Why is the Chicago Tribune promoting Decred?
So btcd started due to Conformal CEO Jake Yocom-Piatt’s frustration with so-called developer centralization within bitcoin: developers who can “set policy on a whim”, are “trivially incentivized to see competing currencies fail”, are “disincentivized to enlarge their numbers”, and are “disincentivized to allow novel additions or changes to the code”. The system and the core developers are compared to central bankers, for good measure, and then juxtaposed to Mr. Yocom-Piatt and his crew – “we do not hold vast amounts of bitcoins and have a vested interest in their increasing value, to the exclusion of other currencies, like the core Bitcoin developers.”
In our view, Mr. Piatt and his developer crew suffer from a case of developer-envy; these Johnny-come-latelies missed getting on board early, are unsatisfied with working through the standard open-source development process to contribute, and believe their concerns should impact directly the bitcoin roadmap. To level the development playing field, Conformal went on to launch an alternative bitcoin protocol, btcd, which tries to incentivize a more robust and diversified developer pool. And hey, they even hired interns.
OK, so fast forward a year and a half. Nobody uses btcd really. Nobody outside of the bitcoin community has heard of it, and the community itself, aside from the margins that just love them some bitcoin alternative, sees it as a sideshow. So naturally, they decide to launch an altcoin, decred which was just pumped by the Chicago Tribune last Wednesday (10th of February), and which we quote throughout this short article.
The article is unintentionally brilliant. It is positive in tone (go Chicago-based developers!) whilst at the same time painting Decred as a likely pump and dump target – not saying be design mind you, I have no idea – with little reason for actually existing. “We’re very much into the technology, but we just weren’t about that developer group,” Yocom-Piatt said. “We’re just going to do our own thing.” It also lays out in a few short sentences the reasons why a coin like Decred has such meager chances for success.
Consider first Mr. Yocom-Piatt’s abrupt about-face on vested interests: “Before the broad launch, Company 0 [Mr. Yocom-Piatt’s company behind Decred] released nearly 2 million Decreds, giving half to early backers and keeping the rest. Yocom-Piatt said the company set the initial value at 49 cents, an amount set in order to cover the costs of development since early 2014. That worked out to about $415,000 worth of Decred that went to the developers who built the new currency without pay.”
Let’s ignore for a moment the hypocrisy, as well as the fact that decentralized Decred is using a centralized method of share pricing to compensate its developers up front with 8% of the total coins it means to release. The compensation sounds fair enough for work done, but won’t this lead to the same vested interests criticized above?
Well, probably not actually, as the developers most likely will dump their coins at the earliest possible convenience. And they have enough liquidity to sink any of the fake value that Decred has amassed. Compare this to bitcoin, which took what, two years before it had any real value? Decred starts out of the gate at 49 cents – thus spoke Company Zero.
Decred actually tripled in value when they were integrated into the altcoin exchange Bittrex. If I were a developer I would do my best to convert coins – now worth $1.12 – into a currency, like bitcoin or dollars, that has actual utility and whose value has been set in the free market. Why would someone hold onto coins which can only be traded on a dodgy altcoin exchange in a very illiquid market that has already been flooded with Decred?
Which brings us to the biggest reason that the odds are stacked against Decred. Let’s leave aside the fact that they pre-released 8% of the coins, which is a big red flag. Let’s ignore the lame assertion that “I knew there would be a market for this because there have been several attempts at creating the next major cryptocurrency”, and accept at face value that what is missing from the cryptoworld is an altcoin “system that can’t progress without input from the community that uses it, something Yocom-Piatt says is a key differentiator from Bitcoin”. Decred will fail because they don’t offer anything interesting enough to overcome the massive network and infrastructure gap between themselves and bitcoin.
In our opinion, btcd started out with ok intentions. When they realized the community was not really taking them seriously, they had already sunk tons of development hours into the development of their alternative protocol. This blocksize debate presented them with an interesting moment in which their concept of democratic coin government was a hot issue, and they jumped on it.
Postscript: Here are some decred exchanges. I wish I had bought when I wrote this article. sigh.