Disclaimer: I’m personally invested in Decred. This article is an opinion and is for information purposes only. Cryptocurrencies are high-risk investments that can go to 0 at any moment. Seek a duly licensed professional for investment advice.
Decred (DCR), also known as “decentralized credits”, has enjoyed a steady rise since its inception a little over two years ago.
The “autonomous digital currency” recently started to garner a lot of attention due to its notable appearances at industry events. And while some might chalk that up to being typical hype that’s often followed by the disappearance act, I’d argue it’s only the beginning.
Decred is, in my opinion, a hidden gem waiting to be discovered by the masses.
And as casual enthusiasts exit crypto in one of the worst bear markets since 2015, identifying digital assets that are destined to succeed has never been a more critical task.
With that said, here are 8 reasons why Decred is positioned to not only survive, but excel in a turbulent market.
1. First-Class Development Team
The lead selling point of every crypto project is, unsurprisingly, their “rockstar” team. A complete package of Ivy League educations, well-known advisors, celebrity marketers, and big-name partnerships.
The reality is that same team is likely to be more accurately described as someone — who might have a degree — with an inflated resume and no hands-on experience, a few people who were offered a percentage of the token distribution in exchange for a photo, a shill willing to promote anything that is backed by a paycheck, and an arrangement (read: checking account) with JPMorgan Chase.
As for the accomplishments; those are on the horizon. At least, that’s what investors are being sold.
Fortunately, the SEC isn’t buying it.
So, what makes Decred different? Founding Decred developers have been working with blockchain technology since 2013. They’re the authors behind many prominent projects in this space including:
- BTCsuite (an alternative bitcoin implementation written in Go)
- ZKC (secure chat software)
- Atomic swaps (exchange-free cryptocurrency trading)
That kind of background is hard to come by, especially considering the infancy of blockchain as a whole. And the strong base that exists has the effect of attracting additional talent, with a growing list of contributors working on development, design, marketing, and strategy.
We won’t dive into too much history here, but some may find the following Reddit post to be enlightening:
2. On-chain Governance
Was it Bitcoin or Bitcoin Cash? How about Bitcoin Gold and Bitcoin Diamond — those sound flashy!
Assuming it can even identify itself anymore, will the real Bitcoin please stand up?
Unfortunately this is becoming a common occurrence. These chain-splitting “hard forks” are a result of infighting over issues such as security, scalability, and new functionality. When entities can’t agree on what to implement, or how to proceed, they simply decide to part ways.
Chaos typically ensues. And while clarity is eventually attained, network strength is diminished as a result of the division, and opponents grow louder with each rodeo.
More importantly, Bitcoin’s legitimacy and scarcity is questioned.
Decred, on the other hand, is fork-resistant. Instead of leaving the decisions up to a handful of developers and miners, features are voted on by the users who are holding and staking the coin. And staking is done directly (no masternodes or Delegated Proof of Stake) in order to promote decentralization.
This gives Decred an agile, cooperative advantage, allowing decisions to be made in a fluid manner while avoiding hard forks and apprehension.
Decred’s killer feature is good governance, and with good governance, you can have any feature you want. — Placeholder Investment Thesis
Decred’s hybrid PoW/PoS protocol is based on the MC2 whitepaper written by Adam Mackenzie (a former Monero developer), with some techniques also taken from the PoA whitepaper co-authored by Charlie Lee (founder of Litecoin).
By taking a hybrid approach, Decred is able to exploit strengths, and either minimize or eliminate vulnerabilities that are tied to PoW and PoS (when those protocols are used exclusively).
We’ve already discussed one of those benefits (governance). But security, while admittedly not as exciting, is just as crucial.
Security is a feature that’s often mentioned in passing. And for some projects, even the developers view it as an afterthought. But ask anyone from the Verge community — which fell victim to the same attack, not once, but twice — and they’ll tell you just how important it is.
Decred is heavily resistant to two common attack vectors.
In any potential “double spend attack”, according to Yocom-Piatt, “mining Decred in secret would require roughly 90% of the hashpower and 23% of the staked funds.” That is to say, it’d be virtually impossible.
And as for the infamous “51% attack”, it’s been determined that if Bitcoin were using the same hybrid model as Decred, it would be 22 times costlier to pull off an attack.
In Decred’s hybrid model, 60% of each block reward goes to the miners, 30% goes to the voters, and 10% goes to the project treasury.
In other words, Decred is self-funded.
- hire an army of developers to expedite the roadmap?
- run a Super Bowl ad?
- pay for a Binance listing?
- fund a decentralized exchange?
Simply create a proposal, the stakeholders (potentially) vote it in, and the plan is executed.
