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The Beginner's Guide
One of the first cryptocurrencies, Decred copied the Bitcoin code and modified it in an effort to empower and reward token holders who contributed changes to their network.
In this way, Decred experimented with ways to encourage user participation in its governance process and offered a new idea for this.
With that in mind, the Decred team designed Decred as a hybrid consensus engine with Proof of Work (PoW) and Proof of Bet (PoS) components, with PoW miners verifying transactions and PoS stakers proposing and voting on updates from network.
Decred uses a proposal system called Politeia to tie it all together, where stakeholders vote on project funding, new initiatives and various other changes to the protocol code.
The project's native cryptocurrency decred (DCR) competes with other cryptocurrencies such as bitcoin (BTC), dogecoin (DOGE) or Litecoin (LTC), while adding additional features like the ability to participate in governance and interact with the community and use it to fund network upgrades.
How does Decred work?
Decred was created by copying the Bitcoin code and therefore the cryptocurrency offers similar features with several modifications.
For example, Decred's lockout time is 5 minutes (compared to Bitcoin's 10), its mining difficulty adjusts approximately every 12 hours (compared to Bitcoin's two weeks) and its lockout reward is allocated to miners, stakers and a treasury (as opposed to 100 percent issued to Bitcoin miners).
| Decred | Bitcoin | |
|---|---|---|
| block time | 5 minutes | 10 minutes |
| Mining Difficulty Adjustment | 12 hours | 2 weeks |
| Block Rewards | The initial reward was 31.19582664 DCR and it is halved every 6.144 blocks (~21 days) | The initial reward was 50 BTC and halved every 210.000 blocks (~4 years) |
| Block Reward Allocation | 60% miners, 30% stakers and 10% for a treasure | 100% miners |
| Max. Provide | 21.000.000 DCR | 21.000.000 BTC |
Hybrid consensus: PoW / PoS
Central to Decred is its hybrid Proof of Work (PoW) and Proof of Stake (PoS) consensus mechanism that maintains the distributed network of computers running its blockchain in sync.
Similar to other PoW cryptocurrencies, Decred miners spend energy solving computational puzzles to validate transactions and add blocks to the blockchain.
Decred's PoS then allows those who bet on DCR to validate and confirm these transactions and also participate in the network's governance process.
Stakers receive 'tickets', a non-transferable asset specific to the Decred network, with 20 tickets available in each block. Five of these tickets are then chosen at random and their owners validate the accuracy of the blocks proposed by the miners.
After the blocks are finally settled and added to the blockchain, the block reward is issued to the involved parties as follows: 60% for miners, 30% for stakers and 10% for treasure.
polity
Politia is a governance system implemented by Decred that aims to create an open environment for new ideas and a voting system to accept and implement them.
Users wishing to offer potential policy updates or changes can do so using Politeia's public proposals platform, which facilitates the submission, tracking and discussion of suggested changes to Decred governance.
