My quick analysis of Decred. Please let me know your thoughts! Check out https://bitconsult.co for Cryptocurrency news and information!
Decred Cryptoasset Analysis
Key Statistics 11/5/2017
Current Price: $27.62, Market Cap: $168.4 Million, Volume (24h): $804K Circulating Supply: 6.1Million DCR, Total Supply: 6.5 Million DCR, Maximum Supply: 21 Million Top Markets: Bittrex, Poloniex, Rank 31
Summary
Decred defines itself as an open and progressive cryptocurrency with a system of community-based governance integrated into its blockchain. Decred’s major departure from Bitcoin’s protocol is through its implementation of a hybrid Proof-of-Work (PoW)/Proof-of-Stake (PoS) consensus mechanism. This hybrid approach is intended to distribute network influence more fairly between users and miners. Decred also implements a voting system to let users decide on important network decisions, seeking to eliminate contentious hard forks.
History
The Decred project launched on January, 18th, 2016. Decred development was funded by Company 0 for a total of $420K. In return, Company 0 received 840K coins (4%of the total supply) via a pre-mine. Another 4% premine was airdropped to a list of participants in order to build the Decred network and decentralize its distribution. It’s unclear exactly who was involved with Decred from the start, but many speculate that some key Bitcoin developers contributed to Decred as they were unhappy with the increased centralization and power attributed to Bitcoin miners as well as Bitcoin’s failure to address network congestion.
Key Distinguishing Features
Wallet
Decred wallets are available for Windows, Mac OS, and Linux. The wallet is easy to download and install and has a professional interface. Unlike many cryptocurrency projects, the Decred wallet is not a straight copy of the basic Bitcoin QT wallet. The wallet currently has over 200,000 downloads and takes about 90 minutes to sync the blockchain over consumer grade cable internet.
The major feature of the Decred wallet is the voting mechanism. Simply link your wallet with one of Decred’s stake pools and you can begin voting, and staking, in minutes. Other cryptocurrencies utilize roundabout signaling mechanisms for nodes/miners to signal support and effectively vote. Decred offers a much cleaner solution right in the wallet.
Consensus
Proof-of-Work Mining uses computing power to validate transactions on the network and generate new Decred tokens. Proof-of-Stake mining uses funds to vote on network decisions and to validate transactions for rewards. PoS pools are available on Decred for smaller holders to participate proportionately in the PoS mechanism. It should be noted that Decred’s PoW mechanism is not ASIC-resistant, and ASIC’s are being developed for Decred, which may lead to some mining centralization.
Development
Like many cryptocurrency projects, Decred is open source and allows for anyone to submit new features and improvements to the network. This type of open project leads to development agility that centralized projects cannot offer, but it also suffers from a major drawback. Many cryptocurrency projects grow slowly, as the developers are not paid. Decred solves this problem by paying for useful projects with 10% of the block reward directly from the Decred blockchain. The Decred developers have been hard at work in 2017 and have laid out their plans and accomplishments in a Roadmap.
Atomic Swaps
Decred is one of the first cryptocurrency projects to support on-chain atomic swaps. Atomic swaps allow cryptocurrency holders to trade Decred for Bitcoin, Litecoin, and other currencies directly with other users, without having to rely on a third-party exchange. Many projects, including Bitcoin, have attempted to implement atomic swaps since 2013.
Decred is also working towards off-chain atomic swaps. These swaps are only possible through implementation of Segregated Witness (SegWit) and the Lightning Network. Bitcoin activated SegWit in August 2017, but Lightning Network development is proceeding very slowly. Decred may implement Lightning Network as early as November 2017. Decred’s smaller market cap and developer incentives allow it to implement changes more quickly.
Price Catalysts
Decred has traded mostly sideways in the last 3 three months, oscillating between $20-$40 per coin. This relative stability is impressive as many alternative currencies have plunged more than 60% in recent months, partly due to traders moving to BTC in anticipation of the Segwit2x hard fork. Decred trades on relatively low volume, with most of the action taking place on Bittrex and Poloniex. Decred is noticeably missing from major Asian exchanges (Bithumb, bitFlyer, BTCC).
Perhaps due to its relative longevity compared to some recent projects, Decred does not seem to get that much buzz on major cryptocurrency news sites. The Decred reddit also has less than 4,000 subscribers. This is despite the Decred team consistently putting out updates on twitter and pushing new upgrades. Seeking increased exposure may be the reason that “presence at events” is being pushed as an integral part of Decred’s roadmap.
Decred Potential
Many users are looking towards hybrid PoW/PoS systems as a potential solution to reduce the amount of energy consumed by PoW networks. Heck, Bitcoin now uses more electricity than some small countries. The PoS aspect also incentivizes users to run full nodes. It is becoming more difficult for consumers to run full nodes due to the massive amount of space needed to store the blockchain and the multi-day sync time. With less users running Bitcoin full nodes, validation is becoming more centralized, something that Decred is poised to prevent.
Decred’s voting features are also a big breakthrough in cryptocurrency. Hard fork voting takes place directly in the wallet, which allows users to directly influence network upgrades. Hard forks have recently crept into even the casual crypto-investor lexicon due to 2017’s Bitcoin Cash and Segwit2x hard forks. Hard forks can be dangerous to a network, not only in a technical aspect; but uncertainty leading up to a hard fork can shake investor confidence and damage the reputation of the currency.
Conclusion
In the fledgling cryptocurrency world, Decred is a relative veteran. Decred is actively under development, and the team has great outreach through twitter and their development roadmap. Decred’s hybrid PoW/PoS system is an interesting approach to ensuring distributed consensus and may help address some of the issues that plague Bitcoin. Decred’s wallet is polished, professional, and easy to use. Decred’s voting mechanism is a real breakthough which should see more attention as the Bitcoin Segwit 2x hard fork unfolds. Decred is a lower risk altcoin with the potential to grab some market share from the bigger, slower players.