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Like Bitcoin, PeerCoin (PPC) is a cryptocurrency based on the blockchain. Being one of the oldest coins available on the market, PPC was created in 2012. The main difference between PPC and BTC is the protection algorithm. While Bitcoin uses a Proof-of-Work model, PeerCoin utilizes Proof-of-Stake, which is less energy-consuming. A deal of other coins adopted Proof-of-Stake or a combination of both algorithms after PPC.
PPC’s creators are Scott Nadel and Sunny King. Just like BTC’s developer Satoshi Nakamoto, they prefer to keep anonymity and don’t reveal their identities till this time. Sunny King is also famous for creating VEE and PrimeCoin.
Peercoin has presented a Proof-of-Stake algorithm to the world of digital currency. Today, this model is accepted by many other currencies and proves to be no less efficient than Proof-of-Work. PoS is calculated by two factors: the holding time and amount of money a user has at the moment. These variables are multiplied to get the so-called coin age index. This sum can be given away or received within the PeerCoin network.
Unlike PoW, PoS allows users to be both owners and miners at the same time. The blocks in a system are created after PPC coins have been kept no less than a month. The procedure can be characterized as paying money to yourself, consuming reconfiguration and the age of a coin. The first investment is known as kernel and must meet particular hash target protocol. This protocol is evaluated in accordance with coin age – the higher the age, the more chances that hash target protocol will be met. For example, if a user has 400 coin years in his wallet, the kernel will be generated in 2 days, while 200 coin years will take 4 days to generate a kernel.
The greatest advantage Proof-of-Work has over Proof-of-Stake is energy efficiency. While PoW requires a lot of energy and computing powers, it is very expensive. This problem is especially serious in countries with high electricity costs. At the same time, PeerCoin doesn’t rely on energy at all.
PPC is created as a coin with a steady inflation rate which makes 1% per year. Due to this scheme, users that work in the network receive 1% of compensation, which encourages them to continue storing coins and utilizing the network. In turn, PeerCoin’s system stays stable. The long-lasting inflation rate is possible due to the high coin cap (2 billion coins). Reaching this cap would make the inflation grow but it goes beyond belief incredible.
In PeerCoin’s network there is a function known as checkpoints. It was established to prevent all sorts of attacks and ensure safety in case of a breakdown. Its functioning is similar to System Restore used by Windows. However, this function was a temporary solution since it provided a weak protection. Today, the newer version of the protocol is adopted. This version allows network members to refuse from using checkpoints.