Peercoin (PPC) is a peer-to-peer, decentralized, digital cryptocurrency. It is a payment network without a single point of control or issuing authority (like the US Federal Reserve). Peercoin relies on cryptography and peer-to-peer networking to validate balances and transactions. It is also the first cryptocurrency to use proof-of-stake technology, an energy efficient solution to securing its network, which was invented by Peercoin's architect, Sunny King.
Bitcoin relies on Mining (Proof-of-Work) to secure its network and validate transactions. Users who mine are rewarded with Bitcoins, thus providing them with an incentive to secure the network. The inherent problem with proof-of-work mining is that it creates a "computational arms race" for more and more powerful hardware dedicated to mining to gain an advantage over others and increase the chances of receiving a reward.
As seen with Bitcoin, this competition shuts out most people from the mining process and pushes control of the network into the hands of those who can afford it. Thus, proof-of work mining has turned Bitcoin from a decentralized network where anyone can participate, into a network that has centralized control into the hands of the few. This is a long term problem for Bitcoin because it increases the risk of a person or entity gaining control of 51% of the mining power, allowing them to attack the network by reversing transactions, blocking confirmations, performing double spends and other attacks which could destroy confidence in Bitcoin. Centralized cryptocurrencies also make easier targets for governments to shut down.
Peercoin was designed by developer and architect Sunny King. Peercoin uses Proof-of-Work solely as a way to distribute coins more fairly, as opposed to an IPO (Initial Public Offering). To maintain the security of the network, Sunny King invented a new mechanism called Proof-of-Stake, which allows people to secure the network using the Peercoins they already hold. While not transacting with your Peercoins, you can hold them in your wallet and engage in a process called "minting," which secures the network and offers you a 1% annual reward. This encourages saving. Proof-of-stake minting is an energy efficient solution to securing the network, meaning that the entire network can be sustained on low-powered hardware, allowing even basic computers to participate. Equal participation is important because it allows Peercoin to remain as decentralized as possible.
The only way for a person or entity to attack the Peercoin network is for them to acquire 51% of the coins that are minting. In practice, attempting to purchase the amount of coins necessary to carry out an attack would drive the price up to astronomical levels, making it counter-productive for an attacker because they would be forced to put their entire investment at risk.
One other major benefit in a proof-of-stake system is that the owners of the network assets (peercoin holders) are also the ones who control the network, as opposed to Bitcoin where there is a disassociation between those who control the network (miners) and those who own its assets (bitcoin holders). In Peercoin these interests are aligned. Peercoin holders are the ones who control the network.
The main strengths of Peercoin are sustainability, increased security (particularly against the "51% attack"), and its economic properties, which allow it to function as a long-term store of value, or "backbone" currency. In technical terms, Peercoin can be expressed as:
As mentioned above, one of the purposes of Peercoin's 0.01 PPC/kb network transaction fee is to eliminate blockchain bloat caused by microtransactions. As a result of microtransactions, Bitcoin's blockchain has grown massively in size, takes days to download and consumes high amounts of hard drive space. By comparison, Peercoin's blockchain remains tiny even after two years, the download time is quick and the entire blockchain is small enough to fit on mobile devices. This makes Peercoin more manageable than Bitcoin.
Even though the transaction fee has been a positive for Peercoin so far, many people are concerned with the fee heading into the future because it would seemingly prevent Peercoin from being used as a transactional currency. A major part of the story is missing here though. In an interview dated 10/24/13, Sunny explained Peercoin's design and how it improved upon Bitcoin. Notice the bolded sentence in the quote below:
||"Both PPC and XPM are designed to last. PPC is designed with energy efficiency, XPM is designed with energy multiuse. Bitcoin has a long term uncertainty as to whether transaction fees can sustain good enough level of security. Before that the main concern is how to balance transaction volume and transaction fee levels. Currently I get the feeling that bitcoin developers favor very low transaction fees and very high transaction volume, to be competitive against centralized systems (paypal, visa, mastercard etc) in terms of transaction volume, to the point of sacrificing decentralization. This also brings major uncertainties to bitcoin's future.
From my point of view, I think the cryptocurrency movement needs at least one 'backbone' currency, or more, that maintains high degree of decentralization, maintains high level of security, but not necessarily providing high volume of transactions. Thinking of savings accounts and gold coins, you don't transact them at high velocity but they form the backbone of the monetary systems.
Pure proof-of-work systems such as bitcoin is not 100% suitable for this task. This is because transaction fee is not a reliable incentive to sustain network security. If the mining generation amount is kept constant (there have been several such attempts in altcoins) it would work better security-wise but then it would also significantly weaken the scarcity property of the currency. XPM's inflation model is designed in such a way that it could serve as backbone currency better than bitcoin if needed, because it could maintain high security reliably for longer, with reasonably good scarcity property as well. Of course that's only from architect's point of view, whether or not it would be chosen by the market is a whole different matter.
