Buy Decred (DCR) in the UK (2023)

Decred is a layer-1 blockchain that was originally created by copying the code to the Bitcoin (BTC) network. However, the developers of the network made modifications to the Bitcoin code to create the Decred that we know of today.

Although there are a lot of similarities between the two networks, like their 21 million coin maximum supply, they have a handful of important functional differences.

These differences include:

• Block Time: Every 10 minutes, the Bitcoin network confirms a new block to the blockchain. However, the Decred network’s blocktime is 5 minutes (which increases the maximum number of transactions per minute).
• Mining Difficulty Adjustment: On the Bitcoin network, the difficulty of mining Bitcoin (BTC) changes every two weeks. But on the Decred network, the difficulty of mining Decred (DCR) changes every 12 hours. Decred’s more frequent mining difficulty adjustments were designed to keep the network’s block confirmations ticking along at a stable rate.
• Governance: Changes to the Bitcoin network are done through Bitcoin Improvement Proposals (BIPs), which are debated among users of the network through an arguably informal process. Alternatively, Decred has a formal, vote-based governance system where all token holders get a vote on proposed changes to the network.

However, the biggest difference between the Decred and Bitcoin networks has nothing to do with block sizes, mining difficulty, or governance. Decred’s most innovative feature is its hybrid Proof-of-Work/Proof-of-Stake consensus mechanism.

The Bitcoin network operates on a Proof-of-Work (PoW) consensus mechanism. In this system, new blocks are added to the blockchain by miners who use their computing power to solve cryptographic problems. But critics of PoW claim that the system uses a lot of energy and that it allows large-scale miners to gain too much control over a network.

In response to these perceived shortcomings, developers created another type of consensus mechanism called Proof-of-Stake (PoS). With PoS, nodes compete to add new blocks to the blockchain by locking up a certain number of tokens on the network (thereby showing that they have a ‘stake’ in the network’s performance and security).

But PoS has its own shortcomings (especially centralisation of power). Because of that, developers of Decred didn’t want to wholly rely on either PoS or PoW for their network.

To solve this issue, Decred went with a hybrid PoW/PoS consensus mechanism with both miners and stakers.

Here’s how it works:

• Miners compete to add new blocks to the blockchain by solving cryptographic puzzles.
• Anyone that wants to stake DCR coins needs to time-lock their funds on the network. In return, they receive “tickets” in the Decred lottery.
• Each time a block is mined, 5 tickets are selected from the Decred lottery.
• These 5 ticket holders then get to validate the PoW from the previous block.
• If at least 50% of the ticket holders approve of the miner’s work, the block is added to the blockchain.
• Network rewards are released once the block is settled. The rewards are split so that 60% goes to miners, 30% goes to stakers, and 10% is allocated to the network treasury.

Ultimately, this system is designed to empower both miners and stakers. The hope is that this consensus mechanism can prevent network centralisation and that it can limit the likelihood of a successful 51% attack on the network.

The Decred (DCR) coin plays multiple crucial roles in the Decred network.

First, you can send and receive DCR just like you would with other cryptocurrencies.

Anyone that holds DCR coins can also stake them on the network to receive rewards, which are paid out in DCR. Network rewards to miners are also paid in DCR for every block that they add to the blockchain.

Finally, DCR coins are used as part of Decred’s governance system. Holders of DCR can time-lock their coins in order to buy Decred voting tickets. Ticket holders can then vote on proposed changes to the network using Decred’s Politeia proposal system.