Decred and Hard Forks

The problem of hard and soft forks have been huge issues in both the Bitcoin (Bitcoin Unlimited, USAF, Segwit) and Litecoin communities. Decred has come up with their own solution to this and may be something that other coins look to going forward. In this article I’m going to explain what a hard fork is, how the voting process works, and why it is so important for the development of a coin.

Hard and Soft Forks

Let’s start off by explaining what forks are. In simple terms, these are updates to the main protocol of a certain currency. Hard forks describe an update that causes a permanent divergence in the block chain. Both block chains may continue to run but they will not be able to send funds to each other as they are using different rules and the coins are not compatible with each other.

Soft forks, on the other hand, are backward compatible updates that allow users to mine from both original nodes or updated nodes with the new rules. If by a certain time, a consensus is reached and a certain percent of the hash rate is mining from the updated nodes, then the new rules are implemented across the protocol and miners of the original nodes will basically be wasting their time.

Why Fork and Who Gets to Decide?

So the programming team decides perhaps they want to make a substantial upgrade to the network to enable a set of features. These features might be very important features such as lightning transactions which allow immediate transfer of currency. It’s important that the community keeps on developing these features because otherwise, your coin is going to be stuck in the mud.

While the development team can propose upgrades usually what happens is that the mining community decides whether to implement these or not. The mining community acts as the accountants of the system. They process transactions and they form new blocks in the block chain. Consequently, they have the power to decide how to build the next block.

One major problem with this is that the mining community decides what the future is and not the consumers – the people who actually use currency. One small set of people decide how upgrades should be processed and the other side that actually uses it, the majority of the users, get zero say in the matter.

 

Decred to the Rescue?

With Decred, they solve this problem by having the community vote on the blocks created by the mining community. If miners start implementing different upgrades the community can vote whether they want the upgrade to go on line or not. If the created block does not follow a certain protocol, they can vote it down and even refuse payouts to miners that don’t follow what the community wants.

So this, in essence, allows the community to actually keep an eye on what’s happening with the miners. We don’t have just one power that doesn’t represent the community. Rather, we end up with the user community sort of policing what’s happening with the mining community.

People who hold the coin should have the greatest say in how the future goes forward. Decred solves both hard forks and soft forks by allowing users to vote on the issues. Issues such as segwit and lightning transactions, which have caused many controversies in the Bitcoin and Litecoin communities. Decred is already trying to implement these changes this year and they may get these technological upgrades in advance of other coins.

Decred vs DASH

What is Decred

Decred (Decentralized Credit) is a crypto-currency that is focused on superior governance through decentralization. Decred can be transferred as a digital currency (like bitcoin). It has one key advantage, which is Decred can be used to create additional Decred over time, like interesting in a bank account. This is possible by a system called Proof of Stake, where people who hold Decred can help the system process transactions (and get paid for it).

Why Decred

Decred Value
Value of Decred has increased drastically over the past few months

Over the past 3 months, Decred has exploded in value, rising 1000% in value in a short period of time. Some believe that Decred is a sleeping giant that has awoken, whilst others accuse it of being a pyramid scheme.

 

Decred vs DASH:

  • Reward Distribution: Decred uses a highly advanced reward distribution system – rewards are split between miners, Decred holders, developers. DASH uses a similar system with a slightly different distribution ratio.
  • Proof of Stake system – Decred or Dash holders get “interest” by holding on to the currency. More specifically, holders vote on issues and get rewarded for it. DASH uses a masternode system which requires 1000 DASH before they can start voting (this cannot be transferred out unless the masternode is shut down). Due to the high buy-in price, DASH master nodes are extremely valuable. Decred uses a ticket based system, and tickets holders are chosen randomly to vote. This allows for a much smaller buy-in and greater participation.
  • Improved Voting system: The biggest objection with Bitcoin is that the community cannot easily vote on issues regarding updates to the protocol. With both DASH and DECRED, community voting is done by stakeholders (masternodes (DASH) or voting tickets (Decred).
  • InstantSend and Private Send – DASH has additional features to instantly process transactions (Instant Send) and anonymous transactions (Private Send). These features are unique to DASH

Where to Buy Decred

Decred is traded on the exchanges Poloniex, Bittrex, and Bleutrade. Decred is abbreviated as DCR.

Can you Mine Decred

Decred can be mined using the Blake256 algorithm (Minable with AMD / Nvidia GPUs). DASH can be mined using the X11 algorithm on special machines called ASICs (no longer profitable to use GPU to mine)

DASH Cloud Mining.

DASH cloud mining is possible (a process where you pay for a professionally managed machine that mines DASH). Check out our guide here: Genesis Mining DASH.