-peer protocol that uses a cryptographic algorithm and is composed of just a few hundred lines of code, as claimed by the developers.
As a result, Decred users now have a new tool for conducting confidential transactions when needed.
Wallets that support Decred
In addition to several popular exchanges like Binance, OKX, HitBTC, ByBit, etc., where you can trade DCR, Decred is also supported by various digital wallets. Some of the most widely used wallets for Decred include:
- Decrediton: the official web wallet for Decred, available for macOS, Windows, and Linux, offering full functionality.
- Universal wallets with desktop and mobile versions: Exodus, Coinomi, and Guarda.
- Hardware wallets: Ledger Live and Trezor.
- Mobile wallet Trust Wallet.
Final words
Decred, the blockchain project, has had its share of ups and downs in its history. What makes it stand out from its competitors is its strong emphasis on decentralization, unique hybrid consensus mechanism that offers more opportunities for passive earning, and swift transactions with low fees. If the community keeps up the momentum in generating new improvements and the developers continue to meet the demands of the community, this project has the potential to remain popular for a long time.
