How is PPCoin better than Bitcoin?

General
1

I wonder whether PPCoin is useful. I have not been able to find a complete answer by myself, so I hope that other people also have an opinion and we can discuss here.

In general, I think an altcoin is not useful unless it is an improvement over Bitcoin. (Being just an alternative for Bitcoin is not useful, but being better than Bitcoin can be useful). So what are the big problems in Bitcoin and how does PPCoin solve those?

(1) Bitcoin mining burns a huge amount of energy and this will only get worse. To keep Bitcoin secure, the network hash rate must always be much higher than the hash rate that any adversary can put together.

PPCoin solves this problem via proof-of-stake mining. However this will only help if PPCoin completely replaces Bitcoin. If both networks continue to exist, Bitcoin will still waste the same amount of energy and nothing is saved.

(2) It may be difficult to attract enough miners once the block reward becomes very low. This may cause Bitcoin to become insecure in the future.
(http://bitcoin.stackexchange.com/questions/876/how-much-will-transaction-fees-eventually-be/895#895)

PPCoin probably solves this problem via proof-of-stake mining.

(3) Too many transactions. The Bitcoin blockchain will not be able to handle the number of transactions produced by a world-wide micropayment system.

PPCoin avoids this problem in a way that limits its own usefulnes. The fixed transaction fee of PPCoin provides a natural limit to the number of transactions. However, it also makes PPCoin infeasible as a world-wide micropayment system: when the value of PPCoin reaches 100 USD, transactions will be so expensive that nobody wants to use them for micropayments. In effect PPCoin is even less scalable than Bitcoin.

(4) Bitcoin provides only weak anonimity.
PPCoin does not change anything here.

PPCoin also has a problem of its own:
(5) Because miners do not receive transaction fees, there is no reason for them to process transactions at all. The miners can avoid all that trouble by mining only empty blocks.
(https://bitcointalk.org/index.php?topic=114664.0)

Conclusion: Two out of four problems solved and one new problem created.
It certainly looks like PPCoin is onto something, but is it enough?

2

quote=“singlethread, post:1, topic:381” Too many transactions. The Bitcoin blockchain will not be able to handle the number of transactions produced by a world-wide micropayment system.

When the value of PPCoin reaches 100 USD, transactions will be so expensive that nobody wants to use them for micropayments. In effect PPCoin is even less scalable than Bitcoin.[/quote]

There are other needs and demand out there besides use solely as a micro-payment system. People invest in gold, but don’t use gold for micro-payments. PPC can be used as a longer-term store of value. Like a CD or Bond. PPCoin is will still be useful for micro-payments at least until the value of PPCoin reaches 30 USD.
Look for instance at eBay/Paypal buying Braintree. Paypal purchased Braintree for $800MM. They process $12B/yr in payments, and have 40MM customers, in 40 countries. look at how much they charge for transaction fees…https://www.braintreepayments.com/…way more expensive than PPCoin. PPCoin would have to exceed 30 USD to become price-uncompetitive here, until this happens, this will not be an issue.

[quote=“singlethread, post:1, topic:381”]PPCoin also has a problem of its own:
(5) Because miners do not receive transaction fees, there is no reason for them to process transactions at all. The miners can avoid all that trouble by mining only empty blocks.[/quote]

“This is inaccurate, you can still raise your paytxfee to get a better chance of getting into a block. The prioritization of transactions have not been changed from Bitcoin.” -Sunny King

The fixed transaction fee of .01 is just a minimum required fee.

3

[quote=“Alertness, post:2, topic:381”]There are other needs and demand out there besides use solely as a micro-payment system.
People invest in gold, but don’t use gold for micro-payments. PPC can be used as a longer-term store of value. Like a CD or Bond. PPCoin is will still be useful for micro-payments at least until the value of PPCoin reaches 30 USD.[/quote]

Agreed. My point is that PPC is not better than Bitcoin in regard to problem (3).
If Bitcoin and PPC are going to be used side-by-side, PPC will not be able to solve the problem of Bitcoin’s energy consumption.

This is inaccurate, you can still raise your paytxfee to get a better chance of getting into a block.

Higher txfee does not increase the chance that a selfish miner processes the transaction because the miner does not receive the transaction fee. All sides of this debate have been pretty well covered in the thread on bitcointalk. I don’t think we should repeat that entire discussion here. I simply submit that (5) is a potential serious problem in PPC. It won’t destroy PPC today or tomorrow but I think it is as serious as the four problems I listed for Bitcoin.

I’m not trying to bash PPC here. I just find it difficult to decide whether there is any substance to PPCs claimed improvements over Bitcoin, and I think a good way to figure that out is to have a very critical look at the facts.

