By Marcelo Martins - September 07, 2018
There are a few ways to obtain Decred, from buying to mining. Learn here the steps for those who want to exchange Bitcoin or fiat currency for Decred the easier way.
Before everything else one thing must be made very clear:
Exchange platforms aren’t wallets.
Your DCRs are only yours when you are in possession of them, in a wallet you control (you hold the private key, or seed of the wallet). Your DCRs (or BTCs or any other cryptoasset) should only remain on an Exchange (or any online platform, from any service provider) as long as it is necessary for the negotiation to take place. When the process is complete, transfer your DCRs to your wallet. This way you prevent the Exchange from being hacked and losing your resources, or that the Exchange disappears taking your money (in some cases claiming it was hacked), that the Exchange itself freezes your funds due to some pending documentation or that the government forces the Exchange to freeze your account or your funds. This subject will be covered again in the last section of this article.
1. If you have fiat currencyPermalink
If you have fiat currency and would like to exchange it for Decred you can use an Exchange to help you. An Exchange is a company that provides an online platform where users with different objectives meet and place their buy and sell orders. An Exchange is also known as broker or market maker, because it makes the market between buyers and sellers.
The next figure shows an exchange between two users, where one has fiat and the other one has Bitcoin. This is a four-phase exchange:
Figure 1 - Users exchange fiat currency for Bitcoin through an Exchange
a) Carol deposits fiat in the Exchange’s bank account;
b) Walter deposits Bitcoin in an address reserved for him by the Exchange;
c) Carol creates an order to buy Bitcoin, offering a certain amount of fiat for Bitcoin (rate); Walter executes this order accepting to trade in this rate;
Obs.: We could also have the other way around: Walter creates a sell order offering an amount of Bitcoin at some price (rate). After that, Carol executes this order by accepting to buy at this rate.
d) Carol, that now has Bitcoin, withdraws this Bitcoin to a private wallet. Walter, that now has fiat, creates a withdrawal order in the Exchange to withdraw the money to a bank account;
For keeping this online platform available to users the Exchange charges an amount that usually goes from 0,1% to 0,5% depending on the Exchange and the type of order.
Learn more: https://decred.org/exchanges/
1.2. Peer-to-peer (P2P)Permalink
It is possible to buy cryptocurrencies with another person in a model called Peer-to-peer. This way one can eliminate the intermediary (the Exchange, that charges fees), and do business with the other party directly. This is the idea Satoshi Nakamoto wrote in the whitepaper used to describe Bitcoin: A Peer-to-Peer Electronic Cash System.
Usually one of the parties, the one with less reputation, send first. The other party, when notice the necessary confirmations, send its resources and the deal is done.
Figure 2 - Users exchange Bitcoin for Decred directly, without trusted third parties
If one of the parties doesn’t want to send coins to the other party first, they may agree on using an intermediate that both trust. This intermediate may or may not charge a fee to intermediate this exchange.
a) Walter send coins to the intermediate and waits for Carol to send her coins or deposit fiat (via traditional banking operation).
b) Walter receives the resources and lets the intermediate know that the coins can already be sent to Carol.
If there is a problem both parties will send the intermediate their financial and blockchain records to solve the situation.
c) The intermediate sends the resources to Carol.
Figure 3 - Users exchange fiat currency for Bitcoin using a third party as escrow
1.4. Atomic SwapsPermalink
Decred developers created a cross-chain tool to exchange cryptocurrencies (directly between blockchains). This tool is called Atomic Swap and it is already available to swap Decred, Bitcoin, Litecoin, Viacoin and other cryptocurrencies.
The first atomic swap of history happened between Decred and Litecoin and was made public on Twitter by Charlie Lee, Litecoin creator.
Yesterday I did an on-chain atomic swap of 1.337 LTC for 2.4066 DCR w/ @_alyp_ of @decredproject. (See txns: https://t.co/BlxU1QBK2U) ⛓️⚛️💱🚀 https://t.co/wPqzdw40Gp September 20, 2017
The first atomic swap between Decred and Bitcoin happened two days after that:
⚡️ “Atomic cross swap 0.1 $BTC for 10 $DCR”https://t.co/1I6mUXusX3 September 22, 2017
Atomic Swap is a very complex subject we will approach again in another article. For developers: https://github.com/decred/atomicswap
2. If you have BitcoinPermalink
If you have Bitcoin you can exchange directly for Decred through exchanges or P2P. The exchanges that support Decred usually trade the pair DCR/BTC.
Learn more: https://decred.org/exchanges/
3. Receiving DecredPermalink
You can sell products or services and get paid in Decred, Bitcoin or other cryptocurrencies. It is possible to integrate Decred directly into your e-commerce or to use a payment gateway that supports Decred.
Figure 4 - Shopping online with Decred
4. If, for any reason, you need fiat currencyPermalink
If you need to use your financial resources and Decred is not accepted as a payment option, you can at any time exchange Decred for Bitcoin or fiat currency, as previously shown. The more users accept Decred as a payment option the greater its liquidity will be.
Figure 5 - Users exchange Decred for fiat currency through an Exchange
5. If you have another coinPermalink
If there is no Exchange that trades the pair DCR/you coin or any well-reputed P2P, you will have to exchange your resources to Bitcoin first so that you can exchange Bitcoin for Decred. This is not the optimal scenario because you’ll have to (in case you’re selling):
First step: execute a DCR/BTC order
a) via Exchange: paying the Exchange fee and, depending on where are your resources (in your wallet on in the Exchange), paying the miners fee on Decred network and on Bitcoin network to send the resources to the Exchange.
b) via P2P: it will be necessary to pay the miners fee on both networks, to transfer Decred and to transfer Bitcoin because they are two distinct networks;
Second step: execute a BTC/fiat or other coin order
a) via Exchange: paying the Exchange fee and, depending on where are your resources (in your wallet on in the Exchange), paying the miners fee on Bitcoin network to send the resources to the Exchange.
b) via P2P: it will be necessary to pay the miners fee to send Bitcoin to another wallet.
Figure 6 - The two steps described above, via P2P
6. PoW MiningPermalink
Proof-of-Work (PoW) mining uses computational power to create and verify the blocks the provide security to the blockchain. This is very similar to Bitcoin mining.
7. PoS MiningPermalink
Proof-of-Stake (PoS) mining is performed by stakeholders that “lock” a certain amount of DCRs in exchange for voting rights and financial reward.
Decred uses a hybrid PoW/PoS mining mechanism that increases network security, reduces PoW miners decision-making power and allows long-term investors to be rewarded and make decisions regarding changes in the project. To become a PoS miner it is not necessary to buy equipments or spend on electricity bill.
Figure 7 - PoW and PoS miners receive most of the rewards
To learn more about the network fund, PoW and PoS mining and rewards, read the article The origin of Decred.
Decrediton is the official Decred graphical wallet. It is open source, developed by the Decred developers team and is available for Mac, Linux and Windows. To learn more, read about the Decrediton Setup.
Once your operation is complete, withdraw your DCRs from the online platform by transferring it to your wallet. “Your wallet” means that only you have the wallet’s private key (or the seed, the mnemonic for the key).
Using Decrediton, generate a new receiving address by accessing the
Transactions lateral menu and then the
Receive tab as shown in the following figure. Although it shows Decrediton connected to the Testnet (notice also that the address begins with “Ts”), the procedure is exactly the same for the Mainnet (where the receiving addresses start with “Ds”).
Figure 8 - Example of receiving address generation
Copy this address to the online platform and transfer your DCRs to your wallet.