The 8th February 2018 will mark two years since the Decred mainnet launched. Over the last 12 months the project has continued to make monumental progress towards developing the first truly decentralized cryptocurrency that is open, scalable, private, self-funded and autonomous. A decentralised cryptocurrency that is fit to serve the masses as a global digital currency. In 2017 the Decred development team engineered new features and tools that revolutionized the cryptocurrency space and solved the blockchain governance problem. In 2018 Decred will usher in a new era of blockchain technology. But before we do, I felt it was a good moment to look back and reflect upon some the biggest successes the project and community have achieved in 2017 – year two of the Decred project!

Last year got off to a great start when the project lead, Jake Yocom-Piatt was invited to give a talk at Coinbase headquarters in San Francisco, California. Jake’s presentation was a huge success, it was extremely well received by Coinbase employees, who learned how Decred was going to take the concept of decentralization one step further. Jake was asked to present by the creator of Litecoin, Charlie Lee, who had recently became an avid supporter of Decred after discovering that, in part, it is based upon his theoretical proposals brought forward in the Proof-of-Activity whitepaper. Since then Charlie has continued to support Decred and has joined the project as an advisor along with Bitcoin developer, Jimmy Song. If you missed the presentation you can watch it here.

In my opinion, the most significant moment of the year started on 17th May 2017 when the first ever user activated hard fork vote began. Using Decred’s novel on-chain consensus voting system stakeholders commenced voting for development work to begin on Lightning Network implementation, and to hard fork to a new stake difficulty algorithm. The vote successfully finished on 11th June 2017, achieving over 98% support for both agendas. Shortly after, on the 9th July 2017, the first ever on-chain user activated hard fork in history successfully occurred, and Decred made the smooth transition to its new stake difficulty algorithm. This represented the completion of phase 1 of the Decred DAO. Whilst Bitcoin was at the height of a scaling civil war that had been raging for over three years, Decred showed the world a solution to the blockchain governance problem – on-chain consensus voting was born.

Soon after, on the 15th June 2017 Decred announced the surprise launch of a new feature, dcrtime, a free time stamping service using the Decred blockchain. Whilst dcrtime would later go on to enable censorship resistant voting on the Decred Proposal System, Politeia, the generic concept of versioned and timestamped data can also be applied in numerous public and private use cases. Such as document and record storage, reputation and identity systems, and supply chains.

Perhaps the biggest surprise of the year was the release of Decred Atomic Swap. This took the entire crypto space by storm and has since been adopted by numerous projects – facilitating the first atomic swaps between Decred, Litecoin, Vertcoin, Bitcoin, Viacoin, Bitcoin Cash, and Particl – amongst others. Furthermore, with the recent upgrade that was announced on 11th January 2018, Decred Atomic Swap is now compatible with around 1300 different cryptocurrencies – including ERC20 tokens! 

Decred developed the Atomic Swap tool to eliminate the requirement to trust a third party intermediary when making an on-chain exchange – a step that further hardens Decred to censorship. Now Decred hodlers can securely store, transmit and exchange their coins no matter what the world throws at them! Going forward, I’m looking forward to how this technology can be extended even further and put to more use cases, including off-chain swaps, and an Atomic Swaps DEX integrated into Decrediton.

On the 25th of October the details of the soon to be released Decred Proposal System, Politeia (Pi), were announced. Politeia is a timestamped filesystem that allows data and proposals to be stored off-chain, but anchored to the Decred blockchain. When Pi goes live anyone will be able to submit a proposal for funding to develop or market Decred for a small fee to prevent spam, which will subsequently be voted on by stakeholders. And anyone who submits a proposal will receive a token that provides them Proof-of-Censorship should it be required. To celebrate this milestone, Decred held the Politeia platform launch party on 8th December 2017 in Austin, Texas. One thing’s for sure – Politeia will change everything!

However, these are only a few of the many events, features and happenings that went on in the Decred ecosystem during 2017! Decred released a new block explorer, website, explainer video and Wikipedia page. We also had the launch of the Decred Assembly and Decred Roundtable YouTube shows, the Decred Education series, DecredTV Brazil, and the much-loved Decred mascot – Stakey! Decredition (the Decred wallet) has undergone a number of impressive facelifts, and many new features have been added, providing a significant improvement in user experience. In addition, Decred has recently launched a successful advertising campaign to tell the world about Decred and bring in some new Stakey fans!

Throughout the year Decred has also been represented at numerous conferences, events and meetups. These include: Coinbase, Illinois Bitcoin Meetup, Consensus 2017, Defcon, Breaking Bitcoin Paris, Texas Bitcoin Conference, Texas Venture Forum, North American Blockchain Expo, InsideFintech South Korea, and VBitConf Brazil. Decred has also presented at a series of events across the Netherlands, and has held its first meet-up down under in Australia! An increased presence at events around the globe went hand in hand with the project’s internationalization effort last year. The website was translated into all major languages, and the results of this effort have been reflected in the growth of our community and social media following. The size of the Decred community has accelerated to become one of the largest, friendliest and most committed open-source communities in existance, stretching into every corner of the planet. Decred now has a thriving community established in every continent in the world! In addition, Decred has also been pleased to see a big increase in the number of exchange, wallet and payment integrations throughout 2017. These include Changelly, HolyTransaction, Tux, Coinpayments, Shapeshift, Flyp.me, Litebit, Exodus, Wirex, Uquid and Globee.

Whilst the project’s primary focus is on advancing blockchain technology to create the ultimate cryptocurrency, it was nice to see that Decred’s achievements in 2017 were also reflected by a steady increase in the exchange rate throughout the year. Decred rose from a low of $0.42 in January to a high of $108.32 in December, which equates to just over a 257x increase – or a rise of over 25,700%. Moreover, if you staked your coins throughout 2017 you will be now be sitting on a whopping gain of over 33,000% against the USD! This means that in terms exchange rate, Decred outperformed almost all other cryptocurrencies!

Overall, in the last year the network has continued to become more decentralized, with an increased number of nodes, stake pools, miners, and stakers! Decred development has also become increasingly decentralized, so much so that the number of new developers working on the project is now more than double the existing Company0 team! Furthermore, all decisions relating to a Decred consensus change now have to be made via the on-chain decentralized consensus voting system – which represents the largest step forward for decentralized governance in the entire cryptocurrency space. This means no consensus changes can occur without the formal support of  75% or more stakeholders. Throughout 2018 Decred will continue to become increasingly decentralized and distributed as early hodlers have their stake diluted by the ongoing  PoW miner to PoS miner block reward ratio of 2:1, and as more and more PoW miners focus their attention on Decred (including the three different ASIC manufacturers that are due to launch this year). Moreover, once Politeia and the DAO is functional both the direction and control of development funds will also be fully decentralized.

Looking to the future, 2018 will be Decred’s biggest year yet. The official 2018 roadmap is due to be released in the coming weeks, outlining some of the exciting new features coming to Decred. Along with the Lightning Network and off-chain atomic swaps, I’m also looking forward to Decred’s highly anticipated privacy enhancement – something that I’m certain will send shockwaves throughout the crypto space. However, more than anything, I’m excited for the live release of Politeia and the Decred DAO. I believe Politeia and the DAO will be the biggest leap forward for blockchain technology to date. Utilising Decred’s on-going 10% development subsidy, and over $50 million worth of decred in the development fund (~431,000 DCR) Decred will mature into the worlds first truly decentralized and self-sustainable ecosystem that will eclipse all other cryptocurrencies.

Anyone will be able to submit a proposal for funding to be approved by stakeholders via the censorship resistant Decred Proposal System. So, now is the time to start thinking about how you can contribute. If you, or anyone you know, has an idea that can bring value to Decred, then consider submitting a proposal to fund it (in DCR) and make it a reality. Whether it’s development, or marketing, big or small, any and all contributions can and will make a difference. As long as stakeholders approve your proposal, anything is possible – there are no limits to what we can achieve. When the Decred DAO is finally released, I believe there will be no other cryptocurrency that is as decentralized, scalable, private and secure as Decred.

Finally, from me, I want to say a big thank you to everyone who has been involved with and contributed to the Decred project over the last 12 months. What we have achieved is truly mind blowing. It’s clear that the tireless efforts of the community, project leaders, developers, designers and marketers have made waves in the crypto space throughout 2017. But 2018 will be the year of Decred! Be a part of it!

