Introduction to Decred (DCR)

Decred was developed by two former Bitcoin community members, David Collins and Jake Yocom-Piatt. They considered that Bitcoin started as a decentralized protocol, but with time certain developers and miners acquired too much control over it. As a result, they forked Bitcoin, and Decred was officially launched on 2016.

Decred – a short word for decentralized credit – presents itself as a digital currency that has as main components decentralization and scalability. Being a fully decentralized cryptocurrency, the changes made in it’s system are voted by the community.

Putting this in simple terms, miner coalitions cannot fork the chain, as happened with Bitcoin, as it’s the community who decides, and this is the most distinctive factor between Decred and Bitcoin. By miner coalitions we mean groups of miners that gather to face the investment required to mine Bitcoin because of the PoW (Proof of Work) algorithm.

The start of the Decred project aimed to create a hybrid system between PoW and PoS (Proof of Stake), where neither of the two systems would dominate with the purpose of having on-chain governance. Decred creates, therefore, a balance between PoW and PoS as consensus mechanism where non-mining users also participate in the network, with the role of checking miners.

In this hybrid system, any token holder can virtually validate transactions and, therefore, receive rewards, making the new generated tokens being more fairly distributed, as follows: 60% to PoW miners, 30% to PoS voters, while the remaining 10% is saved for development. When comparing with Bitcoin, we can see that 100% of the new token rewards goes directly to the miners.

In this pursuit of an equalitarian distribution, the 8% pre-mined Decred were distributed between an Airdrop and development costs, and Decred is also built with the purpose of enabling atomic swaps. Atomic swaps allow cross-chain exchanges for transactions without a third party being involved.

This feature has been tested with success recently, when an atomic swap was performed between Decred and Litecoin, enabling peer-to-peer trading. Another very important technical feature of Decred is that it’s implementing the Lightening Network, allowing instant payments, low fees and easy scalability.

Decred has a good distribution model, good technical features, a strong community, but a lot of competition, namely Litecoin, so only time will tell how successful it will be in the crypto space.

This is a brief introduction to Decred, but if you want to know more about the coin, what people are saying about it, technical details, jump right in any of the links we present below. They are well worth reading before investing!