What is Peercoin?
Peercoin, also known as PPC or Peer-to-Peer Coin, was created by Sunny King and his team and launched in August 2012. It is the first blockchain to implement Proof-of-Stake consensus.
The primary inspiration behind the creation of Peercoin was to address a number of perceived shortcomings of Bitcoin, including energy efficiency, security and sustainability, decentralization and long-term viability.
Essentially it was designed as an enhanced replacement for Bitcoin. As such, it was originally forked from Bitcoin and uses the same UTXO style blockchain. However, Peercoin's code was modified to introduce Proof-of-Stake as its primary consensus protocol. The next section explains how this makes for a better blockchain.
Given that Peercoin uses most of the same code, it can easily port new features from Bitcoin and utilize any of the supporting infrastructure, including tech advancements like Taproot or Lightning Network. Peercoin is the only Proof-of-Stake blockchain that uses modern Bitcoin code, making it the perfect drop-in replacement.
Peercoin also has a dedicated community, is actively developed, fairly distributed, has low barriers of participation, can do everything that Bitcoin does, minus the 13 TWh of energy usage, and it's not a scam.
How to Obtain Peercoin (PPC) and Wrapped Peercoin (wPPC)
There are two versions, real peercoin (PPC) and wrapped peercoin (wPPC).
PPC is the native coin on the Peercoin blockchain, running now for over 11 years. You can obtain PPC from the following exchanges: https://peercoin.net/resources#exchanges
wPPC is more recent. wPPC is a synthetic Peercoin-backed token that exists on EVM blockchains like Ethereum and Polygon. It can be traded on Uniswap and QuickSwap for example. wPPC is created when real peercoin is wrapped using http://bridge.peercoin.net and destroyed as peercoins are unwrapped. You can obtain wPPC from here: https://peercoin.net/resources#wrapped-ppc
The contract addresses for wrapped peercoin (wPPC) are as follows:
Ethereum: 0x044d078F1c86508e13328842Cc75AC021B272958
Polygon: 0x91E7E32C710661C44ae44D10Aa86135d91C3Ed65
What is the Difference Between Proof-of-Stake and Proof-of-Work?
In a Proof-of-Work blockchain, new blocks are created by mining, but in Peercoin’s Proof-of-Stake, new blocks are created by staking.
In a Proof-of-Work blockchain, the act of mining involves using computer processing power to solve blocks. The miner who solves the block first has the privilege of adding that block of transactions to the blockchain, earning them new coins as a reward for their service to the network.
Ultimately, miners are responsible for validating and processing transactions on a blockchain network, and electricity is the scarce resource they use to do this work.
Naturally, miners will attempt to solve and produce blocks faster than their competitors in an effort to earn more rewards for themselves. Becoming faster than the competition requires more processing power, which inevitably requires more electricity to be burned, an incredibly wasteful process.
This process works to secure a blockchain, however it ends up centralizing power over the network with pool operators, as most miners will lend their hash power to a few large mining pools in an effort to continue earning rewards.
Economies of scale also play a factor in centralizing Proof-of-Work blockchains, with miners who manage to grow so large that they are able to get better deals on hardware and negotiate better energy prices. They will always outcompete the small home users and drive them out of profitability.
In Peercoin’s Proof-of-Stake system, the scarce resource used to secure the blockchain is not electricity, but time. Basically, the older your coins are, the more time they’ve accumulated sitting in your wallet. Coins with a higher time accumulation have more power to participate in producing blocks and securing the network.
Let’s say you own 100 peercoins, and you want to start minting new blocks. After sitting in your wallet for 30 days, you will have accumulated 3000 “coin days”, because each of those 100 coins is 30 days old. These coin days are the actual minting power of your coins. You can think of your coin days as being similar to your hash rate from traditional mining. Accumulating more coin days means you’re more likely to produce a new block on the chain.
There are a number of rules in place to make this a fair system. 30 days is the minimum time you need to hold your peercoins in your wallet before they can become eligible to start minting. If you transact with your coins, that timer will reset.
Every time you produce a block, you will earn new peercoins as a reward (about 3-5% annually) and the age of the participating coins will reset to zero. After 90 days, peercoins will hit their maximum minting power. These time limits are all security features designed to decentralize minting power and keep the process fair.
Using time as an integral part of Peercoin's security means that blockchain security becomes inexpensive. It no longer becomes necessary to consume some scarce resource (like burning electricity), which could be used in a more beneficial way.