P.S. – Don’t forget to grab your free tickets to the Decred New York Meetup at Formerly Crow’s, in the West Village, New York, on January 18th and the Politeia Platform Challenge event at the Hyatt Regency, in Austin, Texas, on the February 10th!

 

Decred is a hybrid Proof-of-Work (PoW) and Proof-of-Stake (PoS) cryptocurrency that offers many benefits over a pure PoW or PoS blockchain. The majority of these benefits come from Decred’s unique PoS system that works by locking up a chunk of decred coins into a “ticket”. A ticket represents a token to participate in the Decred PoS system, and if you hold a one then you’re a Decred Stakeholder.

The primary role of a Stakeholder is to govern Decred via the on-chain consensus voting system and the Decred Proposal System, Politeia. Decred Stakeholders have a real say in how the network is upgraded, developed and marketed – the Stakeholders make the rules. However, Stakeholders also help to secure the network, and protect it against contentious hard forks. Furthermore, they actually get rewarded for doing this!

Here are my top 5 reasons to become a Decred Stakeholder:

Reason 1: Staking rewards – Receive a reward for governing Decred

Just like PoW miners are incentivized to participate in the network with 60% of DCR coins created in each new block (block reward), PoS miners (Stakeholders) are also incentivized to participate with 30% of the block reward. Stakeholders receive this reward for governing the network, which is currently around 1.37 DCR, or a return of 1.8%, every time their ticket votes. But the actual percentage of return is determined by a combination of the current block reward and the ticket price, which is in turn determined by the demand for tickets.

Once you’ve obtained your ticket via the Decredition wallet it enters the ticket pool alongside all other Stakeholder tickets, where it will wait to be randomly drawn to vote. It takes an average of 28 days for a ticket to be selected, but it can take up to 142 days (around 5 months), and there is a 0.5% chance that it will expire before being chosen (which means your coins are returned without any reward). The ticket pool has a target size of 40960 tickets. If the amount of tickets in the pool reduces below this number then the price of a ticket drops. Conversely, if the amount of tickets in the pool rises above this number the ticket price increases. Therefore, the cost of a ticket is actually decided by the Stakeholders themselves, or more specifically, by how much DCR a Stakeholder is willing to lock up to obtain a ticket and the subsequent reward.

For example, if the ticket price dropped to 40 DCR with a 1.4 DCR voting reward, this would represent around a 3.5% return in approximately 28 days (high incentive). So it’s likely lots of people would want to buy tickets. In turn this would drive up the number of tickets in the pool over the target size, which would therefore raise the ticket price (via the stake difficulty algorithm). If the cost of a ticket continued to increase to 100 DCR this would only represent a 1.4% return (lower incentive). So more people may decide they are unwilling to pay such as high price. As a result it is likely this would then reduce the number of tickets in the pool below the target size, lowering the ticket price. And so on…

At present it appears the average cost of a ticket is steadily increasing as more and more people see the value in becoming a Decred Stakeholder, but the current price is fluctuating around 75 DCR (~1.8% a month). When these rewards are compounded over a year the gains are actually quite surprising!

For a detailed explanation of Decred rewards and inflation click here.

 

Reason 2: Consensus voting – Govern Decred Consensus Changes

I believe the feature that brings the greatest value to a cryptocurrency is decentralisation. True decentralisation means a censorship-resistant network with no single point of failure. However, a cryptocurrency also needs the ability to quickly adapt and evolve so it can scale to meet the demands of an ever-growing user base. Therefore, all decisions regarding these upgrades must also be made without reliance upon a central authority, as this would represent a single point of failure, putting the security of network at risk.

In pure PoW cryptocurrencies like Bitcoin, PoW miners ultimately make the decision to upgrade the consensus rules (hard fork). But because there is no formal governance system these changes often result in a prolonged and messy governance crisis. Furthermore, PoW miners have their own interests in mind, not the interests of the users – we’ve all felt the effects of the high transaction fees on Bitcoin. To fix this issue Decred decided to implement a formal on-chain consensus voting system that ensures truly decentralised decision-making, by those who have interests aligned with the users – Stakeholders.

So perhaps the greatest benefit of being a Decred Stakeholder is the ability to have a real say in decisions that relate to a change in the consensus rules of the network, via the world’s first on-chain consensus voting system. Without the majority support of Stakeholders it is impossible to change the consensus rules of Decred.

Consensus voting is pretty simple. After a Decred Change Proposal (DCP) has been approved by Stakeholders in Politeia, developers then code the protocol upgrade. Once the upgrade is complete this is released to Stakeholders in a new version of Decredition that contains the dormant upgrade code. If 75% or more Stakeholders choose to upgrade to the new version the voting process begins. Throughout a voting cycle Stakeholders cast their vote by simply changing the ‘yes’, ‘no’ or ‘abstain’ voting parameters when they obtain a ticket. If the vote achieves at least 75% support from Stakeholders the dormant upgrade code activates and the hard fork automatically occurs, after a short lock-in period (normally around 1 month). Unlike other cryptocurrencies this is not a signaling vote – the vote is binding and the decision is final – developers or PoW miners cannot stop it. The Decred Stakeholders really do rule the network.

For a detailed guide to Consensus Voting visit the mainnet voting documentation page here.

 

Reason 3: Politeia voting – Approve proposals for funding

To avoid conflicts of interest, or the influences of an external third party, Decred has a built-in self-funding mechanism where 10% of all block rewards are allocated to a central development fund. Soon anyone will be able to submit a proposal to receive DCR from this fund to develop or market Decred via the new Decred governance platform and Proposal System, Politeia (Pi).

Pi’s primary function is to provide Decred with an unalterable public record of proposals, comments on proposals, and Stakeholder votes, by anchoring this information to the Decred blockchain via a timestamped filesystem. As a Stakeholder you’ll be able to vote to decide which of these proposals you’d like to see funded. Therefore, you have the power to decide how Decred developed and marketed. As a Stakeholder you are in the driving seat! Together with other Stakeholders, the decisions you make will direct the future of Decred.

If you’re interested in finding out more about Pi, then have a read of this recent blog.

 

Reason 4: Help secure the network against contentious hard forks

Although the primary role of a Stakeholder is to govern Decred, they also help to protect the network against 51% attacks and contentious hard forks.

Stakeholders participate in the Decred PoS system, which acts as a secondary authentication for consensus. This means Stakeholders can keep a check on the behaviour of PoW miners by voting against the previous block to either reduce or eliminate the block reward. When each new block is created 5 tickets are randomly drawn from the ticket pool to vote on it, and all new blocks need at least 3 votes to be valid. For PoW miners to also receive the full block reward all 5 tickets must approve the block. If only 4 tickets approve then the PoW miners only receive 80% of the block reward, and if only 3 approve then they only receive 60% of the block reward. Any less than 3 approvals means no reward is received at all, and the block is invalid. Therefore, this provides a strong incentive for PoW miners to not engage in questionable behaviour, or behaviour that does not conform to the wishes of Stakeholders.

In addition, this also means it’s impossible to create a contentious fork of Decred against the wishes of Stakeholders, without destroying the hybrid nature and security properties of the system (in which case the fork wouldn’t be Decred). A Bitcoin Cash or Ethereum Classic scenario could not happen with Decred unless the Stakeholders desire it.

For example, if 80% of Stakeholders voted in favour of activating a privacy enhancing feature on Decred, and the remaining 20% refused to move over to the new private blockchain, the miners on the old minority chain would statistically only be able to obtain 1 out of the 5 votes on each block (20%). Which would be less than the minimum of 3 votes required to validate a block. Therefore, the minority chain would not be able to create valid blocks, and they would be rejected by the network.