4

[quote=“Alertness, post:2, topic:381”][quote=“singlethread, post:1, topic:381”]PPCoin also has a problem of its own:
(5) Because miners do not receive transaction fees, there is no reason for them to process transactions at all. The miners can avoid all that trouble by mining only empty blocks.[/quote]

“This is inaccurate, you can still raise your paytxfee to get a better chance of getting into a block. The prioritization of transactions have not been changed from Bitcoin.” -Sunny King

The fixed transaction fee of .01 is just a minimum required fee.[/quote]

what singlethread says is still true, if i understand correctly, if it is possible for miners to decide to only mine blocks without any transactions, the priority system may work normally with default settings, but miners dont have incentive to actually mine the transactions since the reward gets destroyed anyway. with bitcoin (please correct me if im wrong, i dont know it all), you can set a limit on the blocksize, but im not sure if this makes the block empty of transactions…

and point (2) is funny, because that could be solved in bitcoin by the transaction fees :stuck_out_tongue:

5

[quote=“singlethread, post:1, topic:381”]PPCoin also has a problem of its own:
(5) Because miners do not receive transaction fees, there is no reason for them to process transactions at all. The miners can avoid all that trouble by mining only empty blocks.[/quote]
PPC is designed in the way that PoW does play a minor rule on the long run. PoS minters get the 1% per year incentive for their transaction processing. They do not need the transaction fees.

6

please explain the benefits of mining blocks with no transactions. (im not a coder)

if benefit=0 then no point in doing it.

7

[quote=“teddyb797, post:6, topic:381”]please explain the benefits of mining blocks with no transactions. (im not a coder)

if benefit=0 then no point in doing it.[/quote]

you still get the blockreward

8

[quote=“teddyb797, post:6, topic:381”]please explain the benefits of mining blocks with no transactions. (im not a coder)

if benefit=0 then no point in doing it.[/quote]
For PoS block minting you are getting the 1% a year incentive, in spite of having no transactions to process.

For PoW minting blocks it’s also for getting the block reward, around 250 PPC of today.

I must speculate a little bit for PoW minting on the long run. The reward will drop largely on the rising difficulty. But it will never drop to 0, because miners would stop mining, and the difficulty would drop against 0 again. So the hashrate/difficulty will level at a point, where PoW miners will compensate their costs with the small block reward at least.

9

As the months and years pass by, it will become clear that PPC is substantially more decentralized than Bitcoin. Also, it is much more difficult to stage a 51% attack against PPC and only requires a tiny fraction of the resources to secure the network compared to Bitcoin. In the end, this will result in high BTC transaction fees or low BTC network security.

10

[quote=“irritant, post:7, topic:381”][quote=“teddyb797, post:6, topic:381”]please explain the benefits of mining blocks with no transactions. (im not a coder)

if benefit=0 then no point in doing it.[/quote]

you still get the blockreward[/quote]

so as when you mine blocks with transactions.

it does not cost less to mine blocks with no transactions; so benefits=0.

11

Can you explain what you mean, why you believe this to be true and why you think this is a good thing?
Decentralization is a very vague concept in my mind.

Also, it is much more difficult to stage a 51% attack against PPC and only requires a tiny fraction of the resources to secure the network compared to Bitcoin.

I think this will eventually be true, and this is exactly the reason why I am very interested in PPC. It would be great to have a secure digital currency which has all the benefits of Bitcoin without the huge resource consumption of Bitcoin.

In the end, this will result in high BTC transaction fees or low BTC network security.

Right. Some people even say that the second thing will certainly happen (Bitcoin users will refuse to pay a high-enough fee and therefore the network will become insecure).
For PPC on the other hand, the fixed transaction fee of 0.01 PPC will become prohibitive if PPC gets very popular and its price rises to $100.

12

quote=“singlethread, post:1, topic:381” Bitcoin mining burns a huge amount of energy and this will only get worse. To keep Bitcoin secure, the network hash rate must always be much higher than the hash rate that any adversary can put together.

PPCoin solves this problem via proof-of-stake mining. However this will only help if PPCoin completely replaces Bitcoin. If both networks continue to exist, Bitcoin will still waste the same amount of energy and nothing is saved.[/quote]

Not exactly, the market share that PPC takes from BTC would become more energy efficient. This means at least some energy has been saved in the entire cryptocurrency economy.

This contrasts merge-mining introduced by namecoin. Counter-intuitively merge-mining does not save energy at all, it merely strengthens proof-of-work security of the parent network. This is one of the reasons why merge-mining is not adopted in PPC, as it brings no benefit to PPC’s design.

