The first example of a cryptocurrency that implements “useful” mining, Primecoin implements a unique mining algorithm which has miners find long Cunningham chains of prime numbers as Proof of Work. While not useful in the “curing cancer” kind of way, finding long prime numbers is mathematically interesting, interesting enough for rewards to be given out to people who find really long prime numbers. Primecoin miners have thus far set several records for finding the longest Cunningham chains.
Proof of Stake
Proof of Stake is a method of cryptocurrency security and generation which uses a miner’s “stake” in the cryptocurrency to determine their odds of finding a new block; put more simply, the more coins you have set aside for Proof of Stake mining, the more coins you earn. It’s like an interest-bearing savings account which rewards you for locking up wealth and helping to secure a cryptocurrency network against fraud.
Peercoin is the first cryptocurrency to implement Proof of Stake, albeit using a hybrid approach where coins are first mined using Proof of Work, with a transition to Proof of Stake over time. The stated intention is to improve sustainability by reducing the energy resources necessary to secure the network. However, at the time of this writing there remain challenges to this method of mining which the developers have promised to address in future software upgrades.
The “challenges” refers to the checkpoint. https://en.wikipedia.org/wiki/Peercoin#Centralized_checkpointing
I recalled there were some threads explaining the checkpoint system and somehow couldn’t find the link.
Experiments in Cryptocurrency Sustainability
By John Light