Furthermore, this also makes it incredibly difficult for someone to 51% attack the network. Decred’s Lead Developer, Dave Collins, carried out an excellent apples and oranges comparison between Decred and Bitcoin to explain this, shown below:

“As of November 1, 2017, at its peak, there was an estimated 10,833,159 TH/s of hashing power securing the Bitcoin network. So in order to successfully attack Bitcoin, you would need 51% of that which is 5,524,911 TH/s. Also, let’s discount the fact that with the amount of money we’re talking about here you could just pay to have your own ASIC built out in a fab for even less, but let’s just keep it simple using released hardware. An Antminer S9 provides 14 TH/s @ 1415 USD. Thus, to achieve that 51%, you would have only needed to acquire approx 394,637 Antminer S9s * 1415 = $558,411,355 USD. Now, for an apples to apples comparison, let’s assume Bitcoin used Decred’s hybrid system and thus we’ll use the same coin supply, the same price per coin, and the same PoW hash rate. As of that same November 1, 2017 date, there were around 16,660,788 bitcoins in circulation at a cost of roughly 6740 USD per coin. Now, let’s go ahead and use some less than favorable numbers and assume there is only 33% stake participation and calculate how much money it would take to attack the network by aiming to acquire 33% of the stake. Running the numbers, we can see ((1/0.33–1) * 0.33)³ = 0.29, so you would also need roughly 29% of the hash power in addition to 33% of the stake. So, 33% of 33% of 16,660,788 coins ~= 1,814,360 * 6740 per coin = 12,228,786,400 USD for the PoS portion. Now, you also need 29% of the hash power, so 10,833,159 TH/s * .29 ~= 3,141,616 TH/s. Thus, you would need to acquire approx 224,402 Antminer S9s @ 1415 USD = 317,528,830 USD. So, in summary, you would need roughly 559 million USD to attack Bitcoin while you would need roughly 12.55 billion USD to attack Decred.”

For a more detailed explanation of Decred’s fork resistance click here read of Dave’s recent Reddit post on the topic.

 

Reason 5: HODL

Investing in cryptocurrency can be pretty stressful. It’s volatile, unpredictable and highly speculative. If you haven’t got the stomach to hodl strong through the highs and the lows then it’s very likely you won’t last long in crypto. Luckily being a Decred Stakeholder can also can help with this!

To be a Stakeholder you need to have a long-term outlook and firm belief that the Decred project will succeed. As I mentioned earlier, when you stake your decred it takes an average of 28 days for your ticket to vote, but it can be anything up to 142 days before your coins are returned. Therefore, you need to have enough conviction to lock up your DCR for an unknown period of time (or until your ticket votes).

Personally, I’ve found staking to be great for hodling strong! It’s easy for your emotions to get the best of you when investing, when the market is on a downtrend you can over-react or think irrationally which can lead to panic selling at the wrong moment and losses. The good thing is that as a Decred Stakeholder you don’t have to worry about panic selling – because you can’t! When you’re a Stakeholder you earn rewards no matter what the market is doing. It’s a great feeling!

Conclusion

Bitcoin has disintermediated banking – if you own Bitcoin you can securely store and transmit value without relying on a centralised third party – you can be your own bank. But as a Decred Stakeholder you’re not only the bank, you’re the central bank too. You’re empowered with the ability govern Decred – you make the rules.

More and more people are now realising this along with the broader benefits and rewards of becoming a Decred Stakeholder. As I’ve mentioned in a previous blog, the demand for tickets is gradually increasing. Between September 14th and November 14th the percentage of decred locked up in PoS rose from 42.01% of the total supply, to 46.65% of the total supply, which also meant the circulating supply of decred dropped by 64,079 over the two month period – despite inflation!

Buying tickets can quickly become addictive. Maybe it’s the buzz you get when your ticket votes and the reward arrives your wallet. Or maybe it’s the feeling of safety you have when you realise you actually hold some sovereignty over your own finances. Either way, when you become a Decred Stakeholder it’s very likely you will never go back. Once you learn of the benefits and rewards that come with governing the Decred network it’s likely you will be Stakey fan for life!

Although the ticket price is slowly climbing as demand for tickets increases, it’s not too late to join the club and be part of something where you really are empowered to make decisions that can change the world – become a Decred Stakeholder!

Yet again, it’s been another busy few months for Decred! In the wake of the Atomic Swap release we’ve had several new developers jump aboard, three new exchange listings, a growing presence at conferences and events, and a new Decred community YouTube show. We’ve also had the release of the new Decred website, the start and end of the Lightning Network activation vote, the unveiling of the Politeia platform, and the news that ASICs will be coming to Decred! Furthermore, I’m pleased to announce that due to an increase in staking participation the circulating supply of Decred has officially dropped over the last two months!

Decred Atomic Swap Adoption
October kicked off to a great start in the wake of the Decred Atomic Swap announcement that took the crypto community by storm. Since the atomic swap tool was released, with initial support for Bitcoin and Litecoin, we’ve seen continued adoption from a number of other projects including Vertcoin, Viacoin and Bitcoin Cash – with more in development. Altcoin.io has also made good use of the open source nature of the Decred Atomic Swap tool to enable the first ever atomic swap between Bitcoin and Ethereum!

Recruitment
Over the last few months the Decred team has continued to grow, with new faces in both marketing and development. Our new developers have already made some fantastic contributions to both front and back-end development. Improvements include a significant reduction in the time it takes to load the Decred blockchain from scratch (up to 30% faster load time), and some nice additions to Decrediton. If you’re interested in contributing to Decred, and believe that you have what it takes to add value to the project then visit our recruitment webpage to find out how you can get involved!

The Decred Roundtable
Last month the project was also proud to announce the launch of another Decred YouTube show – the Decred Roundtable. While our existing YouTube show, the Decred Assembly, primarily focuses on interviewing external guests from the wider crypto community, the Decred Roundtable will provide an opportunity for Decred community members to appear on the show for a more informal group discussion on various topics of interest. It’s been great to put some faces to the names I see on slack day in day out! I’ve really enjoyed the shows so far, and I look forward to watching in future. If you missed any of the new episodes, check them out here!

Conferences and Events
Recently the project has also stepped up its presence at conferences and events, and this is something that is set to continue. Company0 CTO, Marco Peereboom, recently presented at the Texas Bitcoin Conference, and João Ferreira “Girino Vey” represented Decred at the V BitConf in Brazil. Furthermore, our Community Co-ordinator, Noah Pierau, is attending a series of blockchain and cryptocurrency events across the Netherlands to promote Decred. So far feedback from these events has been extremely positive. Once people understood the concept of Decred, how we solve the blockchain governance problem, and the projects future plans, they were hooked!

Later this month the project lead, Jake Yocom-Piatt is also scheduled to present Decred at the largest Blockchain conference in the world, the North American Blockchain Expo. And Decred representatives will also be in attendance at InsideFintech, the largest fintech and blockchain conference in South Korea. So I’m sure we will have plenty of new Stakey fans joining us over the coming months!

Exchange Listings
More good news came with the announcement that Decred had been added to LiteBit exchange, Evercoin exchange, and unexpectedly, the new Korean crypto exchange Upbit! It was great to hear that Decred was chosen as one of the initial coins to be listed on Upbit, who have partnered with Kakao (the company behind Kakao Talk – the popular social messaging platform used by 93% of Korean smartphone users). With Korea already leading the charge with crypto exchange volumes there are understably high hopes for Upbit. The news also came at a perfect time for Decred. The week before the announcement Decred.org was launched in Korean language, and a number our Korean community members had just established the first Decred Korea community, with the new Decred Korea Twitter feed, Kakao Talk group, and Band.io page.

Politeia Platform
Last month the details of the long-awaited Decred Proposal System, aka Politeia (Pi), were also released. The Pi platform is a timestamped filesystem that allows data and proposals to be stored off-chain, but anchored to the Decred blockchain. Users will be able to submit proposals for funding to develop or market Decred, and anyone who submits a proposal will receive a token, providing them proof of censorship should it be required. When Pi initially launches proposals will be submitted to the Decred development team for vetting and approval, however this process will transition over to stakeholder voting shortly after. The test platform is already up and running – check it out here.

Although Pi was primarily developed as a censorship-resistant proposal system for the Decred DAO, it also has a vast amount of other potential uses. To explore some of these uses Decred has launched the Politeia Platform Challenge – a competition designed to discover alternate uses for the Politeia codebase, with prizes of $10k, $5k and $2k for 1st, 2nd, and 3rd place (payable in DCR). If you’re interested in taking part in the competition follow the instructions on the link above and email your entry to before January 26th 2018. To celebrate the start of the Politeia Platform Challenge, Decred will also be holding an official launch party at The North Door, Austin, TX on December 1st 2017. The event begins at 8 pm and ends at 1 pm and is free to attend. So if you can, why not pop by for some drinks and an interesting conversation!