13

I never said that fee rate wouldn’t be adjusted via a hard-fork down the road. However my philosophy is that the minimum fee should only be changed very cautiously because block chain has inherent scalability concerns. That’s why I think requiring a hard fork to adjust it is not such a bad idea.

Bitcoin team has been changing bitcoin default fee with too much wanton imho. This is exacerbated by the long term security implications in a pure proof-of-work design. It’s too greedy to try to even take the micro payments market away from altcoins.

14

I never said that fee rate wouldn’t be adjusted via a hard-fork down the road. However my philosophy is that the minimum fee should only be changed very cautiously because block chain has inherent scalability concerns. That’s why I think requiring a hard fork to adjust it is not such a bad idea.

Bitcoin team has been changing bitcoin default fee with too much wanton imho. This is exacerbated by the long term security implications in a pure proof-of-work design. It’s too greedy to try to even take the micro payments market away from altcoins.[/quote]
Don’t ever change the fee. If there was ever a hard fork to change the fee it would destroy PPC. The fee is what makes PPC the cryptocurrency that it is. It is what gives it balance and heavily determines the coin’s value. It gives it security. Changing the fee = changing the currency… you would be better off creating a completely different coin with a different name; you wouldn’t be able to call it PPC anymore, because it would cause so many changes. I say just give it time, ride it out, see what markets develop. If price goes to 1000 or something, just let it be. “Don’t tread on me”

A venture to guess that a lot of smart people are in PPC solely because they have done their research and have chosen PPC for exactly what it is. A lower transaction fee, may seem better on the one hand, but if you look deep at it, lowering it could actually be detrimental. I have ran many scenarios, and the .01 transaction fee is the most ideal. I’m sure if transaction fees and micro-payments became a problem, third parties could establish “off-blockchain” services.

Just go off blockchain. Use coinbase, inputs.io, blockchain.info etc. for small amounts/daily purchases. Use the blockchain only for large, rare, important transfers. Hence all these scaling problems just don’t exist. PPC is just even better than BTC in this regard…because the larger, rare, important transfers are secured by PoS, rather than only PoW like Bitcoin. Going off blockchain with Bitcoin will not solve the problem from a security standpoint in the long run. If you only use it for large, rare, important transfers, how will you be able to pay the miners enough money in fees to keep them mining? In Bitcoin there will be less people mining, to support those larger, rare, important transfers, which will cause an increased security risk as time goes on. This is why Peercoin’s proof-of-stake aspect is so important for long-term sustainability. The .01 transaction fee is at a good place, and should never be change; it is irrelevant, long-term. The scalability is not an issue, long-term!

Think long-term, not short-term. Just take time to think bigger.

PPC = Practically Perfect Coin

15

For which one is this ideal? Money does change the owner only, so tell me who looses.

I did my research, PPC has to be developed in many points, and Sunny is doing a very decent job.

16

Thanks for clarifying things Sunny.
It is sometimes difficult for me to follow your reasoning because you tend to take big “steps”. Perhaps that is just me (I’m not schooled in economics), but I imagine there must be more people here who would get a better understanding if the arguments were broken down in smaller steps. I would personally like to see more detailed reasoning in many topics in this forum.

I will try to rephrase your argument, as I understand it, in smaller steps. I hope you will correct me if I misrepresent you.

The total resources expended on Bitcoin hashing are currently driven by the value of block rewards. It is impossible for Bitcoin to consume more resources than the block rewards because in that case miners would stop mining and just buy their BTC on the market instead.
Taking market share away from Bitcoin towards PPC will reduce the price of BTC (assuming the same market cap in cryptocurrencies is simply redivided between BTC and PPC), thereby reducing the value of Bitcoin block rewards, thereby reducing the resources spent on Bitcoin hashing.
Because PPC is more efficient than BTC, the shift in market share will save energy.

This is an excellent argument which I have not seen earlier.
Will this argument also work on the very long term? Eventually, Bitcoin will require a certain minimum level of resource consumption in order to prevent 51% attacks. Will this minimum level also be affected by shifting market share from BTC to PPC?

17

You appear to assume that a hard fork can be done at any time an that its outcome can be forced into a certain direction.
This may be true if the fork solves a bug in the protocol or provides an improvement that in beneficial to everybody. It is not clear to me that it will also work for fundamental changes in PPC economics.

How would this go about?
Decreasing tx fee would reduce deflation and may therefore be opposed by the people who own large amounts of coins. Those people would refuse to upgrade and therefore the majority of PoS mining power would stay on the old branch of the blockchain. I guess the exchanges would favor low fees and they might collectively decide to enforce the new branch. Owners of PPC savings would then be forced to upgrade or they would be stuck with a huge amount of worthless coins. In any case, this type of fork seems much more complicated to me than you make it appear.

