As Bitcoin has continued to grow in popularity and size, the network’s ecosystem has also continued to multiply. Bitcoin has led the charge in the entrance of institutional cash into cryptocurrency, as well as the development of regulatory and tech infrastructure for crypto.
It’s grown so quickly that it’s almost easy to forget that just a few short years ago, Bitcoin was facing an identity crisis so powerful that much of the world was confused about which coin was the real Bitcoin. (Remember BCH?)
Of course, the Bitcoin v. Bitcoin Cash crisis is firmly in Bitcoin’s rear-view mirror. However, the underlying problems in Bitcoin’s governance that caused the crisis in the first place haven’t changed. While this isn’t a serious issue for Bitcoin at the moment, Bitcoin could face governance issues on the road ahead.
Finance Magnates recently sat down with Jake Yocom-Piatt to speak about governance on Bitcoin and on Decred (DCR), the cryptocurrency that he helped to create. Jake is currently the Project Lead of the Decred cryptocurrency project, as well as the chief executive of Company 0, LLC, one of the corporate contractors that works for Decred.
We also spoke about Decred’s evolution, and about how blockchain can bring transparency to government elections. Check it out.
The birth of Decred
“I’ve been working in the cryptocurrency space since late 2012, early 2013,” Jake said. “My background started with Bitcoin, which was the ‘soup du jour’ at the time. That really caught my eye, and so I started working on it–I thought it was very interesting to be able to store and transfer value out of the fiat banking system.”
Jake’s first serious endeavor in the crypto space was “an alternative full-node Bitcoin implementation called BTCSuite. The intention was to make the Bitcoin ecosystem more diverse, more stable, and more secure.” The project was primarily funded internally funded: “I’d spent a couple of million dollars doing that, but it became a financing game. I could only do that for so long before eventually, I had to get external investments.”
“That didn’t really appeal to me, so I decided to create a cryptocurrency with people that I knew,” he explained.
As such, Decred was born. Jake said that the inspiration behind the coin came from “the frustrations that I had with [his] Bitcoin experiences.”
Power, control, and frustration
“Bitcoin’s obviously a very interesting piece of technology, and it really changes the game–this idea that you don’t have a central point of trust that determines that the outcome of how value storage and transfer works was very interesting to me.”
However, “there were a couple of major issues that I saw” after several years of working in the space.
The first of these issues had to do with power and control. “Who’s really in charge of the network?”, he said.
“With Bitcoin, it’s the core developers, and a handful of ‘economic nodes’–big, venture-capital-backed outfits that build the infrastructure around it,” he said. “That was an issue to me–shouldn’t the people who actually hold the Bitcoin be in control of the network, rather than a small group of miners, venture capitalists, and developers?” This is why Decred’s Proof-of-Stake element was introduced.
In addition to the centralization of power and control on the Bitcoin network, Jake said that he also found frustration with the funding model for technological development.
Indeed, the question of who’s going to pay for Bitcoin’s technical infrastructure is “a very open question to me,” he said. This is why (on Decred’s network), “10 percent of every block…