Website Update and EDU.DCR
This month the new and updated Decred.org website was launched, and with it the new Decred explainer video. The website has been given a full revamp by our design team to give it an awesome new look. Other additions include an updated mission statement and a new contributor page.

In addition, the first two episodes of the Decred education series (EDU.DCR) have also been released. Our motion design guru @kyleFirethought has created EDU.DCR to provide users will clear and simple step-by-step guide to navigating the Decred ecosystem. Episode one focuses on explaining how to purchase DCR in your local currency, while episode two explains some alternative ways to get your hands on Decred, such as Proof-of-Work (PoW) and Proof-of-Stake (PoS) mining. The videos are extremely well made, and very easy to follow and understand. Along with existing Decred documentation the videos will provide newcomers with an invaluable source of information.

New Block Explorer and Wikipedia Page
Other noteworthy news includes the release of an amazing new block explorer. Although we still have the previous block explorer (mainnet.decred.org), the new explorer provides users with a whole host of supplementary information relating to tickets and chain state. I’ve personally found that having the extra ticket information all in one place is very handy. Visit explorer.dcrdata.org to check it out for yourself!

I was also pleased to hear that Decred now has it’s own Wikipedia page! A lot of work has gone into this by one of our community members, @nbdeagle, who has carried out a ton of research and managed to jump through all the hoops required by Wikipedia to get the page established. His persistence has definitely paid off. The new page provides the project with a excellent base to build on in the coming months as new features are released.

ASICs are Coming
In the last few weeks a number of third-party companies external to the Decred project have revealed their intention to launch ASICs for Decred. Short for Application-Specific Integrated Circuit, ASICs are custom built chips that are specifically designed for efficient PoW mining. Both Dcrasic and Obelisk have announced a pre-sale that aims to bring ASICs to Decred in mid-2018. This is welcome news for the project. Although the BLAKE-256 hash function was primarily chosen by the Decred team due to a number of improvements over Bitcoin’s SHA-256 hash function, it was also selected because it’s ASIC friendly. Decred does not have to worry about the same PoW miner centralisation issues that pure PoW experience due to the its hybrid PoW/PoS design. This enables Decred to take advantage of the increased security ASICs offer to create a more robust network.

Both ASIC providers have now released their chip and performance specifications. If you’re interested in purchasing one of these miners in the pre-sale then I suggest you do your own research to make yourself aware of the risks involved. I look forward to seeing how this progresses over the next 6 months!

Demand Up Supply Down
I’m pleased to announce that over the last two months the circulating supply of decred has dropped due to an increase in staking participation! When it was previously predicted that this might occur in a blog on the 14th September, approximately 2,588,603 DCR (42.01%) were locked up in PoS. This amount has now risen dramatically to 3,068,488 DCR (46.65%). So between the 14th of September and the 14th of November the circulating supply of decred has reduced from 3,573,271 to 3,509,192 DCR! Therefore, on the 14th November there was 64,079 less DCR in circulation compared to 14th September!

It seems that an increased number of people are realising the benefits and rewards associated with PoS. So much so that the number of extra coins being locked up in PoS is actually outpacing inflation! Not only does staking give you a say in the decision making to govern Decred, it also means you receive a reward of around 1.4 DCR per ticket (current price ~75 DCR) every 28 days (on average) for participating in the process.

The Lightning Network and Roadmap
Perhaps the most exciting development over the last few months is news that the Lightning Network is officially coming to Decred – very soon! Decred stakeholders recently voted in favour of activating the features required to support the Lightning Network, with an incredible 99.51% of votes in favour. Development work is now underway to ensure that Decred is ready to implement the network once these features are activated. Furthermore, since the Lightning Network uses btcsuite – the codebase used by Decred and created by Company0 – there are hopes that our developers will be able to quickly port aspects of the offical Lightning Network desktop wallet into Decrediton. This means that Decred could well be the first altcoin to offer an easily usable implementation of the Lightning Network via a graphical user interface. Either way, it appears that Decred will amongst the first projects with a scalable network that is capable of handling millions of instantaneous, near zero fee payments per second via Lightning Network smart contracts.

One thing’s for sure, the project still shows no sign of slowing down! The Lightning Network, Politeia, and details of the highly anticipated privacy enhancement for Decred are just a few of the things scheduled on the upcoming roadmap. Following this, the development team will decentralise the control of DHG funds, transforming Decred into a full Decentralised Autonomous Organisation (DAO) – the first-ever DAO with its own blockchain, that is ruled only by its stakeholders. Could the near future of a cryptocurrency look any better than this?!

In late 2015 a group of Bitcoin developers proposed a solution to the governance crisis plaguing the Bitcoin network. As the creators of btcsuite – an alternative full node implementation of Bitcoin written in Go – they had first-hand experience of the problem. In a series of blogs, the team highlighted the extent of Bitcoins governance issues. To them it was clear, in order solve the problem they had to go back to basics, right back to zero to build a new cryptocurrency from the ground up, on the foundations decentralised governance. Shortly after, the group, known as Company Zero (c0), announced the launch of Decred – a new cryptocurrency that not only solved Bitcoins governance issue but extended the technology of Bitcoin itself. Aside from funding, Bitcoin’s main governance problem relates to its inability to make decisions effectively. More specifically, the problem revolves around who ultimately decides to hard fork to a new set of consensus rules, and how. To allow us to better understand how Decred has solved the governance problem, this blog will examine how both Bitcoin and Decred make consensus change (hard fork) decisions.

Who makes consensus change decisions for Bitcoin, and how?
Amongst the cryptocurrency community, I feel that there is somewhat of a distorted reality with regards to who ultimately decides for Bitcoin to hard fork to a new set of consensus rules. It seems there is a common misconception about who really rules the Bitcoin network. Because there is no formal governance system, it isn’t clear who’s in charge. In other words, without an effective voting mechanism to allow the network to seamlessly move from one set of consensus rules to another, any decision to change Bitcoins rules leads to a prolonged and messy governance crisis.

Perception: I can understand why an outside observer could easily think that the various participants in the Bitcoin network – developers, users, miners, wallets and exchanges – all get to have a real say in the decision. Over the last few years we have seen Bitcoin and Satoshi roundtable meetings, twitter polls, miner signalling, declarations from wallets and exchanges, live public debates, formal agreements, Coinbase polls, and the recent advisory statement issued by Bitcoin Core. However, in reality only one group of these participants has the power to decide to hard fork to new consensus rules.

Reality: Despite many people believing otherwise, in Bitcoin the Proof-of-Work (PoW) miners ultimately make the decision to hard fork to a new set of consensus rules. Satoshi Nakamoto designed Bitcoin to be an open-source peer-to-peer network that anyone can contribute to. However, Satoshi gave no one other than PoW miners the decision making power to deviate from the original consensus rules he set out. Evidence of this comes from a direct quote in the Bitcoin white paper:

“Proof-of-work also solves the problem of determining representation in majority decision-making. If the majority were based on one-IP-address-one-vote, it could be subverted by anyone able to allocate many IPs. Proof-of-work is essentially one-CPU-one-vote. The majority decision is represented by the longest chain, which has the greatest proof-of-work effort invested in it.”

Therefore, in short, Bitcoins hard fork decision-making process can be summed up by “one-CPU-one-vote”. This means that PoW miners who invest more CPUs in the network, contribute more hash power (work), which translates to more decision making power, to determine the longest chain with the greatest PoW effort invested in it, and therefore the majority decision.

Before we look at exactly how the PoW miners make their decision, let’s look at a few facts:

• PoW miners hold the ultimate decision making power in Bitcoin.
• PoW miners are now represented large mining corporations.
• PoW mining corporations are becoming increasingly centralised – just four miners hold more than 50% of the networks decision-making power.
• PoW mining corporations exist to make a profit.

Therefore, decisions are made by large and increasingly centralised mining corporations (like the one seen in the above image) to benefit their profit margins. So here’s the problem: their interests are not aligned with the users of Bitcoin – they are profiting from them. For example, there is very little motivation for a PoW miner to lower the transaction fee that users pay them when sending bitcoin. Whilst a user of the Bitcoin network would find the average transaction fee of $3 far too high, to a PoW miner, a higher fee means more profit.