Bitcoin team has been changing bitcoin default fee with too much wanton imho.

I just want to remark that there is a huge difference between a default parameter in the software versus a parameter which is enforced by the network.
Everybody can clone the software and release a modified version with different defaults.
Nobody can modify the network, unless they manage to convince the majority of nodes that they should upgrade.

18

i read the whole ppc’s white paper, i didn’t see anywhere the fee should be .01 all the time. so investors shouldnt have problems with it because it doesnt violate the original design.

reduce tx fee will not effect deflation, because higher fee=less transactions; lower=more.

i think it’s vital to reduce the fee when ppc reaches a higher price ($50+), otherwise ppc will no longer be a viable currency.

ppl will argue that you can use ppc as a wealth storage, but wait bitcoin is already more expensive than ppc and it can be for micro payments. at that point we will be useless for both.

19

[quote=“singlethread, post:16, topic:381”]I will try to rephrase your argument, as I understand it, in smaller steps. I hope you will correct me if I misrepresent you.

The total resources expended on Bitcoin hashing are currently driven by the value of block rewards. It is impossible for Bitcoin to consume more resources than the block rewards because in that case miners would stop mining and just buy their BTC on the market instead.
Taking market share away from Bitcoin towards PPC will reduce the price of BTC (assuming the same market cap in cryptocurrencies is simply redivided between BTC and PPC), thereby reducing the value of Bitcoin block rewards, thereby reducing the resources spent on Bitcoin hashing.
Because PPC is more efficient than BTC, the shift in market share will save energy.

This is an excellent argument which I have not seen earlier.
Will this argument also work on the very long term? Eventually, Bitcoin will require a certain minimum level of resource consumption in order to prevent 51% attacks. Will this minimum level also be affected by shifting market share from BTC to PPC?[/quote]

Thanks, that’s one way of phrasing it. It’s hard to say something about the ‘minimum level’ of resource required to secure bitcoin, because it’s one of the main uncertainties about bitcoin’s design. This is not just an energy issue, it’s a security issue of utmost importance to bitcoin’s survival. In my opinion if bitcoin could not maintain dominance on proof-of-work resource consumption, it would lose it’s market dominance as well.

20

[quote=“Alertness, post:14, topic:381”]Don’t ever change the fee. If there was ever a hard fork to change the fee it would destroy PPC. The fee is what makes PPC the cryptocurrency that it is. It is what gives it balance and heavily determines the coin’s value. It gives it security. Changing the fee = changing the currency… you would be better off creating a completely different coin with a different name; you wouldn’t be able to call it PPC anymore, because it would cause so many changes. I say just give it time, ride it out, see what markets develop. If price goes to 1000 or something, just let it be. “Don’t tread on me”

A venture to guess that a lot of smart people are in PPC solely because they have done their research and have chosen PPC for exactly what it is. A lower transaction fee, may seem better on the one hand, but if you look deep at it, lowering it could actually be detrimental. I have ran many scenarios, and the .01 transaction fee is the most ideal. I’m sure if transaction fees and micro-payments became a problem, third parties could establish “off-blockchain” services.

Just go off blockchain. Use coinbase, inputs.io, blockchain.info etc. for small amounts/daily purchases. Use the blockchain only for large, rare, important transfers. Hence all these scaling problems just don’t exist. PPC is just even better than BTC in this regard…because the larger, rare, important transfers are secured by PoS, rather than only PoW like Bitcoin. Going off blockchain with Bitcoin will not solve the problem from a security standpoint in the long run. If you only use it for large, rare, important transfers, how will you be able to pay the miners enough money in fees to keep them mining? In Bitcoin there will be less people mining, to support those larger, rare, important transfers, which will cause an increased security risk as time goes on. This is why Peercoin’s proof-of-stake aspect is so important for long-term sustainability. The .01 transaction fee is at a good place, and should never be change; it is irrelevant, long-term. The scalability is not an issue, long-term!

Think long-term, not short-term. Just take time to think bigger.

PPC = Practically Perfect Coin[/quote]

This approach is actually pretty close to my preference. Some people said that bitcoin should never have changed the original default fee of 0.01 and it’s then on its way to finance mining with transaction fees. Of course bitcoin devs are not content to be just the backbone of the p2p financial network, they want bitcoin to dominate everything. I don’t have this mindset. Should scalability dictate that specialization is necessary I think PPC network would be more than happy to serve as backbone.

This is the reason why there is a protocol enforced 0.01/KB minimum fee in PPC, by the way. Scalability issues of the block chain are of great deal of concerns to me.