Why waste electricity at all when a green alternative exists that can perform the same function? Time is also a scarce resource. It is limited. You can't create more of it, and you can't manipulate it, or speed it up to benefit yourself. All you can do is wait, and waiting doesn’t cost anything except your patience.
The main costs for staking in Peercoin are an investment in the coins and time necessary to participate in the staking process. As a result, Peercoin staking is energy efficient, sustainable, and can even be done on low powered devices like the Raspberry Pi.
Peercoin has proven over the past decade of continuous operation that the energy wasted to secure Proof-of-Work blockchains is completely unnecessary.
Did Peercoin Really Invent Proof-of-Stake Consensus?
Yes, the Peercoin blockchain is the very first working implementation of proof-of-stake consensus. Peercoin's founder, Sunny King, designed it as a sustainable alternative to Bitcoin’s proof-of-work.
What is Minting (Staking)?
Staking, or ‘minting” as we call it in Peercoin, is a fundamental concept that plays a key role in securing the network. This is the original Proof-of-Stake mechanism, and arguably the only true Proof-of-Stake mechanism to this day.
When you hold peercoins in your wallet, they begin to accumulate "coin age." Coin age is a measure of the amount of time your coins have been held in your wallet and not used for transactions.
When your coins meet an age of at least 30 days, your wallet is eligible to participate in the staking process. Your wallet competes with others for the opportunity to mint a new block. If your wallet is selected by the protocol, you create a new block, validate transactions, and earn the block reward associated with this new block.
Minting benefits users by allowing them to 1) directly maintain and secure the blockchain by finding new blocks, 2) earn block rewards and 3) directly participate in the consensus and governance process.
Can Small Coin Holders Participate in Minting?
Given that the core principle of the original peercoin design is to be the most decentralized blockchain, the minting is direct. There is no middleman between the user and the blockchain (like in DPoS) when it comes to minting. There is no gatekeeping either (like a required minimum balance). It is an open market of coinage and a lottery to be the next to find a block. Anyone can participate, even those holding only one PPC have a chance to find a block. It will always be easier if you own more coins, but the main point is that there are no limitations or requirements to mint except the 30 day wait.
How do I Start Minting with my Peercoin?
Minting is extremely simple, because the wallet will do everything automatically. The user needs to download the wallet and deposit some coins. After the necessary 30 days of coinage are accumulated, all that is left to do is to occasionally open the wallet in order to allow it to try to find a new block. Leaving your wallet open 24/7 will allow it to mint continuously, earning you a higher annual percentage reward. Mint rewards are around 3% for periodic minters and up to 5% for continuous minters.
Does Peercoin Use Proof-of-Work Mining Also?
Peercoin actually uses both Proof-of-Stake and Proof-of-Work. Proof-of-Stake is used for security of the network, while Proof-of-Work is only used as a mechanism for continuous distribution of new coins. This continued distribution helps increase decentralization by ensuring that newly created coins end up on the market where outsiders can buy them.
Essentially, the role of PoW in Peercoin is to create new holders that will mint, rather than placing new inflation only in the hands of existing holders. The PoW in Peercoin is modified from Bitcoin because the block reward automatically decreases as the mining hashrate increases, leading to less inflation over time.
Why is Peercoin One of the Very Few LEGAL Crypto Assets?
The USA has strict legislation about crypto. Under the laws of the USA - Peercoin is perfectly legal as it had no ICO, no presale, no allocation to team members or founders and no "dev tax" of any sort. Peercoin (just like Bitcoin) distributed its entire supply automatically as block rewards through its consensus protocol (Proof-of-Stake and Proof-of-Work). As a result, Peercoin is NOT a crypto security.
The vast majority of crypto assets however are unregistered securities due to one or a number of the above listed items that cause them to pass the howey test. The law is very clear on this topic. Given that unregistered securities are at higher risk of being targeted by law enforcement, Peercoin's legal status offers both users and exchanges a sense of safety and peace of mind. It is also an excellent indicator of long-term viability.
What is Something Fun I can do with Peercoin?
Immutable.place is a collaborative pixel art project (inspired by Reddit Place) hosted on the Peercoin blockchain. Anyone can produce artworks on a 1000x1000 pixel canvas by spending coins to a burn address. Each pixel has 16 addresses that represent 16 colours. Colours that receive the greatest amount to their address are filled in. The resulting artworks are independently reproducible from the blockchain by querying the balance of addresses. Check this tutorial on how to use it, including ways to place pixels faster.