Peercoin ExposédJuly 16, 2015

Born: Aug 16, 2012 2:31am
PoS Interest Rate: 1% APR
Mining Limit: Unlimited*
Block Target: 600 seconds
PoW Mining Rate: see features

(at time of publishing)
Price: $0.50 - $0.55 USD
Peercoin Supply: 22.5 Million
Transaction Rate: 400/day
Hashrate: 500 TH/s (SHA-256)**

* Coin generation rate is 80k/month (6 month avg)
**Network hashrate is highly variable for SHA-256 coins



The Innovator

Peercoin pioneered the Proof of Stake (PoS) method for generating coins. Low inflation and low energy consumption are beneficial aspects of the peercoin PoS system.

Features

Peercoin uses a hybrid PoW/PoS method for generating new coins. The Proof of Work system starts the process of mining similar to bitcoin. Unlike bitcoin, the number of coins mined per block varies, and is inversely proportional to the network hashrate. This has the benefit of reducing energy consumption by lowering the reward when more people are mining.

The PoS reward is set to give an annual return of 1% interest. Proof of Stake started with block 6325. Instead of relying on energy hungry hardware miners for blockchain security, blocks are generated through the process of staking/minting. Wallets connected to the network compete to create blocks based upon the quantity and length of time the coins have not moved.

This method of creating blocks adds increased potential for double-spends and other malicious attacks. Bitcoin is protected from attacks because it would take an enormous amount of hashing power to create several blocks in a row (the basic principle behind a 51% attack). Creating multiple blocks is easily accomplished on a PoS network by having several 'input coins' in a wallet, and taking it offline for a few months. When the wallet comes online, each input coin will have built up enough coin-days to stake immediately, creating it's own block. Couple this with modified wallet code, and you have the basis of a serious vulnerability.

History


Due to the PoW block reward's inverse relationship to hashrate, around ten million coins were generated in the first two weeks. This is 44.5% of the current amount in circulation (3 years later). To compare this with litecoin, which I reviewed two weeks ago, litecoin 'instamined' only 0.031% of their 3-year total during the first two weeks.

Development

Peercoin has a decent community, forum, and has some active development. The android wallet appears more updated than the desktop wallet, and includes the pin-lock feature which was missing from litecoin's android wallet. Peercoin branched away from bitcoin around version 0.6, and many newer features that have been added to bitcoin have not made their way into peercoin.

I tried testing the mutisig functionality of the peerunity wallet (v0.1.1). I created a 2-of-3 and a 3-of-5 address, and attempted to fund both wallets and spend the coin. Unable to spend the coin from either of these addresses, I tried funding the first multisig address again. Upon checking the blockchain, I saw the coin did not go where I had sent it!

The two coins I sent to address pAJzZ..V6v went to PDMbX..qdh (my own primary wallet address), and the coin I sent to p6ZqT..qXL went to P9cSQ..dxZ (not my address). I did not repeat these tests with the ppc core wallet because the code is nearly identical.

Market Activity

Peercoin price has followed a similar trend to bitcoin and litecoin - experiencing a large pump in December 2013, then a steady decline until interest picked up in recent weeks.

Rating

Overall Score: 

37 FairLaunch™ Grade: E
Time PeriodTargetPPC Mined% of PPC (22.5M)
Premine000
24 Hour32,0002,000,0008.9%
14 Days448,00010,000,00044.5%
Instamine09,552,00042.5%
*Instamine = First 14-Day PPC Mined - Computed Target
Development Grade: C
PoS feature pioneer
Android wallet does have pin-lock
Not up-to-date with bitcoin core
Usability Grade: D
Small blockchain due to required fee
Multisig does not work
Missing bitcoin core features/bugfixes
Liquidity Grade: C
There is currently a $14M market cap, giving peercoin a fair amount of liquidity.

Conclusion

If you can get over the fact that this coin was incredibly instamined, it could be a good coin for day trading. Don't expect to get rich from the 1% interest rate. The inflation rate is around 4%, and expected to decrease in the future. Possible long-term investment, due to the majority of coins already in circulation, while interest in the coin is low.

Resources