Peercoin is one of the many alternatives to cryptocurrency Bitcoin. It has its own set of features that make it a preferred digital currency which has been gaining a lot of traction lately.
Background of Peercoins
Peercoin’s name comes from the words ‘peer’ and ‘coin’ designed to reflect the fact that it is a peer-to-peer cryptocurrency and runs on the proof-of-stake and proof-of-work platforms respectively. The brainchild of Scott Nadal and Sunny King, Peercoin came through the paper written by them in August 2012.
The latter was responsible for another altcoin known as Primecoin. Eventually, he would be the sole developer who created Peercoin after Nadal left a year later. The underlying inspiration of Peercoin is Bitcoin as it has a very similar technology platform. Distributed under the MIT/X11 software license which does not impose any limit on the number of coins. This is not the same care with the likes of Bitcoin and Litecoin. Instead, it would aim for long-term scalability where it could attain a 1% annual inflation rate. Like other cryptocurrencies, Peercoin is decentralized where the tokens are issued by the stakeholders.
Checkpointing in Peercoin
Checkpointing is the unique feature that Peercoin adopts. This was stated in the original paper that was presented that introduced a centrally broadcast checkpoint mechanism as it seeks to solve the distributed consensus problem that Bitcoin cannot.
Features of Peercoin
Among the features of Peercoin includes:
- Mining and transactions – an SHA-256 is used to manage the transactions, issuance and balances of Peercoins.
- Digital Signatures are used as the basis for addresses where payments are made to. All of the addresses start with the letter P.
- Blockchain – The Peercoin blockchain is where the transactions are recorded
- Coins – Mining and minting are 2 ways new coins can be created.
Highlights of Peercoin
Peercoin has several aspects that make it a better alternative which include:
- Hybrid – Peercoin uses a special hybrid proof-of-stake: proof-of-work platform. This was specifically made to solve the shortcomings of systems that run on pure proof-of-work platforms.
- Proof-of-work – using the SHA-256 algorithm, it offers miners better profitability as the proof-of-work block reward is halved every time there is a 16 times increase in the network.
- Energy efficiency – This is one of the very distinguished factors of Peercoin. The platform was developed with the intention provide a better alternative to the high energy consumption that bitcoin was so known for.
- Value – with a pre-determined 1% inflection annually, it seeks to maintain its value. This will yield an unlimited amount of coins in the future. Furthermore, it has a fixed transaction fee which will be destroyed instead of going to the miners to help control inflation of the currency.
Peercoin – 2021 Updates
Peercoin uses proof-of-stake as its basis. This is an alternative protocol that was the brainchild of King and Nadal, forming the nucleus of Peercoin back in 2012. Fast forward to nearly 10 years later, the proof-of-stake continues to be the main protocol, offering a great and effective alternative. Here, coin owners are the ones who will be making new blocks and subsequently have a stronger influence over the network thereby securing the chain along the way. In other words, the stakeholders co-own the blockchain which is similar to how shareholders function.
Not miners but minters – Those who produce blocks in Peercoin are known as minters instead of miners (in other blockchains). It uses ‘coin age’ to determine which minter gets to produce the next block which is derived from the number of coins and the number of days the coins have been stored.
Better security – When stake producers need to prove their eligibility, it makes the network more secure as it is harder for attackers to function. An attacker would need to have certain coin age in order to get involved in minting. That means he needs to have a certain significant investments in Peercoins before he can even conjure up an attack. Secondly, they might get burnt while trying to scam anyone. This is because they are financially tied to the network which will mean any detrimental move will affect their investments along the way.
As of May 2021, the price of Peercoin has been traded around US$1 to US$2. This is among the most stable it can be for the remaining part of the year and leading into 2022 as well.