Investigating the Top 50 Cryptocurrencies, Part 12/50: Decred - An Improved Version of Bitcoin?
Decred is a re-creation of bitcoin with an improved governance / consensus model. While that might not sound too exciting on the surface, I am impressed by this cryptocurrency and think it is worth taking a good look at.
Decred is built on the thesis that relying on pure Proof-of-Work (PoW) consensus (ala Bitcoin) is flawed and gives too much power to a small group of miners and developers.
The Decred consensus system combines PoW mining with Proof-of-Stake (PoS) to vote upon upgrades to the blockchain. The PoS system also allows for mined blocks to be declared invalid if they “don’t match to the consensus rules of the network.”
About This Series + Disclaimer
This post is part of a new series where I investigate each of the top 50 coins by marketcap (based on coinmarketcap.com's rankings on October 11, 2017). My goal is to help steem’s userbase become the most knowledgable blockchain community in the world.
Disclaimer: I am not an investment expert and will not be providing investment advice. I will teach you about the top 50 coins, and you can do what you want with that info.
Why Recreate Bitcoin?
The decred blockchain has a lot of similarities to bitcoin. Perhaps the most direct parallel between the two chains is the token distribution model. There are a finite number of tokens that will ever be minted on decred - approximately 21 million, just like bitcoin.
The mining system that verifies decred transactions is similar too, with blocks being solved via PoW and rewarding tokens to whichever miner finds the solution first.
The differences between decred and bitcoin can be summed up in this sentence from the Company 0 (founders of decred) blog: * “The main problems [with bitcoin] are governance, funding development and proof-of-work (PoW) miners having too much power.”*
Let’s take a quick look at these issues.
Governance / PoW Miners Having Too Much Power
Decred’s creators allege that the developers at Bitcoin Core have what is essentially a monopoly on bitcoin development ideas. They trace the lineage of bitcoin development “autocracy” from Satoshi to Gavin Andresen, and then to Wladimir van der Laan. However when van der Laan took over, the central control of development shifted to a “oligarchy” style of rulership where the inner circle of Bitcoin Core makes all major bitcoin dev decisions.
With decred’s PoS-style voting mechanism for deciding upon and implementing new features or changes in the blockchain model, these decisions are much more decentralized.
Funding Development
Due to its reliance on donations in the early days, Bitcoin development was limited to one or two full-time paid developers and a group of unpaid developers. In the early-to-mid 2010’s, the formation of the Blockstream corporation and subsequent round of VC-funding created perverse financial incentives which may have had a major influence over the block size debate.
Decred automatically allocates 10% of all block rewards to a “developer’s fund.” From the Company Zero blog: ”This entity is transparent and responsible for funding development work performed by current and new developers so that the project remains sustainable without a funding dependence on outside forces in the future.”
It’s important to note that any developers can propose projects for decred, and all of these proposals are transparent and visible for the world to see. The proposals are decided upon by the Decred Assembly. From the blog: ”The Decred Assembly shall be composed of diverse Assembly members who are selected for membership by the Admission Council from the project ecosystem for representation.”
Who Created Decred?
Company 0, the team who previously built btcsuite, founded the decred blockchain. Development is decentralized, so over time this team will have less and less influence on the development process, at least in theory.
Nonetheless, looking at a few of the core members of Company 0 is the best way to get a glimpse at who’s building this blockchain. Let’s take a look:
Jake Yocom-Piatt - CEO
It’s hard to find much info on Jake. His profile at Bitcoin Magazine (where he contributed a guest post) says the following: ”Jake Yocom-Piatt is Project Lead for Decred (www.decred.org). A cryptocurrency pioneer, he has been an expert source for the Chicago Tribune and a variety of industry publications. He has also been a frequent panelist and has taught workshops on cryptocurrency governance.”
Beyond that, this outdated LinkedIn profile belongs to him. His previous experience includes being CEO of Conformal Systems LLC: ”Conformal Systems is an open source software engineering firm focusing on privacy and security oriented solutions.”.
Marco Peereboom - CTO
Marco worked at Dell for twelve years (1998-2010) before joining Jake at Conformal System as CTO. His roles at Dell were varied, ranging from Storage Engineer to *Software Engineer and finally Architect before finally becoming CTO at Conformal, a role he would reprise at Company 0.
Dave Collins - Lead Developer
Dave is the lead developer of Decred. To be honest, I can find very little info on him beyond the fact that he’s been working with Decred for the past two years or so.
If you want to hear Dave speak about Decred, you can watch this episode of Epicenter TV where he and Jake talk about the blockchain.
Token Distribution
8% of all Decred tokens were released at the start of the project: 4% went to the Company 0 team at a rate of $0.49 per token (designed to compensate them for $400,000+ of bootstrapped work and investment prior to the launch of the token) and 4% went out as an airdrop to anybody with development experience who requested to be included. 2,972 people participated in the airdrop.
Decred tokens are issued in the exact same rate as bitcoin, slowly dwindling down until all 21 million tokens are released. The current distribution of tokens is this (from their website):
Market History
This is interesting… the price was very low for the first ~1.4 years of the token’s existence, and then BOOM! This token hit the fucking moon, I know “mooning” gets thrown around a lot but this is insane. From less than $0.50 to more than $30 in just eight months is insanity.
Anybody who held on to some decred tokens must be very happy right now. It seems very risky to buy in right now, since it’s already gained so much value so quickly.
When this token is essentially trying to be competition against bitcoin… it’s hard to say if HODL is smart. Bitcoin ain’t going anywhere. On the other hand, it could find a long-term home as a top 20 token in the long tail of cryptocurrencies based on the quality of development and management so far.
Final Thoughts
I like Decred. It’s a good token with excellent ethics backing it up. The development team has a lot of experience and they’re working hard to iterate on the technology.
It’s impossible for me to predict the future of this token, there are too many external factors at stake. I’m not sure if it will find a good spot in the long-term market of cryptocurrencies. I sure hope it does though, based on the quality of the project.
What do you think about Decred? Were any of you holding tokens prior to the ultra-moon of mid-2017?
Great Read! Kinda a Decred Fan (well technically a Holder). Lost some during the Altcoin Bounce.. thinking of entering my position!
Forgive me for being a noob here, but what do you mean when you say "entering my position"?
This sounds like a good token but it is yet another coin trying to do what bitcoin already does, only slightly better. I feel bitcoin already has that pretty much sticltched up and unless something happens, such as the HF going horribly wrong, causing people to look for an alternative, it will remain king.
Yeah I agree with you, it's hard to see how decred builds a long-term audience w/ Bitcoin and Litecoin (plus all the forks) so well established already.
In some way, they are trying to build a strong community, but I doubt this approach will work. I am a part of the community and have worked on translation. Many people are not satisfied, promised payments are delayed, communication is bad etc etc...
Reputation takes a lifetime to build, and a second to ruin.
That doesn't sound good, though. Bitcoin should become deprecated once, as there are better alternatives even right now already.
If nothing then IOTA: super small and fast, no mining, no blockchain, >$1B market cap.
and maybe some fundamental crypto bugs :-) (or features as IOTA calls them)
hat is wrong with IOTA? I'm interested.
There was a big controversy of IOTA vs MIT researchers. Ivan on Tech has a great video overview:
You think bitcoin will fail?
In 10 years at worst, I wouldn't be surprised. But it heavily depends on the knowledge of the fund keepers about other cryptos.
I've been pointing people to your (well done) intros to the top 50 cryptos, but it would be easier if there was a link i could send friends that had all posts in this series so far available. Is that out there?