- What is Peercoin?
- The Problem With Proof-of-Work Based Digital currencies
- Why Proof of Stake Makes Peercoin a Superior Alternative
- Microtransactions & Off-Chain Networks
- Learn More
- Community
- Project Development
- Wallets & Exchanges
- Minting & Mining
- Resources
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:
- Proof-of-Stake, a sustainable coin generation model where a 1% annual reward is generated on coins held.
- Absence of hard limit on total coins in existence, modeling the supply of natural resources such as gold.
- Presence of 0.01 PPC/kb network transaction fee that is destroyed rather than paid to miners, in order to offset inflation caused by the minting of new coins.
- Transaction fee also limits casual, micro-sized transactions, making Peercoin's blockchain small and lean, even after almost three years.
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 almost three 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 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. There are many projects being worked on. Together, we are working to build the world's most decentralized and energy efficient cryptocurrency. Come and be a part of something truly revolutionary!
- peercoin.net - The official Peercoin website.
- peercointalk.org - The official Peercoin forum.
- peercoin.chat - The official chat room for Peercoin.
- Twitter - Follow Peercoin's Twitter feed for the latest news.
- Facebook - Get the latest news on Peercoin's Facebook page.
- Reddit - The official Reddit community for Peercoin.
- Google+ - Peercoin's Google Plus page.
- YouTube - Watch helpful videos and tutorials about Peercoin.
- Telegram - Peercoin chat service on Telegram.
- IRC Chat - Peercoin chat on Freenode.
- Video Tutorials - Introductory videos about Peercoin and tutorials.
- Peercoin Wisdom - A resource for technical information and peer review.
- Development - Core development and community projects.
- Media - A collection of articles and interviews about Peercoin.
- Whitepaper - Peercoin whitepaper by Sunny King.
- Myths - Counter-arguments for common Peercoin myths.
- FAQ - Frequently asked questions about Peercoin.
- Wiki - Peercoin's dedicated wiki on GitHub.
- PeerAssets - Protocol for issuing and transacting with assets, including features like voting and dividends.
- PeerKeeper - A thin wallet for minting in browser and mobile phones, with built-in PeerAssets support.
- Peerbox - Platform for secure minting and running Peercoin nodes.
- PARS Network - A subnet of the Peercoin network that can mint non-standard transactions without forking the Peercoin.
- PeerScript Labs - A testing grounds for developers to experiment with scripts and smart contracts on Peercoin.
- P2TH - Tagging a txn using a publicly known address allows for rapid parsing of the blockchain.
