Blockchain governance: reducing trusted third parties with Decred project

Abstract

Decred is a cryptocurrency with its own blockchain and has several similarities with bitcoin but implements a governance model that resembles a company with thousands of investors. These stakeholders invest their coins, receive the right to direct the project as they see fit and are rewarded for doing so. Everyone else not invested may use the coin as means of exchange, trading it for goods or services or consuming other services provided by the blockchain as the digital notary. This paper investigates how Decred project created its own version of money and implemented security measures to improve governance and remove trusted third parties from money issuance and e-voting. This topic is particularly relevant to understand how blockchain technologies improve governance and avoid the tyranny of the majority. In order to reach our goal, we use multi-agent simulation and statistical modelling to verify to what extent Decred is capable of providing a predictable, scarce, trustworthy digital asset. We show that Decred increased blockchain security with its hybrid proof-of-work+proof-of-stake (PoW + PoS) security mechanism, making an attack more expensive.