Decred is a decentralized hybrid blockchain that simultaneously uses the Proof-of-Work (PoW) and Proof-of-Stake (PoS) consensus mechanisms. The hybrid consensus system enables it to balance miners and users.
The true advantage of blockchain technology was known after the introduction of Bitcoin into the market. Bitcoin not only made transactions anonymous, but it also redefined how payments can be made through the blockchain in a decentralized atmosphere. However, with time the decision-making process could get a bit centralized in the Bitcoin community.
Therefore, as a fork of Bitcoin and to give a better alternative to the cryptocurrency markets, Decred was introduced. Decred balances the decision-making process by providing equal voting power to all DCR holders, which does not allow large organizations to have a monopoly in their ecosystem.
In the Decred network block, rewards are distributed among the PoW miners, Pos stakeholders and the ecosystem-funding Treasury. This reduces the influence of a single entity or an individual.
This review of Decred (DCR) was created for informational purposes. This article is not intended for promotion.
So, let us draw our attention to what makes Decred different from other blockchains and how users can use it to simplify transactions.
When it comes to a Proof of Work consensus system, the miners of a particular cryptocurrency have primary control over the governance of the blockchain and any significant changes to the system. But in the case of Decred, it has integrated an additional PoS system, which allows the DCR holders to stake or lock their holdings, thereby giving them a chance to enter a lottery that will decide who will vote for consensus on the next block.
This system is structured in such a way that 60% of the block reward goes to the validators (PoW), 30% is allotted to voting stakeholders (PoS), and 10% goes to the Decred Treasury, which is then used for funding the project.
Decred’s Lightning Network is a Layer 2 protocol that runs on the Bitcoin blockchain. With the integration of Lightning Network, developers can build and deploy dApps.
And compared to layer 1 blockchain, it enables higher throughput, quicker and low-cost transactions.
By staking DCR coins, you can participate in the Decred governance. This allows you to confirm the validation of blocks, and enforce blockchain consensus rules and participate in decision-making processes of future development.
Once DCR coins are staked, non-transferable tickets or votes are allotted to the stakers. Ticket holders can cast a single vote for each ticket they hold. They can vote on-chain to validate the blocks proposed by miners. When voting is completed, each ticket generates the original ticket price and a reward for the ticket owner.
There are projects on the Decred blockchain that makes transactions smooth and safe. We have listed a few of them here.
Decredition is the desktop graphical user interface (GUI) used to interact with the DCRWallet. The wallet application requires a user to download the entire Decred blockchain and requires a fair amount of hard drive space on a device.
However, doing so creates an opportunity for anyone willing to become a miner, receive rewards, plus voting and governance rights.
Mobile Wallet does not require users to download the entire blockchain. Furthermore it operates using Simplified Payment Verification (SPV) mode, which reduces the need for much of resources and data plans for from a mobile device.
The Decred Mobile Wallet can be downloaded for iOS and Android devices. However, currently users cannot vote on proposals using the Decred Mobile Wallet.
As the name suggests, DCRDEX is a decentralized exchange that uses atomic swaps to enable cryptocurrency trading completely trustless, in a peer-to-peer fashion.
Decred does not charge any trading fees and uses the Lightning Network payment channels to facilitate scaling with future adoption.
The Decred mainnet launched in February 2016 to revolutionize the blockchain industry. Decred was founded by Jake Yocom-Piatt, who has previously worked as a developer on Bitcoin.
Like BTC, even DCR token has an optimum cap of 21 million tokens, of which around 13.34 million is in circulation, and approximately 8% was mined before the protocol’s launch.
The DCR coin is staked to participate in the governance of the Decred ecosystem. Traders can also use DCR to take advantage of the feeless structure of DCRDEX.
It will also incentivize the developers working to improve the protocol.
Decred also has a sizable development pool set aside to pay contractors for the project’s development, design, and marketing. Payment is made in DCR, and developers work on various aspects of the project from all around the globe.
DCR holders must “freeze” their funds for some time in order to benefit from PoS mining. They are given a ticket that symbolizes a single vote in exchange for locking their monies. After that, each ticket is randomly assigned to vote on ideas for a period of 28 days. The stakeholder receives a little reward and earns his ticket money back once the ticket has been used to vote.
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Jake and the other core developers aimed at creating a democratic cryptocurrency that would solve the governance problems persisting in the existing blockchains. And the answer to that goal was Decred, a hybrid blockchain with dual consensus mechanisms.
This novel approach did solve the problem of governance where even if an attacker-controlled 51% or more of the network’s computing power, the stakeholders involved in the governance can detect malicious actions and vote to reject illegitimate blocks.
Although, in recent times, a new set of advanced PoS cryptocurrencies have emerged, which might limit the long-term potential for Decred. Moreover, environmental concerns about PoW blockchains continue to remain in the markets. Due to this the PoS-only blockchains like Algorand and Ethereum will be preferred more over Decred, which comparatively lacks scalability.
It would appear there isn’t much room for Decred to grow eventually until its ecosystem has significant developments.
Disclaimer: Trading and investing in cryptocurrencies (also called digital or virtual currencies, altcoins) involves a substantial risk of loss and is not suitable for every investor. You are solely responsible for the risk and financial resources you use to trade crypto. The content on this website is primarily for informational purposes and does not constitute financial advice.
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