In short, PoW miners make a decision to hard fork to a new set of consensus rules by simply allocating their hash power to whatever blockchain they choose to support.

So if PoW miners make the decision, what’s causing all the problems then?
When Satoshi Nakamoto disappeared he entrusted the future development and maintenance of the Bitcoin network to Gavin Andresen. Before the Bitcoin Core development team formed, Andresen spent a number of years as the only full-time developer working on Bitcoin. It was therefore a surprise to many in the community when he stepped down from his position as lead developer in 2014. And then in 2016 when Bitcoin Core revoked his commit access to their development repository, stating concerns that his Github account had been hacked. In contrast, it emerged this might not have been the case. Andresen had a plan to scale Bitcoin by increasing the block size, but this was met with resistance from the other Core developers. As a result, it is rumoured that Bitcoin Core pressured Andreson to step down from the role in a series of backroom discussions.

Andreson was not alone in his disagreement with the Core development team. Mike Hearn was another prominent Bitcoin Core developer who also supported an increase in block size. Hearn stepped down from his position in early 2016, stating that the scaling issue existed because Bitcoin Core “refused to implement the necessary changes to increase the block size”. Following this, Jeff Garzik, another Core developer was expelled from Bitcoin Core in April 2017 for his support of the block size increase via Segwit2x.

Once the man that Satoshi Nakamoto left in charge of Bitcoin development was gone, it left the Bitcoin Core team with full control.

As a result, Bitcoin Core developers now hold a monopoly over all development decisions regarding Bitcoin consensus changes, by way of accepting or rejecting Bitcoin Improvement Proposals (BIP). However, although Bitcoin Core have the ability to put forward a consensus change BIP, the change is only implemented on the network if it has majority support from the PoW miners (as we learned earlier).

In reality, Bitcoin Core are one of many development teams maintaining the network. Other notable groups include Bitcoin Unlimited and Bitcoin ABC. Bitcoin Core is seen as the reference client, which means it’s specifications are used to form the basis upon which other alternative implementations of Bitcoin are developed. For example, Bitcoin Core is written in C++, but there are also other implementations of Bitcoin. These also include btcd – Bitcoin written in Golang – that was created by the current Decred development team. But despite the variety of alternative development teams working on Bitcoin, all development decisions relating to Bitcoin itself remain highly centralised to Bitcoin Core.

A review of the governance and politics in Bitcoin concluded:

“Implicit in the governance structure of Bitcoin is the idea that the Bitcoin Core developers (together with a small number of technical experts) are – by virtue of their technical expertise – the most likely to come up with the right decision as to the specific set of technical features that should be implemented in the platform. Such a technocratic approach to governance is problematic in that it goes counter to the original conception of the Bitcoin project. There exists, therefore, an obvious discrepancy between the libertarian vision of Bitcoin as a decentralized infrastructure that cannot be regulated by any third party institution, and the actual governance structure that dictates the technological development of Bitcoin – which, in spite of its open source nature, is highly centralised and undemocratic. While the (a)political dimension of the former has been praised or at least acknowledged by many, the latter has remained, for a long time, invisible to the public: the technical decisions to be taken by the Bitcoin developers were not presented as political decisions, and were therefore never debated as such.”

So, you’re probably now wondering how Bitcoin Core retains majority control of Bitcoin development decisions? To some extent, I believe that Bitcoin Core manages to maintain majority control by virtue of their technical expertise. They are highly skilled software engineers who have a vast amount of experience to offer. However, there are always two sides to every story. I believe their status is also fueled by the common belief that they are simply entitled to be in control of Bitcoin, along with a more general fear of the unknown in the community. The phrase “better the devil you know than the devil you don’t” comes to mind.
Recently, Joseph Poon, the highly respected developer of the Lightning Network, revealed that he was upset to learn that Bitcoin Core “have a secret channel where they organize their PR and trolling campaigns”. There had previously been speculation of organised trolling by Bitcoin Core when it was found that a well known Reddit troll was hired by Blockstream – the external company that fund Bitcoin Core. However, this was one the first times that someone outside of the Core development team had shed light on what went on behind closed doors.

This highlights the fact that without a formal and effective way to establish who is and isn’t in favour of a hard fork, it’s impossible to know the true consensus opinion of the community. Astroturfing can magnify the voice few vocal individuals with numerous sock puppet accounts to the volume of a roaring crowd.

If we look back to the quote from the Bitcoin whitepaper above, Satoshi Nakamoto specifically states that decisions are not based on “one-IP-address-one-vote” for this reason, because they “could be subverted by anyone able to allocate many IPs”. In other words, if consensus change (hard fork) decisions were in fact determined by whoever holds the majority of full nodes (like the Bitcoin Core client) people could simply rig the vote by running multiple nodes.

Bitcoin Core have stated they want to keep the 1mb block size to ensure the majority of people can continue to run a full node, however this motive has recently been called into question. As mentioned earlier, Bitcoin Core are funded by Blockstream, an external company. Blockstream have future plans to scale Bitcoin using side chains, which allow transactions to occur off-chain, but settle on-chain. Blockstream intend to sell these side chains to businesses, charging for the hardware required to run them, along with transaction fees, and a fixed monthly fee. It’s not hard to understand how this creates a real and perceived conflict of interest that has resulted in objections from many in the community, on the grounds that Bitcoin Core are keeping the block size smaller to ensure Blockstream can profit. This is a prime example of why Decred decided to ensure that all development is both decentralized and self-funded, by allocating 10% of all block rewards to a stakeholder directed development fund.

As someone who believes that the decision makers for a cryptocurrency should be the users, I agree with Bitcoin Core that it should be the community who decide to hard fork. But despite what I think, or what anyone else thinks, we cannot change the economics of the Bitcoin network.

I don’t agree with a the majority decision made by the PoW mining corporations, what can I do about it?
If you don’t support a decision made by the PoW miners that’s fine, everyone is entitled to their own opinion. But the fact is, unless you want to start mining Bitcoin yourself, that’s all it will ever be – an opinion. Satoshi designed Bitcoin to give the PoW miners sovereignty over the network. If you don’t agree with that, then you agree that Bitcoin’s governance is flawed. If the Bitcoin network splits then you three options:

1. Continue supporting Satoshi Nakamoto’s ‘Bitcoin’ that will eventually be determined by the chain with the greatest PoW effort invested in it, and accept being ruled by the PoW mining corporations.
2. Just like those who opted to support the Bitcoin Cash blockchain, you can elect to follow the minority chain if you prefer it’s rules over those made by the majority decision.
3. If you’re fed up of the endless battling and struggle for power in the Bitcoin ecosystem, you can choose to support a cryptocurrency designed to solve this issue. One that allows users to make the rules via a decentralized on-chain user activated hard fork voting system. You can choose Decred.

Who makes consensus change decisions for Decred, and how?
Early on Company0 realised that the PoW miners held too much decision making power in the Bitcoin network. They knew the only way to solve this issue was to build a new cryptocurrency, with a governance system that gave the ultimate decision-making power to participants who had interests aligned with the users of the network. A cryptocurrency with a formal on-chain voting mechanism to enable decentralized censorship proof decision-making.

Building on the theoretical concepts brought forward by both the Memcoin2 and Proof-of-Activity whitepapers, Company0 decided to rebalance Bitcoins decision-making power by introducing a new hybridised system that added Proof-of-Stake (PoS) voting to the PoW blockchain. The new system continues to incentivise PoW miners to secure the blockchain with 60% of the block reward, but it also incentivises PoS miners (stakeholders) to actively participate in consensus change decisions via on-chain voting with 30% of the block reward. The remaining 10% block reward is allocated to a central development fund owned by stakeholders, to avoid decisions being influenced by funding from an external entity.

Similar to Bitcoins BIP’s, Decred uses a system whereby anyone can submit a Decred Change Proposal (DCP) that describes a potential protocol or consensus change for Decred. However, unlike Bitcoin, where the PoW miners ultimately decide whether or not to implement a BIP that changes the consensus rules, a DCP is proposed to the stakeholders, who then formally vote for or against it via the on-chain PoS voting mechanism.

