What is Decred?
A Beginner´s Guide to Buying, Selling, Using, and Mining Decred:
An In-Depth Decred Guide by Black Chip Poker
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There are some who still believe Bitcoin should be more decentralized than it is. They deem the control exercised by some stakeholders, mainly miners, to influence its supply and demand – as well as price – as unnecessary. They also think it is avoidable.
Hence, they set out on a collision course to ensure that miners and users have the same amount of influence. They sought to create a purely-decentralized currency that will discourage power imbalance. Their final output is Decred, a digital currency that stands for Decentralized Credits.
It uses a Proof of Activity (PoA) model – a combination of proof-of-work and proof-of-stake Blockchains – for users to develop a more robust consensus. PoW is used to create the blockchain while PoS stakeholders vote on whether to add the block permanently or not. This is unlike Bitcoin’s consensus in which 95% of miners need to agree for any upgrade to the network.
What is Decred (DCR)?
A group of developers started working on Decred as a Bitcoin model. It is not a clone but one with new features that its developers believe is beneficial for the long term. Launched in late 2015, they started with an airdrop.
It seeks to use a community-based governance model built on the blockchain technology. This open governance and hybrid proof-of-work and proof-of-stake mining systems are key attractions. They ensure that a small group cannot dominate or make changes to the Decred network without the input of the community. Users are able to vote and have a voice on any issue through its internal voting system. It is a democratic way of resolving future issues on the Decred blockchain.
Decred separates transaction signatures from the transaction data to provide immutable transaction hashes. It also uses Schnorr signatures and is able to sign transactions off-chain.
How to use Decred
Like many other cryptocurrencies, Decred could be used for speculation. The prices of most cryptocurrencies increase due to investors’ calculations, estimations and expectations. How its model fares will help investors determine what to expect in the future. Think of what could happen to Decred’s value if it solves Bitcoin’s main problem with a hard fork voting.
A Decred’s price value which was worth about $1.20 is now at over $15. Decred has an online wallet service from BitPay’s Copay for its users. The wallet allows for basic functions such as sending and receiving Decred coins.
Not much can be bought directly with DCR at the moment. Integrated payment gateway like coinpayments.net enable buy now buttons that make checkout systems possible for many cryptocurrencies.
But as an investment tool, it is one of the alternative coins that have the potential to survive. As DCR’s value grows naturally, its price is likely to be less speculative and more real as time goes.
How to buy Decred
Decred and Litecoin recently became the first to conduct cross-chain atomic swaps. These swaps can remove the need for centralized platforms to exchange cryptocurrencies. While this project which cuts out any intermediary is not public yet, DCR could be bought on major cryptocurrency exchanges.
Since its launch in February 2016, four digital currency exchanges allow users to buy (and sell) DCR. They are Poloniex, Bittrex, Bleutrade and Tux Exchange. Bitcoin has to be traded for Decred because of its early stages of development and adoption. Cash or credit cards cannot be used.
Interested users need to create an account on any of these platforms, get Bitcoin and place an order for Decred at a chosen price. After the purchase, the Decred could be withdrawn to a Decred wallet. Changelly recently started offering Decred directly for fiat currency.
A major other way to get DCR is through mining. It could either be through PoW or PoS as mentioned earlier. PoW entails using computational power to create and verify the network’s cryptographically-secure blockchain. But PoS mining is done by stakeholders who lock an amount of their DCR in return for voting rights and a monetary reward.
The Decred project sometimes recruits contractors – members of the community – who get paid in Decred for their contributions. Also in the community, Decred could be used to pay for services or goods exchanged among members.
How do I turn Decred into cash?
Decred is predominantly traded for Bitcoin on Bittrex and Poloniex. Bitcoin can be easily exchanged for cash or for other cryptocurrencies. Decred cannot.
So to turn DCR to cash, it has to be first traded for Bitcoin. After the DCR has been sold, it can be liquidated into cash and withdrawn through the banks. Cashing out through automated teller machines are also possible. There are also Bitcoin-backed Visa cards like BTCC’s Mobi Card.
What is Decred mining?
Like Bitcoin, Decred has a maximum supply of 21 million coins of which 29.5% have been mined thus far. Presently, about 25 new coins are created by miners per block every five minutes. Its reward adjusts every 6,144 blocks, about 21 days and most of its 131 active nodes are in North America and Europe. 60% of block rewards go to PoW while 30% go to PoS and 10% to developers.
Aside creating new coins, the mining process provides bookkeeping services to the network. It also ensures that the network complies with safety standards.
How to mine Decred
Unlike Bitcoin, many alternative currencies still rely on GPU mining and are somewhat profitable doing so. Decred coins can be mined using a simple AMD GPU miner that connects to a local daemon.
With a mid-tier gaming pc that has a decent spec graphics card, DCR could be merge-mined with Ethereum. The miner needs to register with a pool and create two workers. One will mine Ethereum and the other will mine Decred. Afterwards, the miner will download a mining program like Claymore’s miner and configure its setting.
Other mining programs include Gominer Windows AMD64 opencl v0.6.0, AMD Radeon Software Crimson Edition drivers release build 15.12 and Sapphire TRIXXX.
How will Decred scale?
Decred’s scalability characteristics are tied to its decentralized democratic governance model. It is built to give stakeholders a voice by following a user-based decision making process.
Also, as part of the Decred project’s plan for 2017, it will integrate the Lightning Network support. A useful application of smart contracts, LN allows for off-chain transactions that optionally settle on-chain. This has clear benefits for both scaling and privacy. Once enabled, LN will allow atomic cross-chain transfers between Decred, Bitcoin and any other project that supports the infrastructure. It also creates a new low-latency low-risk liquidity channel for Decred.