21 Million coin supply
Decred has a maximum supply of 21 million coins similar to that of Bitcoin. These coins are mined into existence every 5 minutes until the full supply is realised in 2120. Unlike Bitcoin, Decred doesn’t have a dramatic supply shock. Instead of a halving every four years Decred reduced its mining reward every 21 days by less than 1% of the current reward.
By 2027 the bulk of the supply will be in circulation, approximately 19 million DCR coins. The remaining 2 million coins will be produced slowly over the next hundred years.
When the coin supply slows down in 2027 we will start to see what a low inflation currency looks like and whether it can hold up to the promise so many of us believe.
Rewards and incentives
To align incentives and drive the decred project forward the block reward is split three ways:
60% + block fees go to the POW miners for securing the system and to offset the expense for the hardware and electricity purchased, now and into the future
30% goes to the POS ticket holders for validating the miners work and voting on governance issues and proposals
And 10% goes to the Decred treasury to help fund the development and public awareness of the project.
Why 21 million?
Satoshi Nakamoto, explained, that by having a fixed maximum supply of around 21 million coins, it will mean that even if the project remains relatively small it will be able to maintain its value, making it more stable in its growth over time. They also went on to say, that if the project did remain in a niche market they would expect a coin value of 0.001 to be equal to $1. Which would give each coin a value of $1000.
What is a DCR?
With such a low supply, how can Decred become a world currency? It’s important to realise that a single DCR coin is made up of 100,000,000 atoms. This means that at any time you can, buy, earn, sell, use or trade a small fraction of a coin. A common crypto currency misconception is that you need to buy whole coins, this is not the case. A single purchase just needs to be higher than the mining fee associated with each transaction, in Decred’s case this is normally around 4000atoms which is currently less than a penny.
As time moves forward, we will see a change in how we think about a common unit, for instance:
- in 2020 we would have used 1500 dcr to buy a £15,000 car.
- In 2021 we would use 100 dcr to buy a £15,000 car
- and in 2026, possibly, we would use 0.5 dcr to buy a £15,000 car
As the project grows and it gains more users and use-cases, we can turn this calculation on its head and start thinking in atoms rather than DCR. For example instead of saying 0.0001 dcr we can say 10, 000 atoms.
What is a niche market?
The niche market, just means small community. Based on some simple transaction calculations and individual user frequency. You can reasonably assume that a niche market for Decred to gain and maintain a value of 0.001 to $1 would be between 70,000 and 100,000 transactions each month, this calculation disregards user and chart manipulation and assumes honest user behaviour.
Decred’s current development cycle and ethical direction makes it a good contender to build a loyal following of users that want to hold their value in the coin over the long term. You are unlikely to see mass adoption in the short term due to the way the crypto market has been so heavily manipulated by project claiming to be the next big thing, centralised exchanges manipulating price action and penny stock projects objectively appearing to be cheaper alternatives for new participants.
Instead, Decred will grow slowly, quietly and strongly in the background. If you have a long term horizon for your investment strategy it’s easy to see that Decred is unique in this space and has a bright future with the possibility of becoming one of the global currencies or maybe even something bigger.
Decred’s currency is also used by coin holders to help secure the protocol. At any given time more than 50% of the total supply of DCR will be locked up for staking rewards and to vote on the governance of the Decred system. This is a use case that adds value to the project, puts the coins to use on a frequent basis and also reduces the available supply. Stakeholders are encouraged to act responsibly due to the fact that the lockup time of these coins can be up to 142 days.
Due to it’s fixed coin supply and stakeholder governance system, Decred will continue to develop long into the future. Creating the developments the space needs to remain decentralised.