How do stakeholders make their decision?
To be eligible to make a decision on a DCP that changes Decred’s consensus rules you need to possess a ticket to vote. Tickets can be obtained via the Decrediton wallet for around 70 DCR, but this price varies according to demand. If tickets are in high demand, the price increases, and if they are in low demand, the price decreases. Once you have obtained a ticket you simply set your vote preference in Decredition (as shown below). Your DCR is then locked in PoS until the ticket is randomly chosen to vote, which takes an average of 28 days. However, it can take up to 142 days before your ticket is selected, and there is a 0.5% chance of your ticket expiring and not being drawn at all. Once your ticket has either voted or expired, your locked DCR will then be released back into your wallet, in addition to a PoS reward for participating in the decision-making process. This reward is currently around 1.4 DCR, minus any stake pool fees. The DCP is approved if the vote passes with greater than 75% of stakeholder support. For a more detailed voting guide click here.

How does Decred prevent centralised decision-making?
Decred set out to ensure decentralised decision-making right from the very start. To be certain that inital tickets were widely distributed, 840,000 DCR was air dropped for free to 3,244 community members. In addition, the hybrid PoW/PoS design allocates PoW miners double the block reward of PoS miners. This makes it impossible for any stakeholder to obtain the majority decision making power over the network by buying in early at a low price and staking their coins over a long period. Furthermore, to ensure Decred developers never gain majority decision making power they did not recieve a free air drop, instead they chose to purchase all their DCR, and then they intentionally throttled their staking from the beginning (something which is visible on the blockchain). Moreover, because all staked DCR are locked up out of circulation, this prevents someone from simply purchasing the majority decision-making power on the market. 

How does Decred’s governance system ensure stakeholders make good decisions?
Stakeholders are motivated to make a good decision when they vote through the requirement to have ‘skin in the game’. As I mentioned above, to be eligible to vote you need to lock up DCR in a ticket. In turn, this provides a strong incentive to make a decision that seeks to achieve the best possible outcome for the DCR that is ‘at stake’, and that voting power is directly proportional to the amount staked. This also disincentivises malicious decisions, as they would only reduce the value of the staked coins.

In contrast, Bitcoin PoW miners do not need to hold any bitcoin to be eligible to make a consensus change decision. Other than an investment in the resources required to mine bitcoin (which can be sold or used to mine another cryptocurrency), there is nothing to disincentivise a PoW miner from making a poor or malicious decision that results in a loss of value. In fact, PoW miners can use the power to make decisions without short term consequence to their advantage. For example, a PoW miner could intentionally stop signalling their support for a hard fork, in order to break a required agreement threshold. Under most circumstances it is highly likely this action would have a negative impact on the bitcoin price. Therefore, a miner could manipulate the bitcoin price to buy lower, only to increase the price again by reinstating their support for the hard fork.

Nevertheless, this is not the only way Decred ensures that good decisions are made! Because Decred stakeholders make decisions collectively, the governance system also utilizes a phenomenon known as the “wisdom of the crowd”.

There’s evidence to suggest that the aggregated decision of a large group is as good as, and often better than, a decision made by an expert alone. It’s thought that this collective decision-making benefits from a more diverse pool of knowledge, opinions and ideologies – hence the term “wisdom of the crowd”.

While there has been some criticism of crowd-sourced wisdom, with claims that mob behaviour may influence decisions, this is not applicable to Decred’s governance system. Some people have suggested that when a person acts as an anonymous participant in a crowd they can lose individuality, personal responsibility, and judgment – only for it to be replaced by a charismatic leader. However, when Decred stakeholders make their decision, there is no in-person interaction between the crowd – a mob cannot form. Stakeholders make decisions individually, and the decisions are motivated by financial incentives, rather than deindividualisation and converging behaviour in a mob crowd.

In effect, when Decred stakeholders are asked to vote, the decentralised hard fork voting system consults the wisdom of thousands of highly incentivised Decred stakeholders around the world – think of it like a highly intelligent global mind.

What would happen to Decred in a Bitcoin Cash or Segwit2X hard fork scenario?
Firstly, Bitcoins hard fork problem would simply not happen in Decred. There is a formal on-chain voting system to deal with all governance decisions related to hard forks. Secondly, it would be virtually impossible to fork the Decred network in the way we have recently seen with the Bitcoin Cash fork or SegWit2x. This is because all new blocks created by PoW miners need to conform to the wishes of Decred stakeholders (PoS miners). If PoW miners refuse to comply with the collective policy, PoS miners can invalidate any new blocks they create. So, for example, if 80% of stakeholders voted in favour of activating the Lightning Network, and the remaining 20% refused to move over to the new chain that supported Lightning Network features, then the 80% majority could simply vote new blocks on the old chain as invalid, which would strip them of the block reward. In turn, this would incentivise PoW miners to move from the old chain to the new chain, and the old chain would die off.

The only way someone could hard fork Decred against the wishes of stakeholders would be to create an entirely new fork of the blockchain and start it from scratch. In which case, it would not be contentious at all, because it wouldn’t be Decred.

Conclusion
In summary, Decred’s novel on-chain consensus voting mechanism ensures hard forks are done right. The system enables decisions to be made in a timely manner without sacrificing any aspect of decentralisation. In just 3 months Decred stakeholders voted to activate the Lightning Network, and seamlessly move from one set of consensus rules to another. In contrast, Bitcoin has been trying to scale for 3 years.

I believe Decred’s governance system is the crypto holy grail we have all been searching for. It means we can have a truly decentralised cryptocurrency that does not need to be ‘born’ with a feature or use case. A cryptocurrency built on the foundations of decentralised governance enables the best use case of them all – evolution. The ability to evolve will bring multiple use cases to Decred, whereas relatively unchanging systems like Bitcoin will be mainly limited to one use case.

Company0 and Decred developers have done exactly what they set out to achieve – they have created a solution to Bitcoin’s governance crisis and extended the technology of Bitcoin itself. As a result Decred is well on its way to becoming the ultimate cryptocurrency, one with a multitude of features and use cases. The Lightning Network, enhanced privacy, and a Decentralized Autonomous Organisation are all just around the corner. Decred can have, and will have, be the best of everything.

Getting governance right is hard, but our developers have done it. Decred is going to show the world what Bitcoin could have been if it was built on the foundations of decentralized governance. It’s Decreds time to shine!

So, you know that Decred aims to take decentralization to a whole new level, right? We’re talking a decentralized cryptocurrency with decentralized decision-making, decentralized funding, and decentralized development. Just when you thought the future of Decred couldn’t get any more decentralized, the release of a new tool has taken the concept one step further!

I believe the overriding goal of Decred is to create a truly decentralized infrastructure that’s ruled by its stakeholders. Decentralized decision-making via stakeholder voting is just one part of this infrastructure. Step-by-step Decred is eradicating all requirements to trust a third party intermediary or centralized entity – it’s slowly rooting out all single points of failure.

In recent years, exchanges have emerged as one of the biggest risks to the cryptocurrency ecosystem. Whilst they don’t represent a direct point of failure for any given cryptocurrency, our reliance on exchanges has perhaps made them one of the biggest. No one needs to store their funds on an exchange, but many people do so out of necessity. For most people this is the only practical option available to conduct a trade.

Here lies the issue: while cryptocurrency is decentralized, exchanges are not. Exchanges simply act as a centralized escrow between two parties. When you send your funds to an exchange wallet you are trusting a third party custodian to keep them safe. These exchanges are responsible for the funds and private keys of anything up to millions of users – compare this to you looking after your own funds.

Despite the efforts of the majority of reputable exchanges that go to great lengths to try and keep customer funds safe, the fact is they represent a centralized and widely known target of wealth. Why would a thief target one person when they can potentially target millions? As such, there have been numerous cases where exchanges have been hacked and customer funds have disappeared. The most notorious being the Mt. Gox hack, where approximately 630,000 bitcoins were stolen, and the more recent Bitfinex hack, where around 120,000 bitcoins were stolen.

Furthermore, because exchanges are normally centralized in a single country, they are often highly regulated. Therefore they are subject to the strict rulings and decisions of the nation where they are based. This creates a further vulnerability if a government decides to clampdown on the cryptocurrency ecosystem. A prime example of this is the news that yet again, the People’s Bank of China is enforcing the closure of all Chinese digital currency exchanges. As usual, this has sent the markets plummeting.