- don’t rely on donations, which could present conflicts of interest
- don’t get paid lump sums up-front (completely removing the incentive to get things done)
- can rest easy knowing that there’s dedicated funding coming in on a consistent basis
Best-in-class governance paired with perpetual funding and an open and collaborative environment with users and developers is the DNA that could achieve a breakthrough in blockchain development. — BlueYard Capital
As mentioned above, 30% of every block reward goes to stakeholders — those who hold Decred and participate in voting.
Staked Decred is locked for an average of 28 days, guaranteeing that voters cannot amass tickets in order to manipulate a decision (without exposing themselves to the ramifications of that decision).
The most obvious benefit of staking Decred is that, currently, PoS rewards deliver an annual ROI of approximately 20%. That allows investors to buy-in on the long-term vision, avoid the risks and stress of day trading, and earn more Decred… all while being encouraged to participate in the ecosystem.
In bear markets, some might argue that staking is a good place to wait out the storm, assuming you’re not trying to time the bottom.
But staking serves another — perhaps more consequential — purpose.
By incentivizing users to contribute, supply is constricted, panic selling is subdued, and the value is kept relatively stable (that is, in a highly-volatile crypto market).
As seen in the chart above, when measured against the percentage down from its all-time high, Decred is by far the leading cryptocurrency among established projects.
Ticket-splitting (beta) will soon allow anyone to participate in staking by purchasing a partial ticket, as opposed to only those who can afford enough Decred to buy an entire ticket (current cost: 95 Decred). And with nearly 50% of Decred already being staked without ticket-splitting, we could end up seeing some impressive stats moving forward.
This, in theory, will stabilize Decred even further by:
- allowing everyone to stake
- preventing current stakers from getting priced out in the future due to the rising ticket cost
Great startups and serial entrepreneurs are known for putting in long hours and working incredibly hard to ensure that their ideas are realized. For most, there’s plenty of motivation to keep them going: the journey, their passion, and a whole lot of money.
But what happens when these startups are given millions (billions, even) before they even begin to write a single line of code?
The same thing that happens when you’ve been given the “cheat codes” to anything else in life. You lose interest.
That’s a formula for disaster, as witnessed by the hundreds of coins that have succumb to reality. After all, delivering a product sounds great, but for some, the fast life is just too hard to resist when you’re a fraudulent, self-made millionaire.
Decred had arguably one of the most ethical initial distributions in crypto. No hyped-up ICO with a questionable legal status. No insider handouts. No power plays.
Instead, founders purchased 4% of the total supply. Another 4% was airdropped to the community. The rest is mined, with the block reward going to miners, stakeholders, and the project treasury (as described earlier).
As a result, Decred has a core development team that has an interest in seeing the project succeed. A team that has demonstrated that they aren’t here strictly for the lambo parties.
7. Adoption, Traction & Roadmap
After the fundamentals are solidified, a cryptocurrency needs traction, community, adoption, and a productive roadmap that’ll guarantee maximum visibility.
- listed on over a dozen high-volume exchanges with a variety of trading pairs including USDT
- supported on the Trezor hardware wallet, with Ledger and Edge support in the works
- built a large community of users who believe in the tech, with little advertising to date
- gradually ramping up brand-building (stole the show at Consensus 2018)
- Lightning Network support
- SPV wallet support
- decentralized control of funds
- decentralized autonomous entities
- scalability optimizations
Additionally, PoW hash rate is skyrocketing — a good indicator of what sentiment looks like.
8. [Your Favorite Altcoin]’s Nemesis
An article mentioning an alternative cryptocurrency wouldn’t be complete without the tired, worn-out “Bitcoin killer” claim.
Provocative? You bet.
When you’re on top of the world, every motherf*cker wants to get a piece of your *ss. — Eastbound & Down (via Quotery)
Bitcoin isn’t going anywhere anytime soon. But that doesn’t mean everyone else in the decentralized universe is standing idly by, waiting for Bitcoin to fix Bitcoin.
If complacency trumps innovation, it’ll only be a matter of time before the inevitable happens.
The question then becomes, which cryptocurrency will present a legitimate challenge to the throne? Not a toppler, necessarily — it’s way too early to have that discussion. But a project that at least deserves the opportunity.
A better Bitcoin Cash. A better Litecoin.
Sure, Litecoin has always wanted to be “the silver to Bitcoin’s gold.” And that tagline sells. But does Litecoin serve a purpose? Not according to Kyle Samani, cofounder of Multicoin.
Charlie Lee isn’t afraid to question his creation’s contribution to crypto either, referring to it as a “copy/paste coin that is not that innovative”.
In fact, Lee believes that Bitcoin, Monero, and Decred are the top three coins when measured against four factors: innovation, competent developers, honest marketing, and fair incentives.
But I digress.
Is there a cryptocurrency out there today that deserves to be mentioned in the same breath as Bitcoin? I’d advocate for one that is addressing Bitcoin’s primary shortcomings: governance, funding, and centralized power.
And if it happens to be an underdog whose market cap would need to explode before demanding that kind of recognition?
Send me a postcard.