PPC is designed to serve even better as a backbone currency. The proof-of-stake technology in PPC is not only energy efficient; it also maintains high level of security without relying on transaction fee. Thus PPC could be safely designed with strong scarcity property yet serving well as backbone currency. Both PPC and XPM use protocol enforced transaction fees, which reflects my preference that high transaction volume is discouraged in favor of serving as backbone currencies.
Right now if we are talking about micropayments in the US$1 range, both PPC and XPM still handle them with much lower overhead than credit card network. In the long term micropayments should be provided by centralized providers, or a less decentralized network optimized for high capacity transaction processing.
On the other hand there is no promise that minimum transaction fee wouldn't be adjusted. If processing capacity of personal computers continues to advance at the current pace, both max block size and minimum transaction fee could very well be adjusted at some point. However I do take a very cautious approach to adjusting transaction fees, as opposed to bitcoin devs. The impact to the fitness of the currency as a backbone currency is of great concerns to me."
A decentralized, censorship resistant blockchain is suitable for safe and secure storage of value, while a centralized or less decentralized off-chain solution is better for transactions due to high performance and low fees. Sunny thus designed Peercoin knowing that such off-chain networks would become important in the future.
One example of an off-chain network is Open Transactions, or OT for short. When implemented, OT will allow any size amount of Peercoin [or other crypto] to be transacted instantaneously, enabling Peercoin to retain its ability to be used as a transactional currency, even with the 0.01 PPC/kb fee still in place.
Another advantage is that Peercoin will handle its connection to an off-chain network like OT much better than Bitcoin. Bitcoin miners won't receive the fees from transactions happening within the OT network, which could become problematic for Bitcoin in the future once the block reward lowers. Peercoin on the other hand is perfectly set to handle this potential future due to the low cost of minting.
Peercoin and off-chain networks like OT are perfect for each other. Peercoin provides a decentralized and secure currency while OT provides fast and inexpensive tools to manipulate and exchange Peercoins in everyday life. And Open Transactions is only one example. Peercoin will be able to connect to other high speed off-chain networks as they are developed and released.
As you can see, Peercoin has been carefully designed with the long-term in mind. It was built to last. If you would like to get involved, then please join our community forum at PeercoinTalk.org (NOTE: In order to post a thread, you first have to make 2 replies). There are many projects being worked on, some of which are listed below. Together, we are working to build the world's most decentralized and energy efficient cryptocurrency. Come and be a part of something truly revolutionary!
To get started with Peercoin, you'll need to download a wallet client so you can send and receive coins. There are currently two options available, Peercoin-Qt and Peerunity. For the majority of users, the best option for a wallet is Peerunity. Peerunity is a wallet that is developed and maintained by the Peercoin community. It includes features beyond the core protocol wallet, such as one click minting and coin control. Future releases will contain a redesigned theme, Peershares integration and a dedicated minting tab.
There is also Peercoin-QT, which represents the core protocol and is developed and maintained by Sunny King. Although it is the most secure Peercoin wallet, it receives only high-priority updates, so it lacks in extra features, ease of use and visual appeal.
Help secure the Peercoin network by minting and earn your 1% reward:
NuBits is the world's first stable cryptocurrency. It achieves this by separating currency units (NuBits) from ownernership of the network (NuShares). Peercoin is a critical part of NuBits, as all NuShareholders receive network revenue in the form of Peercoin dividends, thus making Peercoin the incentive to build a better and stronger Nu Network.
Peershares is an inexpensive and decentralized ledger to be used by businesses for raising funds, tracking share ownership and distributing dividends in an automated fashion. Shares can be transferred and held just like other cryptocurrency units, such as Peercoins or Bitcoins. Each business using Peershares will have their own blockchain that is independent of all others and can be secured cheaply and easily using Peercoin’s proof-of-stake. Issuers can distribute dividends as Peercoins, which can then be held by the investors, or if they would prefer, can then take those dividends and convert them to another cryptocurrency or fiat through their preferred exchange.
Peerbox is a secure operating system for minting and running Peercoin nodes, and is currently under active development. It focuses on inexpensive, energy efficient devices such as the Raspberry Pi, which is compatible with Peercoin's goal of providing an energy efficient cryptocurrency. If ASIC is a term for dedicated and energy efficient mining, then Peerbox is the ASIC of Proof-of-Stake.
The Fundamentals of Peercoin
It may have been a long time since you've heard from us. This email newsletter is a last minute reminder to all Peercoin holders that they need to upgrade their client before the protocol switches to v0.5. It will also give you a rundown of some of the things that have been going on in the community recently as well as remind you why Peercoin is unique amongst all other cryptos.
