Governance is a persistent issue in the cryptocurrency industry. Failures to compromise, internal conflict and differences of opinion all cause a variety of problems – from value fluctuations to full-on hard forks that result in split communities. This uncertainty is a major factor in the ongoing attempt to convince the public to adopt cryptocurrency. So long as stability is so easily disrupted, the average non-tech company will avoid using crypto-related products.
Decred (DCR) offers a solution to this problem – specifically created to fix the governance issues seen in the Bitcoin blockchain. While many blockchains are now moving towards Proof-of-Stake to provide a basis for voting rights, DCR specifically maintains both Proof-of-Work (PoW) and Proof-of-Stake (PoS) to form a combined governance system. Their modular codebase can be altered based on the desires of the full community – voted in through an autonomous system.
The Mechanics of Decred
Decred maintains a pool of miners to validate transactions – the traditional method created by Bitcoin. These miners solve cryptographic problems alongside validation to complete ‘blocks’ and generate new Decred coins. This is nothing new to the average cryptocurrency enthusiast. However, in addition to this PoW aspect, Decred folded in a Proof-of-Stake voting system.
Users can purchase voting tickets through the use Decred funds. Five of these tickets are chosen at random each time that a new block is generated and used to validate prior blocks. Those that have their ticket chosen will have the purchase price returned – as well as a portion of the block reward. The system prioritizes older tickets over time, ensuring that all tickets are eventually chosen.
Above and beyond the process of generating rewards, users can vote in the Decred Assembly that serves as the final word on suggested improvements. These votes are separate from the prior mentioned voting tickets and anyone on the chain can suggest improvements.
Decred’s Projects and Performance
DCR fully supports the Lightning Network that allows for off-chain channel transactions. This helps keep the Decred blockchain moving quickly and efficiently – a benefit that Lightning will hopefully provide for the original Bitcoin blockchain as well. In addition, they are in the process of establishing an atomic swap system – currently supporting both Litecoin and Bitcoin, as well as Decred.
Finally, they developed the ‘Politeia’ system for timestamped governance archives. Rather than storing all the various suggestions and votes that occur directly on the blockchain, Politeia exists within Git. To authenticate all timestamps placed in the archive, they are recorded directly to the Decred blockchain – allowing for quick validation of their authenticity.
Article By: Adam Stone