Whilst it is impossible for a country to ban a cryptocurrency, they can restrict people accessing the ecosystem through exchanges. For many Chinese people this now means the only option available is to make over-the-counter (OTC) trades. However, the problem with arranging an OTC trade online is that both parties need to trust each other to hold up the other side of the deal. In other words, if Jack agrees to swap 1 BTC for 100 DCR with Jill, and sends her the bitcoin, there is nothing to enforce Jill to send him the decred in return – he just has to trust her. For obvious reasons, this has the potential  to end in tears!

For the foreseeable future there will still be a need for fiat to digital currency exchanges, unless you enter the ecosystem via mining, or by receiving a free airdrop. However, last week Decred developers announced a much needed solution for digital-to-digital OTC trades such as this. Decred developer, Josh Rickmar (@joshrickmar), has created a new tool that enables trustless OTC exchanges between Decred, Litecoin and Bitcoin, via a cross-chain atomic swap. Bitcoin Magazine reported that the new tool “delivers on the market desire for improved interoperability between currencies and the demand for new efficiencies that drive investor value”.

Cross-chain atomic swaps use ingenious protocols that allow the secure transfer of funds across two different blockchains, and remove any need to trust a third party when trading between different cryptocurrencies. Therefore, cross-chain atomic swaps disintermediate the requirement to use a centralized exchange as an escrow. Instead they provide people with a decentralized and trustless option to conduct OTC trades between supported cryptocurrencies – free from the type censorship recently seen in China.

As explained by Jake on episode 12 of Decred Assembly, there are two types of cross-chain atomic swaps: on-chain and off-chain. On-chain atomic swaps will be discussed throughout this article. Off-chain atomic swaps will be made possible once the Lightning Network is integrated (coming soon!).

Last week the first Decred on-chain atomic swap was completed when 1.337 LTC was exchanged for 2.4066 DCR between creator of Litecoin, Charlie Lee (@SatoshiLite), and Decred developer Alex Yocom-Piatt (@_alyp_). Charlie has been a long time supporter and holder of decred (or should I say, staker).

But what exactly is a cross-chain atomic swap? For a detailed, elegant and easy to understand explanation I will refer you to Jimmy Song’s latest article. Or if you’d prefer to see a video explanation, check out what Charlie Lee had to say on episode 13 of Decred Assembly. However, in short, an on-chain atomic swap involves two parties conducting a trustless exchange across two different blockchains. Since Decred and Litecoin are both supported by the new atomic swap tool, it is now possible to conduct swaps between their blockchains. So, for example, if Jack and Jill want to swap 1 LTC for 1.5 DCR, both parties would need to agree on a deal. Following this, the DCR would be locked to the Decred blockchain, the LTC would be locked to the Litecoin blockchain, and then the two sets of coins would be swapped without any counterparty risk.

To show how this works Charlie Lee also gave a live demonstration on Jimmy Song’s Off-chain YouTube show. However, whilst it was great to see Charlie give the live demo, the thing that really hit home with me was when I saw the first real OTC swap take place live on Twitter.

On 22nd September 2017 Narcélio Filho (@narcelio) tweeted “I want to buy 10 DCR paying 0.1 BTC. Anyone interested?” In response Gogocoins (@gogocoins) tweeted “Hey Narcélio! I would love to buy some BTC. This is my BTC contract address: 1MhbxWTbyThNmVpRTnisrxPWeMs1e8bQcs”.

For me, it was at this moment that both the concept and potential of cross-chain atomic swaps was put into perspective. I believe the future of digital-to-digital OTC exchanges will be conducted in this way. A process that decentralizes our ecosystem even further by eliminating our need to rely upon a centralized third party exchange to trade between two blockchains.

Whilst the only option available to conduct these swaps at present is via a command line interface (CLI), the good news is that Decred is integrating the atomic swaps tool into the Decrediton wallet. Which means that cross-chain atomic swaps will soon be available and accessible to everyone, regardless of their technical ability!

Once the Lightning Network is activated on Decred off-chain atomic swaps will also be possible. This will bring improved efficiency and an even greater range of use cases. With on-chain atomic swaps you still need to wait for both chains to mine a new block to confirm the transaction. Whereas off-chain atomic swaps will utilize the Lightning Network to carry out exchanges, confirming them instantaneously.

Going forward, I believe that Decred will continue to break new ground, with developments such as the atomic swap tool, leading the way with innovations in the blockchain space. Moreover, since Decred is committed to open source development, these innovations will be shared for the wider benefit and greater good of the cryptocurrency ecosystem. Decred welcomes any other projects to use our on-chain atomic swap tool, as we believe that broadening the range of supported coins will ultimately benefit us all. I am pleased to see that Vertcoin has already joined the party! Last week they also carried out their first on-chain atomic swap when Charlie Lee exchanged 1 LTC for 55 VTC with their lead developer.

The development of the Decred atomic swap tool, along with its integration into Decredition, is a prime example of how Decred’s decentralized funding mechanism enables us to quickly develop and add new features.  Perhaps the greatest use case of them all is emerging from our decentralized governance system, something that I believe will eventually become the ‘holy grail’ for cryptocurrencies – the ability to evolve rapidly. Decred is a robust, adaptable and highly progressive cryptocurrency that is evolving – fast. Its funding mechanism ensures there are plenty of funds available for development, whilst on-chain consensus voting and the soon to be released proposal system, enables stakeholders to quickly agree on how those funds are spent. I believe this is the only way a cryptocurrency can make decisions in a timely manner, without sacrificing true decentralization by handing over decision-making power to a centralized decision maker.

But, as usual, the story doesn’t stop here! Very soon Decred stakeholders will begin voting to activate the Lightning Network. All development work is now complete, and all that remains is for stakeholders to decide if they want to activate it. Since the Lightning Network was built using btcsuite, which was also created by the Decred development team, I am excited to hear what new innovations our team can bring with the Lightning Network! Off-chain atomic swaps will surely be one of these. But, for now, and as always, the destiny of Decred is in the hands of its holders. Get ready to vote for Lightning!

Reminder: to make sure you’re ready to vote please upgrade to Thunderstruck (release v1.1.0).

Over the last few months we have seen a steady rise in demand for Decred right across the board. We’ve had a big increase in the number of people joining our community on all social networks, hash rate is booming, and relative to inflation the circulating supply of Decred is dropping!

The Decred community is expanding rapidly. As shown above, in just 3 months Slack members are up 59%, Decred Redditors are up 125%, subscribers to our Decred Assembly YouTube channel are up 385%, and our Twitter numbers are up 98% — with an additional 6,192 followers. Furthermore, one of our biggest local communities around the world, the Decred Brazil Facebook group, has now almost reached a staggering 4,000 members! In addition, an extra 5,700 official wallets have been downloaded from Decred.org!

However, our community isn’t the only thing that’s growing — our hashrate is going through the roof! In the last month the network hashrate has reached a peak of 380 Thash/s. It appears that Decred is in demand! All good news, not only is this a sign that Proof-of-Work (PoW) miners believe enough in the future of the project to invest their resources in our network, it also means there has been a huge increase in network security too! But it gets better…

Although approximately 400,000 additional decred have been mined over the last 3 months, the amount of circulating decred is being constricted via an increase in people opting to stake their DCR. Over the last few months the number of decred locked up in Proof-of-Stake (PoS) has increased from approximately 39% of the total supply, to around 42% of the total supply! So despite the addition of approximately 400,000 newly mined decred, around 340,000 additional decred have been locked up in PoS. As shown below, inflation is continuing to drop (block reward). So whilst there’s been a huge increase in community numbers, the amount of decred in circulation has only increased by approximately 60,000. If this trend continues as expected, and more people decide to lock up their DCR in PoS, the available circulating supply of decred will actually start to decrease! Whilst this is yet another sign that more and more people have enough faith and trust in Decred to lock up their wealth for a prolonged period of time, it also means an increase in network security too.

Decred’s novel hybrid PoW/PoS design significantly enhances network security compared to blockchains that rely on PoW alone to secure the network. If PoW miners produce blocks that do not conform to the consensus rules of the Decred network, PoS miners can vote them invalid. Therefore, in order to attack the Decred network, an attacker would have to obtain at least 33% of the total supply locked up in PoS, in addition to a large proportion of the PoW hash power. When combined with the increase in hashrate, this represents a significant increase in network security.

