PayCoin ExposédJuly 09, 2015
Born: Nov 29, 2014 12:00am
Mining Limit: Unlimited*
Block Target: 60 seconds
Mining Rate: 5% or 100% PoS**
Rate Halving: Never
(at time of publishing) * Coin generation rate is ~150k/month
Price: $0.05 USD
PayCoin Supply: 16.1 Million
Transactions Rate: 600/day
Network Hashrate: Not Applicable***
** Prime Controllers get 100% APR, everyone else gets 5%
*** The security of a PoS currency lies in wealth distribution
The Red Herring
Rife with scandals from day one, PayCoin coninues to entertain us with its shenanigans. This is a prime example of greed gone wrong, and what to avoid when investing in cryptocurrency. XPY set a crypto record for the highest premine percentage, and wins a GAWful Goose™ award for the best long-con in the crypto industry.
PayCoin started as a bastardized clone of peercoin. It features "Prime Controllers" which, for over eight months since the coin launched, do nothing but print more money. Originally, these PC's had an APR of 350%, but after the Paycoin Foundation mutiny of April 2015, this has been reduced to 100%. Anyone else wishing to invest in PayCoin receives a rate of 5%.
From the start, PayCoin has been rife with scandal and controversy. The name PayCoin was already being used by PYC, and had to be purchased by XPY. The logo was found to be trademarked by another company and had to be changed. Information was highly controlled - posts were deleted, accounts suspended, anything negative about GAW/XPY was being erased from the internet.
GAW, the originator(s) of PayCoin, premined 12 million XPY (98% of the PoW phase coins). Some of these coins were used to convert non-paying hashlets (another GAW invention) into XPY at a rate of $4/XPY. Some of the premine was sold to larger investors at a rate of $1/XPY to be used as prime controllers ($135k minimum).
PayCoin launched privately via hashtalk forum. It was portrayed to benefit a small group of GAW devotees. Everyone was sold on the idea of buying for $4 and the promise of a floor at $20 each by Josh Garza, the CEO of GAW. Soon, the $20 floor was retracted, and the mob turned.
In the beginning, coin development was non-existant. The hyper inflation of PC's staking at 350% APR was obvious, yet ignored. It took a month just to scrub the name peercoin from the code.
In April 2015, the PayCoin Foundation updated the code to cap the PC staking rate at 100%. This was done in direct opposition of GAW, who controls an estimated 30% of the 50 PC's. Since then, some of the PC's have voluntarily turned off, or are destroying the generated coins. The second round of bidding for Prime Controllers is currently underway. Once this takes effect, the PC staking rate will be reduced to 25% APR.
Moving forward, security might be a concern for XPY. A proof of stake system is secured from a 51% attack by keeping any single entity from controlling 51% of the currency. Normally this would not be an issue, except that XPY was 98% premined, centralizing it from the start.
On the promise of a $20 minimum, $250M in funding, contracts with Amazon & other internet supersites, the price of XPY rose quickly. The price peaked at 0.0668 BTC ($20 USD) on Dec 30, 2014, as Josh Garza (josg21) purchased ~$500k worth of XPY on Cryptsy.
On Jan 18, 2015, while Josh Garza was pulling a no-show for his presentation at BTC Miami (he was present but did not present), PayBase experienced an issue where the price crashed to less than a penny. The details have to do with the way Gyft cards were being 'sold for XPY' on the site. Gyft had an agreement to accept BTC, so the XPY/BTC trade was made on PayBase exchange. A post about buying a $20 Gyft card with XPY and receiving $200 went viral. Cards were bought so fast the buy orders on PayBase could not keep up. The site was shut down within a few hours, but some users were able to withdraw thousands of coins purchased for pennies. Once the site recovered, most users found their accounts had been locked and the trades reversed.
PayCoin had all the ingredients necessary to make a successful cryptocurrency, but greed reared its ugly head. It had a strong community, willing to invest incredible amounts of capital. Instead of building a strong empire with a solid foundation, the community divided. Hyper inflation increased the coin supply from 12.34M to 16M in a matter of months, which crippled the value of XPY.
Moving forward, PayCoin might eventually be able to redeem itself, but that's a long road to hoe. There is a fair chance PayCoin value will increase as PC's change hands, and the developers find a use for PC's besides inflating the currency.