Bitcoin has massive potential as an investment, there’s no denying it. Anything with the goal of becoming a global currency has the ability to be an option to replace “all the money” in the world and gain a similar market capitalization.
But at the same time, Bitcoin has its problems. Having been released in 2009, there has been plenty of time for some of its weaknesses to be exposed. One of the largest weaknesses is with how it is governed, but there are several more. This is why Decred was developed.
Free of Third Party Influence
As an autonomous coin, there have naturally been many questions with how Bitcoin is governed and what the best way to continue advancement in the area is. This is to be expected, but there are also many things about Bitcoin to be envied, such as the fixed supply, fungible coins, and diehard community that surrounds it.
The founders of Decred were Bitcion developers in teh beginning, but they saw issues with the protocol. In their analysis of the coin, they identified 3 main issues: governance, funding, and security.
The governance issue is to do with stakeholders. The way Bitcoin is designed, miners are decision makers. This doesn’t mean they will always act in accordance with what is best for token holders though.
Additionally, the method of funding development is uncertain, to say the least. Incentives need to be in place to get developers dedicated to teh long-term prosperity of the proejct, and right now, that just isn’t happening.
Finally, security is in question due to the vulnerability to 51% attacks from miners. All of these issues essentially come down to planning a way to align the incentives of miners with those of tokenholders.
New Solutions to Old Problems
Upon proposing their solutions, these developers were essentially excommunicated, which led them to start Decred in 2013.
One of the main innovations of Decred was the Proof of Work/Proof of Stake hybrid they invented in order to solve teh governance issues. Additionally, the algorithm was designed to pay 10% of block rewards to developers from the very beginning.
And as for security, with the new POW/POS protocol in place, potential attackers would need both the majority of hashpower and the majority of tokens. This makes it far too costly for any entity to ever attack Decred without ruining themselves in the process.
Governance Issues Create Opportunity
Governance has always been an issue in question with a protocol whose original reaosn for being designed was to move away from the centralized model of doing business that led us into so many financial crises. Decred is designed to start aligning the incentives of all stakeholders, and still holds true to many of the original promises of Bitcoin (its maximum supply is even the same at 21 million).
The DCR token is currently trading around 0.006 BTC and is ranked 25th in market capitalization ($312 million). This is a relative low for the coin and it may be worth picking up a small position as a minor hedge against Bitcoin.