The last few months have been extremely positive right across the board, however…the rest of the year has even more in store! With the recent translation of the Decred website into 10 different languages, and more due to be added in the near future, I expect our community numbers will begin to accelerate. Furthermore, as stated in the recent roadmap update, over the coming months we will see the release of the long awaited Decred proposal system, Lightning Network integration, Ledger and Trezor hardware wallet support, and a few other surprises along the way! In addition it is also expected that details of the highly anticipated privacy enhancement for Decred will be revealed. There’s never been a more exciting time to be part of the Decred community!

 

There’s been a lot of debate recently within the Decred community about what the name “Decred” really stands for. We know that Decred means Decentralized Credits, but what exactly are Decentralized Credits? Why was it chosen instead of following suit with something like “Decentralized Coin” or “Decentralized Cash”? I believe that everyone will always be free to interpret the name Decred and Decentralized Credits as they wish, in a way that represents their own views and opinions. However, in this a blog I will explore what I believe Decentralised Credits might really stand for. The first word “decentralized” needs little explanation, so I will revisit this towards the end of the article. On the other hand, to fully understand “credits” we must first explore both the nature of and history of money.

It is believed that money, as medium of exchange and measure of value, first emerged from the trade of livestock and grain from 9000-6000 BC. This was followed by the arrival of commodity money during the Bronze Age, where commodities such as gold, silver, salt or cowry shells were traded. However, it was proto-money – items made of the precious metals (such as jewellery) – that eventually became more favoured throughout the medieval times. Precious metals were more divisible, portable and durable in comparison to grain, cattle, salt or shells. Which was also one the reasons gold was favoured by the ancient Egyptians.

Whilst many people thought that gold and silver had intrinsic value due to its scarcity and use case in jewellery, not everyone was of this opinion. During pre-revolutionary America, fur traders in Hudson Bay, Canada, quickly learned that gold and silver was of no use to the first nations that lived there. Instead they used beaver pelts as a currency in exchange for items they needed such as knives and axes. In fact, it is thought that the word “buck”, now used synonymously with the word “dollar”, stems from the days when Americans traded animal skins such as deer and elk buck.

From history we can learn that the best form of money evolved to have intrinsic value, could be easily transported and divided, and was both durable and useful.

The Greek philosopher Aristotle was in some agreement with this. He was possibly one of the first people to contemplate the nature of money. Around the year 350 BC Aristotle considered that every object has two uses, the first being the original purpose for which the object was designed, and the second is to conceive of the object as an item to sell or barter. Bartering was a system where items were directly exchanged for other items without using a medium of exchange. But because items exchanged weren’t always an exact match in value, it was commonplace for people to be either left in debt or credit. Therefore it is thought by some that the early bartering economies marked the advent of the first credit systems. As a result some people have also suggested money was first created to replace the need for barter.

However, anthropologist David Graeber argued against this suggestion. Graeber stated that there is a lack of supporting evidence, and that his research indicated “gift economies” were common during the beginnings of the first agricultural societies, where humans used elaborate credit systems. Instead Graeber proposes that money as a unit of account was invented the moment when the unquantifiable obligation “I owe you one” transformed into the quantifiable notion of “I owe you one unit of something”. Therefore in Grabber’s view, money emerged first as credit and only later acquired the functions of a medium of exchange and a store of value.

It is clear that during the times when money was “credit” there was no need to rely on any third party to exchange value. There was no need to trust that a note or coin has the value that a government says it does. We were all in control of our own money, and it had the intrinsic value we assigned it.

Whilst proto-money gained most popularity out of all commodity monies, it wasn’t without its issues. Gold and silver weren’t always easily divisible, and it was difficult for the average person to verify the weight and purity. This often led to fraudulent metals being circulated, such as fool’s gold. As a consequence kingdoms, empires and governments began minting gold and silver bullion coins to be used as a medium of exchange and store of value within their realm – the dawn of standardized coinage.

Minted coins brought about a number of improvements to money. It meant money could change hands in a more secure manner, with much less frequent need for weighing. Furthermore, although these coins were not always identical – most bearing their own unique imperfections – they did bring about a vast improvement in fungibility compared to proto-money.

For this reason civilizations quickly adopted and became reliant upon minted coins. The benefit of not having to trust or rely on a third party when exchanging value had to be traded off against the requirement for money that was easy to use, due to it being divided into small transportable units with a specific authenticated value.

One thing led to another, and before we knew it – here we are, carrying around worthless metallic discs and pieces of paper in our wallet that the government controls entirely! Also known as fiat money; the legal tender that the majority of the world know and use today. In its physical form fiat money is still represented by coins, but also paper banknotes. Together coins and banknotes can also be referred to as cash.

This resonates with my own thoughts. When I hear the words “cash” or “coin” I immediately think of something that is representative of old school physical money – like a banknote screwed up in my pocket, or the pot of old loose change that sat on my desk. In my opinion coins and cash represent something that is issued and controlled by a government or central bank. I believe cryptocurrency represents something fundamentally different, something more versatile – I feel it represents the future of money.

The birth of cryptocurrency has the ability to take us back to the time when credit was money. A time when we had no need to rely on a third party when exchanging value. There is no longer a need to use minted commodity money or fiat money as a trade off. Blockchain technology solves problems that have plagued us for millennia. It is divisible, durable, portable and fungible. But at the same time it has intrinsic value. Its value is derived from its functional use as a private, censorship resistant, and secure medium of exchange and store of value. In addition, cryptocurrency has become a digital commodity, where value is derived from the certain scarcity and set rate of supply. What’s more, this value is assigned and recognized by us, the cryptocurrency community.

Although many people now associate “credit” with a positive unit of value that allows someone to obtain goods or services, understanding its place in the history of money makes it all the more meaningful. However, when the name “Decred” was selected it was perhaps chosen with a different meaning in mind. It is thought that whilst the projects early founders and organizers Jake Yocom-Piatt, tacotime, and _ingsoc were brainstorming on the topic of “Decentralized Credits” they looked to the future for inspiration.

It is rumored that “credit” was thought of in the context of Sci-Fi. The use of “credits” is common in futuristic Sci-Fi settings. In fact, there is a well know cliché pointed out by the popular futurist and comic book writer Sam Humphries who said, “In any science-fiction movie, anywhere in the galaxy, currency is referred to as credits”.

In Sci-Fi novels and movies “credits” are widely used and envisioned as a form of electronic money. The first use of “credits” in Sci-Fi can be traced back to the novel “Galactic Patrol” by Edward E. Smith, first published in 1937. Smith wrote “Bid, one thousand credits per packet of ten. Offered, none at any price”. However, the first published explanation of what a “credits” represents was in the science fiction novel “Space Viking” by Henry B Piper, published in 1962. Piper wrote, “Our currency is based on services to our society. Our monetary unit is simply called a credit”. Surprisingly fitting book titles and topics, given the Decred community’s current enthusiasm around the space theme!

For more obvious reasons “decentralized” will have also been hot on the minds of Jake, tacotime, and _ingsoc. I believe that decentralization is most fundamental and significant factor that gives a cryptocurrency like Decred value. Cryptocurrencies are decentralized blockchain networks. The most valuable blockchains are those that have decentralized development, decentralized funding, and decentralized decision-making (governance). The more decentralized a cryptocurrency is, the more resistant it is to censorship or control from a centralized entity – it is therefore more secure. Decentralization is the missing piece of the puzzle that allows us to eliminate the requirement for a third party when storing and exchanging value.

So, it seems only natural that the most fundamentally important feature of cryptocurrency is brought together with a word that described money as it once was before third parties became involved, and money that has been envisioned for the future. Decred, Decentralized Credits, was born.

I see cash and coins as something that was developed by monarchy and governments to replace credit. Fiat money arose from the need for a divisible, durable, fungible and transportable money. We no longer need to rely upon these centralized entities to give us a medium of exchange and store of value.

The future is now. Crytocurrency is a highly divisible, easily transportable, cryptographically secure, fungible, decentralized and trustless money. In the case of Decred, decentralization is taken to a whole new level – we have money that is governed by us.