Proof of stake consensus has been seeing a surge of interest lately. Even the developers for Ethereum have made known their interest in eventually switching over from proof of work to proof of stake. As the original crypto to introduce a working implementation, Peercoin still stands to this day as a testament and the main example to the efficacy of proof of stake consensus. Sunny King had much forethought when he originally designed it and many people are still only coming to realize the numerous problems that it solves.
As Bitcoin and proof of work go through one stuggle after another, Peercoin's true strengths shine through. As we speak, Bitcoin's block reward halving is approaching closer, which will put many miners out of commission, further centralizing the network. Sunny King however designed Peercoin without these abrupt reward halvings. Instead, the block reward adjusts upward and downward based on the hashing power being put toward the network. Small miners losing profitability with Bitcoin mining will try to stay profitable by transitioning their hashing power over to Peercoin. As a result, Peercoin's inflation rate will continue to decrease, making Peercoin more and more scarce over time. So far 98.5% (22,740,325) of all Peercoins are distributed to miners and merely 1.5% (341,888) to minters. The number of mined Peercoins will start to drop further as hashing power crosses over from Bitcoin to Peercoin.
Unlike Bitcoin however, a decreasing block reward will not harm Peercoin's network security. Sunny King designed Peercoin as a hybrid system, meaning proof of stake minting is used for security of the network while proof of work mining is used solely for distribution of new Peercoins. Using proof of work for the continual distribution of new coins gives Peercoin an advantage over pure proof of stake systems, which often suffer from poor manual distribution. Proof of work in Peercoin ensures that coins are distributed widely to as many people as possible without the centralizing effects and security concerns that plague the Bitcoin network. The hybrid design offers Peercoin the best of both worlds in terms of security and distribution.
Making sure that Peercoins are distributed to as many people as possible is very important for the decentralization of the network. One of Bitcoin's major flaws is that control over the network is given to miners, rather than the users of the network who hold Bitcoin. The increasing costs and decreasing rewards of competing in the Bitcoin mining market has led to a dwindling number of miners and a centralizing effect among those who provide security for the Bitcoin network. As time goes on, control over Bitcoin's future and security is falling into the hands of fewer and fewer people. This opens up Bitcoin as a prime target for attack or abuse through government intervention and regulation. Another drawback is that miners and everyday users of Bitcoin may not share the same interests or vision for the future of the network, in the end putting each other at odds with the users feeling powerless and not in control.
Peercoin doesn't have these problems by design. The owners of the network and thus the ones who control its future and handle its security are the Peercoin holders themselves. Since the owners and users of the Peercoin network are one and the same, interests are perfectly aligned. This leads to much less conflict and argument about the direction and purpose of the network. I'm sure many of you have grown tired of the arguments and endless debates on block size and clogged up mempool that take place in the Bitcoin community. If Peercoin holders wanted to increase the block size, we wouldn't need to appeal to miners. We could simply do it ourselves by minting on a forked chain.
When it all comes down to it though, when Sunny King originally developed Peercoin, he had a very specific long-term vision, that of a network designed for maximum decentralization and security. Peercoin's underlying purpose is to provide the ability to store value in an inexpensive to maintain crypto network which prioritizes security, decentralization and scarcity over speed, low fees and transaction volume. This is the definition of a backbone currency, according to Sunny King. The block size debate taking place in the Bitcoin community is ultimately about whether Bitcoin should focus on decentralization and security or sacrifice it all in order to become a payment network capable of competing with the likes of Visa. With Peercoin, Sunny specifically designed it to focus on the former, rather than the latter, a network that maintains a high degree of decentralization, maintains a high level of security, but not necessarily providing high volume of transactions.
The fixed 0.01 PPC/kb fee ensures that transaction spam and blockchain bloat are prevented. As we speak, Peercoin's blockchain is only around 321 megabytes in size after over three and a half years of operation, compared with Bitcoin's blockchain, which is now over 66 gigabytes. Peercoin can work with off-chain networks like Open Transactions or the Lightning Network to provide a solution for instant micropayments, at the same time preserving its fundamentals as a backbone currency. While Bitcoin and other cryptos fall victim to blockchain bloat and centralization attempting in vain to become payment networks for microtransactions, Peercoin will continue to focus on creating the most decentralized and secure network possible for storing value.
Peercoin v0.5 Protocol Switch is Imminent
The v0.5 protocol switch is imminent and will happen on Tuesday, 26 Apr 2016 19:46:40 UTC. If you have not upgraded the core client to v0.5.3 already, please do so now. A late upgrade will generally require a blockchain redownload. Upgrade instructions and the download page can be found at the links below.
- Upgrade Instructions - https://www.peercointalk.org/index.php?topic=4453.0
- Download Page - https://www.peercoin.net/download
Windows and Linux versions have been released, however Ben, the team member responsible for releasing the Mac versions for Peercoin, NuBits and B&C Exchange has unfortunately been unavailable to help us put out a version for OS X. We have located someone to help us put out an OS X version for release, but it looks as if we're going to come up a little short and miss the deadline. If you are waiting for the OS X release, please follow this thread where work is being done to support Mac.
