[quote=“ppcman, post:70, topic:1068”]Wouldn’t your cell phone be limited if you could only call other cell phone users on the same network? Having the ability to convert your cellular call, back into the standard telephone network has its benefits. This is an example of a backbone that large telephone companies peer-up and make it work behind the scenes.
Wouldn’t your debit card be limited, if you could only use it at merchants who used the same bank as you? Having the ability for all banks to peer-up and share network connections for financial transactions makes that happen.
Now with cryptocurrency, there has been no interoperability standard between cryptocoins that I know of… We are using exchanges to do that, and we’re all competing in the marketplace to ask a merchant “Hey! Accept Bitcoin, ok, can you accept Litecoin? Hey! Want to accept Feathercoin!”.
There is going to be a missing piece to the puzzle needed at some point. That’s Peercoin’s network. It isn’t here to compete with Bitcoin for everyday transactions. It’s the opposite. It is here to hold large value for slower transactions, a smaller blockchain, with a relatively limiting transactional fee (0.01)
There is a time when you want to buy a soda pop with your cell phone for 0.00001233 BTC
There is going to be a time when a virtual cryptocurrency ATM needs $10,000 transferred immediately, and it doesn’t have time, nor want to wait for that transaction to be assembled in the same proof-of-work block as that soda pop with 0.00001233 BTC
Yes, I know, Bitcoin allows you to have a higher transaction fee. But Bitcoin will suffer from blockchain bloat too, so will Litecoin.
Peercoin is purposely designed to take the need for large volume transactions, that do not belong on Bitcoin’s or Litecoin’s proof-of-work bloated blockchains. In addition, by being a proof-of-stake network, it can also be used as the heartbeat for a peer-to-peer exchange network too. There is a multitude of possibilities.[/quote]
Except we already have something called banks that provide that service. If transactions are limited, the velocity of money is limited and thus the price per peercoin will have to be high, and thus the transaction fee will have to be high assuming widespread adoption. I can send huge sums of money via a 3-day ACH for 3 dollars, or if I’m not patient I can pay 25 dollars to have it sent instantly on a business day. 0.01 Peercoins is easily worth over 25 dollars in any scenario where it’s widely adopted for this service.
Right now it might make some sense to do a large money transfer using Peercoin, but it makes less and less sense the more people are on the network because of the fee.
I don’t disagree that BTC or LTC have serious flaws, I’m saying none of these currencies can be a true substitute for any paper currency issued by a government, for different reasons. Central banks do have the benefit of being able to control the money supply and induce inflation with economic growth, but having manual control over this is clearly not necessary; As long as there is some amount of inflation built in that approximates economic growth, investment is encouraged but the currency will not lose value so quickly as to deter its use.
The multiple currency situation could work out if the system had a built in way of converting the coins directly, but it doesn’t. If you want to pay for something and you’ve run out of BTC or XPM or whatever is the “transaction currency”, then you must convert some of your Peercoin or “savings currency” to accomplish that, and in the process you lose part of your money by transferring it to someone who has the other currency to give you. Again, this isn’t necessarily bad, the slight deflationary effect is like paying for the use of the network, but whether people are willing to pay this is very sensitive to the fee amount, and I’ve explained why the 0.01 fee will very quickly become unattractive assuming things go well for Peercoin. There should be an auction like system for faster fee processing since that would add economic value, and then the “fixed” fee should be roughly correlated to the resources the network expends. That way you have something whose costs make sense, as they’d be strongly correlated to the security and speed of the network, the service you are paying for.
Again, if everyone was already using Peercoin and then you introduce this fixed fee, no problem, it would become a reserve currency since everyone’s wealth would already be in Peercoin, and you could plausibly see banks trying to undercut the transfer fee with some other currency to try and replace it. But the fact is no one is using it, and the only way to get people to use it is to have it make sense as a currency. The fact that people immediately notice that 0.01 Peercoins is a lot of money if Peercoins become remotely close to the current value of Bitcoins is a huge problem.
Just because some people like to daydream about these digital coins becoming the currency of choice doesn’t make the situation different. Other stores of value such as gold and paper money start with a degree of desirability; People think gold is precious because it is rare, and people value paper money because everyone else accepts it as a store of value. Peercoin has to jump that hurdle of widespread acceptance before it is a suitable store of value, and the way to jump that hurdle is to have the qualities that economists have already identified as being good for a currency: (1) durability, (2) divisibility, (3) transportability, and (4) noncounterfeitability. All cryptocurrencies have reasonably good durability, divisibility, and non-counterfietability built in by design, but transportability is the problem for Peercoin. Transportability in the electronic era is essentially transaction fees.
