WTF is Decred?

Introduction

WTF is Decred? This blew up a while back, right after Decred was added to Cake Wallet—a well‑known, open‑source crypto wallet built by Cake Labs (the team behind the popular Monero wallet).
So WTF is Decred? In short: Decred is Money Evolved.

WTF is Decred?

Decred is a cryptocurrency designed to upgrade and evolve over time based on the input of its coin‑holders.

It’s essentially similar to Bitcoin, with one key distinction, built-in governance. This is possible due to Decred’s hybrid Proof‑of‑Work / Proof‑of‑Stake (PoW/PoS) consensus mechanism (more on that soon).

What is Bitcoin?

I assume everybody knows or have heard of Bitcoin, and those who do not are probably too afraid to ask at this point. Well don’t be! Here a quick overview:

Bitcoin is the first cryptocurrency, with its white paper launched in 2008 and its protocol started running in 2009, with its genesis block mined on January 3rd 2009.

The genesis block has a message, which is “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks”. This message was the headline of an article in The London Times newspaper on January 3, 2009.

Oh boy, history does not repeat itself, but doesn’t it rhyme?

What is a genesis block?

The genesis block is simply the very first block ever mined in a blockchain.

What’s the significance of having a message?

Bitcoin includes a scripting language that allows transactions to have conditions, such as: “only spend after a certain time” or “only spend if multiple parties agree.” This scripting capability also enables arbitrary data, like historical messages, to be recorded permanently on the blockchain—making the genesis block particularly symbolic.

Why does Bitcoin matter?

Bitcoin elegantly solves a problem presented for many years in distributed systems: The Byzantine Generals Problem.

What is the Byzantine Generals Problem?

Imagine a group of generals (think: Bitcoin nodes) who need to coordinate an attack by agreeing on the same battle plan (network state). The problem arises because they cannot trust whether messages received from other generals are genuine or altered by traitors. This scenario exemplifies the challenge Bitcoin nodes face: achieving consensus despite potential malicious or unreliable nodes.

And how does Bitcoin solves it?

Bitcoin uses a distributed timestamp server, implemented through a method called Proof of Work (PoW). According to Bitcoin’s white paper:

  To implement a distributed timestamp server on a peer-to-peer basis, we will need to use a proof-
  of-work system similar to Adam Back's Hashcash...
  ...
  The 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.

In simple terms, miners compete by using computational power to solve cryptographic puzzles (calculating hashes). This ensures the network’s integrity, as altering data would require massive computational power. The first miner to solve this puzzle gets to add the next block, thus securing the network without relying on a central authority.

Does it solve governance as well?

Clearly, it does not solve governance. Satoshi could not have foreseen how the mining industry would evolve, leading to massive mining pools composed of many participants or even entire countries mining Bitcoin.

Therefore, it’s evident that Satoshi’s original belief—that Proof-of-Work alone would sufficiently address governance—has proven incorrect.

Why was Decred created?

Recognizing that governance was a significant issue for Bitcoin, Decred was created by Company 0, tacotime, and _ingsoc to address this shortcoming.

If you’re interested, you can read more about Decred’s project history here.

Simply put, Decred is like Bitcoin—but with governance.

Why does Decred have governance?

Decred’s governance comes directly from its Proof-of-Stake (PoS) system. Coin holders can lock up their coins to purchase “tickets,” giving them voting rights in the blockchain’s governance decisions. In short,

It’s a straightforward model: one-ticket-one-vote.

And why does governance matter?

Humans are inherently political, striving to influence and change their environments.

Bitcoin has encountered significant governance issues, such as contentious soft forks like Taproot, and the infamous block size debate that led to Bitcoin Cash’s creation.

Decred prevents such contentious splits by requiring explicit approval from stakeholders for consensus changes, and spending proposals must pass a threshold of at least 60% approval.

Here’s a visual representation of Decred’s consensus voting process:

And why can Decred not be forked?

While not entirely fork-proof, Decred’s system makes contentious splits significantly harder.

It has successfully navigated controversial consensus changes, such as reducing mining rewards to 1%, something nearly impossible to implement smoothly in Bitcoin (many would say this is a feature).

Is governance really that valuable?

Governance alone doesn’t guarantee success, as seen with many ERC-20 tokens whose main feature is simply that holders can vote.

However, Decred combines governance with a decentralized treasury funded by 10% of block rewards. this gives Decred genuine autonomy. It doesn’t rely on venture capital, ad money, or any external funding that might conflict with stakeholders’ interests. Instead, stakeholders have true independence to fund and pursue initiatives they genuinely support.

Notable examples of stakeholder-driven development include:

• Bison Wallet:
  A wallet featuring a built-in decentralized exchange powered by atomic swaps.

• Decred’s Privacy System:
  A privacy solution integrated directly into Decred’s core protocol.

• Bison Relay:
  A decentralized, censorship-resistant communication platform with integrated economic and social features.

Conclusion

By now, you likely have a clearer understanding of Decred and its vision to be:

a cryptocurrency designed to upgrade and evolve over time based on the input of its coinholders.

If you are interested in learning more about Decred, feel free to join our community.