- Mac OS X Thread - https://www.peercointalk.org/index.php?topic=4467.0
Peerunity v0.2.0 Released
If you use Peerunity, rather than the core client, we have also released v0.2.0 as well. This upgraded version supports Peercoin v0.5 protocol changes and adds a new visual theme as well with Peercoin branded colors. For those unfamiliar with Peerunity, it is an easier to use community client which offers extra features that the core client doesn't, such as enabling minting from the menu and other features. You can download at the link below, as well as see screenshots of the updated theme. Once again, the OS X version is still being worked on, but you can follow the progress being made at the link mentioned above.
- Download Page - https://www.peercoin.net/download-peerunity
- New Theme - http://imgur.com/a/y5yPp
Peerbox v0.5.5 Released
A redesign of Peerbox, v0.5.5 has now been released. For those unfamiliar, the ultimate goal of Peerbox is to provide a maximum security platform for safely minting and running Peercoin nodes. With this release, Peerbox is no longer an independent operating system and is now designed as an addon for Debian. This new architecture enables stability, ease of installation and use and ease of maintenance. What is most important, the new Peerbox enables even less technology savvy people to use it, as it features a graphical user interface for the first time. Tor support for full nodes is also included. Users can now transform their Raspberry Pi into a Peerbox in minutes and not lose any of the functionality they are used to. To install your Peerbox and start minting Peercoins, check out the following links.
- v0.5 Release Thread - https://www.peercointalk.org/index.php?topic=4470.0
- How to Thread - https://www.peercointalk.org/index.php?topic=4468.0
- Support Thread - https://www.peercointalk.org/index.php?topic=4469.0
Peerassets Whitepaper Coming Soon
The creator of Peerbox (Peerchemist) will be releasing a whitepaper soon for a new feature called Peerassets, which will enable issuing of and transacting with assets on top of Peercoin's blockchain. Other features will also be included as well, such as shareholder voting. An older draft is already on the Peercointalk forum called Peercoin Simple Assets, but a new version will be released shortly, so make sure to keep your eye on the forum for Peerchemist's thread.
PeercoinWisdom.com Coming Soon
Community member Saeveritt has introduced us to a website he is building called PeercoinWisdom.com. The following is his introductory announcement...
"The aim and scope of Peercoinwisdom.com (PPCW) focuses on increasing public exposure of community driven projects and technical articles pertaining to Peercoin itself. In order to expand dialog between community developers, researchers and the public, PPCW will become a resource of technical information for the crypto-community to familiarize itself with.
The main focal point for this project is set towards the Peer Review section. In this section will reside articles pertaining but not limited to technical project proposals, comprehensive financial analysis and tutorials, market simulations utilizing blockchain data, declarations of new DAOs, DACs, assets and more. Anyone willing to can submit text to be peer reviewed publicly and if well received by the community will subsequently be published to the PPCW Journal. It is in this journal where work in less narrowly defined or inter-disciplinary fields may be discovered among its contemporaries. The academic quality of publicly available information is priority but by no means prevents the publication of invalid research. In this regard, community researchers and developers wishing to be apart of the publishing process will be provided Publishing Keys to help ensure quality articles are chosen.
Future and potential resources provided by PPCW consist of but are not limited to a block explorer, PSA (Peercoin Simple Assets) web client, and financial market data accompanied with charts covering multiple exchanges. An initial outline of the website can be found at the following address http://www.peercoinwisdom.com
If you have any questions, comments, or concerns please feel free to discuss them. Site development is open to anyone in the community wishing to be involved."
- Announcement Thread - https://www.peercointalk.org/index.php?topic=4471.0
- Main Website - http://www.peercoinwisdom.com
- Repository - https://github.com/embeddedthought/Peercoin-Wisdom
- Peer4commit Donation Page - http://peer4commit.com/projects/168
Peercoin: History of the First Year
Christopher P. Thompson has written a book detailing the history of the first year of Peercoin's existence, a time when proof of stake was newly invented by Sunny King. The book delves into this time period and covers a lot of things such as the first fork of Peercoin, early exchanges that supported it, growth in the market cap and money supply, early work on the logo. It pulls many direct quotes from Sunny King and other forum members from around the internet. It even includes an early interview between Sunny King and the main developer of Ethereum Vitalik Buterin. Please grab a copy and leave a review so maybe we can get the author to continue it as a series.
- Amazon Page - http://www.amazon.com/Peercoin-History-First-Christopher-Thompson/dp/1512178063
- Video Review by Chronos - https://www.youtube.com/watch?v=2S1XuCrnGiA