Yet Another Altcoin to Address the Issue of Centralization

News and Analysis

Several bitcoin developers announced they are going to develop yet another altcoin dubbed Decred in order to address the centralization issues they believe are inherent in bitcoin.

Their concerns may seem justified, as the community recently started discussing the probability of bitcoin’s centralization due to concentration of mining capacity in the hands of a small group of major miners. The notorious block size debate could add even more concerns to the issue. Possibly due to those reasons, the developers see their project as an ultimately open source one, where anyone can participate, and the very governance thereof will be completely decentralized and distributed.

The developers state in their press release:

“Many people may not know that despite the technological decentralization Bitcoin has brought the world, there are serious and growing issues of centralization that rule decisions made about the present and future of the project. The Bitcoin software is controlled by a small group of people who decide exclusively what can and cannot be changed.

“This is in part due to a lack of mechanisms and pathways for funding development work directly from the community, and as a result Bitcoin development is funded by external entities that create conflicts of interest between the developers and the representative power of the community that uses Bitcoin.”

According to the project’s web-site, the proposed altcoin’s features include:

  • A hybrid proof-of-work and proof-of-stake technology-based consensus system that will balance consensus between miners and voters.
  • Open and self-funded development using a block subsidy to ensure long-term development sustainability.
  • Using the Blake-256 hashing algorithm.
  • Possible bitcoin implementation/compatibility due to the main contributors being those behind the development of btcsuite.
  • Bottom-up non-financial decision making through the Decred Assembly by community members contributing to the project through work and effort.

Many, however, believe that there is nothing to worry about, as bitcoin at its core is designed to oppose any centralization.

There have been lots of various efforts to change “what was wrong” with bitcoin, yet only few such projects, like Litecoin or Dash formerly known as Darkcoin, have eventually succeeded. Most of those currencies remain somewhat unsuccessful forks that extinct without gaining nether market audience, nor any notable publicity.

The press release provided by the Decred group hints at its aim to gain some notability even prior to the project’s launch. However, the developers state that it is “the technology itself” that funds the project.

Anyway, the question of whether the market needs yet another altcoin also remains open.

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