Peercoin has also been referred to as the Peer to Peer coin (PPC). During its launch, it caught the attention of cryptocurrency enthusiasts. Although as many others it was forked from Bitcoin, it tried not to inherit all of Bitcoins shortcomings which included solely relying on a Proof of Work (PoW) algorithm.
The Proof of Work algorithm has been viewed as a major hindrance to scalability. Additionally, the algorithm also requires massive computing powers when confirming transactions on the platform.
The coin’s developers, Sunny King, who is believed to be a pseudonym, and Scott Nadal, introduced a second consensus algorithm, Proof of Stake, to not only address the computing power intensity of PoW but also to increase Peercoin’s efficiency.
So how do the two algorithms seamlessly fit into the platform?
According to its website:
Peercoin is the first hybrid blockchain: utilizing proof-of-stake to provide security for the network and proof-of-work for distribution of new coins.
The Proof of Work algorithm handles the mining process but as the mining difficulty rises, the platform accepts the Proof of Stake algorithm to take over the addition of new blocks in a process known as minting. Additionally, the second algorithm is responsible for securing the platform against a 51 percent attack.
This type of attack occurs when a single entity has more than 50 percent controlling power on the platform. When this happens, the entity is able to reverse transactions allowing them to spend the same coin more than once.
With Peercoin using the same hash function as used by Bitcoin and by having the same PoW algorithm, the rewards miners get for adding new blocks keeps decreasing over time.
The PoS algorithm rewards those holding 1 percent of PoS coin blocks. But, to qualify for this rewards your coins must be held for thirty days. The PoS algorithm, unlike the PoW algorithm, does not rely on the computing power since what determines if you are eligible for minting is the amount of Peercoins you hold in your wallet.
To avoid the monopoly that a staking system may introduce, the Peercoin blockchain only considers coins depending on age. As we had pointed out earlier on, coins eligible for minting must have been in your wallet for 30 days. What about the maximum age of these coins?
The PoS aspect of the Peercoin platform caps the maximum age of coins eligible for minting at ninety days. As the number of times you participate in the minting process rises, you earn supplementary Peercoins.
Major differences with Bitcoin
Apart from employing two consensus algorithms on the same platform, Peercoin has other differentiating features,
For example, Bitcoin has a hard cap of 21 million coins which will ever grace the face of the earth. This means that after the 21 million Bitcoins have been mined, all Bitcoins will already be in circulation. Peercoin, on the other hand, does not have a hard cap on the number of coins to be ever mined. Instead, the number of Peercoins in circulation will be inflated each year at a rate of 1 percent.
Also, the block confirmation time for Peercoin is lower than on the Bitcoin platform. Also, the transaction fees on the Peercoin blockchain are lower than those on the Bitcoin platform.
When it comes to buying and selling of Peercoin, your favorite cryptocurrency exchange may not have yet listed the coin. But major exchanges that support trading of Peercoin include Poloniex, YoBit, Cryptopia, CoinEgg, WEX, and HitBTC. On this exchanges, Peercoin is listed against other cryptos meaning that it cannot be bought directly using fiat. At the time of writing, Peercoin was exchanging hands at $0.602 and had a market cap of $15,143,564 according to coinmarketcap. The coin occupies position 168 on coinmarketcap.
From our discussion above, it is clear that Peercoin is among the best when it comes to security. Also, it was the first blockchain project to use the Proof of Stake algorithm.
Unfortunately, the coin is not as popular as other altcoins out there. Also, its price appreciation curve is not as steep as with Bitcoin and other altcoins since its birth.
However, being among the first cryptos after Bitcoin, it has manifested resilience it may be a good choice to include in your portfolio.