Peercoin - The Environmentally Friendly Standout (Pros & Cons)

General
1

Heavy.com posted an article comparing different cryptocurrencies, including Peercoin.

http://www.heavy.com/tech/2013/12/bitcoin-vs-litecoin-peercoin-ripple-namecoin/

Capitalization: 122 Million Dollars. Price as of 12/2/12: ~$6

Pros:
• Said to be sustainable and long-term environmentally friendly because mining will require orders of magnitude less power than Bitcoin and Litecoin.
• Distinguishes itself from other coins by using “Proof-of-Stake/Proof-of-Work” hybrid. Proof of stake requires less energy.
• .01 Peercoin Transaction fee (on every transaction) is said to render Peercoin a better “store of value,” and it may be used as a backbone cryptocurrency according to some, and its creator, Sunny King.
• In terms of speculative value, Peercoin has attractive branding and an excellent logo. This may increase early adoption.
• Peercoin is inflationary, tantamounting to each user’s number of Peercoins growing 1% per year. This means that the number of Peercoins is technically limitless. This may be seen as a con for speculation, but for real-world use is more comparable to modern money systems.

Cons:
• .01 Peercoin transaction fee means that Peercoin is less liquid and less multifaceted in use than competitors. It would be impractical to use in everyday transactions, a stock market, or anything with high transaction volume. This will only become more true as its value increases.
• Not truly decentralized. Peercoin uses “centralized checkpointing,” but Sunny King, Peercoin’s creator, says this feature will be removed with future versions and when the cryptocurrency stabilizes.
• Peercoin is inflationary which some feel is intrinsically bad. Others have said that “the rich get richer” with peercoin, but the reality is that Peercoin users all stand to benefit equally from Peercoin’s inflation.

2

Notice inflation and the .01 transactions are listed as both pros and cons. At least with the .01 transactions, (if we’re going to keep it that way) rather than calling it a backbone currency, (Because that can be confusing to people I think) we should be marketing it as a savings account. Right now I see certain people getting upset about the transaction fees. They don’t understand it wasn’t designed to compete with Bitcoin and Litecoin in transaction volume. It has a different purpose, being a better store of value for holding their cryptocurrency, like a savings account.

I think it’s dangerous to let these misconceptions build in the community. We need to get out in front of the issue and market it properly.

3

Here’s my concern with calling it a savings account… right now, large numbers of people (rightly/wrongly) are being primed to believe that the value in cryptocurrency is intrinsic to it’s ability to be spent. If people don’t think that they can spend PPC, because it will be “too expensive”, it’s going to be a hard sell to get the price up.

4

And it’s not so much that you can’t spend it, you just wouldn’t want to on really cheap things. Like gold?

This is something we really need to address. People need to understand how this currency was designed to be used. If Peercoin keeps gaining in value at this rate we are going t see a huge backlash because of the transaction fee as people who don’t understand see it.

5

That is concerning. So what do we do then? Is the only reason for the .01 fee to cut down on block chain bloat? Are there any other reasons for it?

6

I get that, but I’m worried about other people getting it.

I’m not an economist, so I don’t pretend to understand all of the inputs/outputs of a system like Peercoin, but I’m wondering if there’s a way to slowly acclimate people to the 0.01 PPC transaction fee.

For example: At the beginning (now) it is dynamic based on the transaction amount (up to a max of 0.01 PPC), but for smaller transactions, it could go as low as 0.005 PPC. Gradually though, over time, the cost of transactions gradually rises, until all transactions are 0.01 PPC.

I’m thinking of this as the inverse of why checkpointing is centralized today, but will be decentralized in the future. If people can acclimate to using Peercoins, is it more likely that they would then begin to use them as a store of wealth?

Just something for conversation – so poke that one full of holes and see if it sinks.

7

Again I refer to when Sunny addressed it:

Both PPC and XPM are designed to last. PPC is designed with energy efficiency, XPM is designed with energy multiuse. Bitcoin has a long term uncertainty as to whether transaction fees can sustain good enough level of security. Before that the main concern is how to balance transaction volume and transaction fee levels. Currently I get the feeling that bitcoin developers favor very low transaction fees and very high transaction volume, to be competitive against centralized systems (paypal, visa, mastercard etc) in terms of transaction volume, to the point of sacrificing decentralization. This also brings major uncertainties to bitcoin's future. 
From my point of view, I think the cryptocurrency movement needs at least one 'backbone' currency, or more, that maintains high degree of decentralization, maintains high level of security, but not necessarily providing high volume of transactions. Thinking of savings accounts and gold coins, you don't transact them at high velocity but they form the backbone of the monetary systems.

PPC is designed to serve even better as a backbone currency. The proof-of-stake technology in PPC is not only energy efficient; it also maintains high level of security without relying on transaction fee. Thus PPC could be safely designed with strong scarcity property yet serving well as backbone currency.

Both PPC and XPM use protocol enforced transaction fees, which reflects my preference that high transaction volume is discouraged in favor of serving as backbone currencies.

On the other hand there is no promise that minimum transaction fee wouldn't be adjusted. If processing capacity of personal computers continues to advance at the current pace, both max block size and minimum transaction fee could very well be adjusted at some point. However I do take a very cautious approach to adjusting transaction fees, as opposed to bitcoin devs. The impact to the fitness of the currency as a backbone currency is of great concerns to me.</blockquote>

Perhaps getting his word on it again would help clear things up, but as it stands now it’s not simply about spam, it’s an integral part of the design.

8

And just to add, I really like the idea. I like the idea of a long-term, stable, secure, energy efficient crypto. I just think people need to understand it for what it is, it’s not the crypto for buying a cup of coffee like Bitcoin. It really is the gold of cryptos, and I think it has it’s place for certain types of people. I’d just hate for people to understand what it is only after it hits $100/PPC and there’s a fee equal to $1. I mean even before I realized the transaction fee, I didn’t really move my coins around. I feel like most people are sitting on their coins whether it be Bitcoin or others.

9

This is what I’m afraid of. We need to figure out how to make sure people understand why this was implemented and what the benefits are, or else we might have a crisis to deal with in the future. Imagine people dumping ppc at $100 because the fee is too high, not understanding the purpose behind it. As I said, we need to get out ahead of this issue and if that means we need Sunny to bring a little more clarity to it, we need to get that done.

10

This is what I’m afraid of. We need to figure out how to make sure people understand why this was implemented and what the benefits are, or else we might have a crisis to deal with in the future. Imagine people dumping ppc at $100 because the fee is too high, not understanding the purpose behind it. As I said, we need to get out ahead of this issue and if that means we need Sunny to bring a little more clarity to it, we need to get that done.[/quote]

Someone light up the Sunny King signal.

11

Sunny King has said plenty about the issue before. He’s developing 0.4 right now. Let’s scour the web and quote what Sunny King has ALREADY said about the transaction fee thing and repost it here, with references if necessary.

Every time someone gets confused about something, we can’t possibly run around panicking until Sunny stands up and repeats himself. Doing that, will keep him from developing enhancements to the software that everyone would like to see…

I already did some of this on November 17th, but obviously it is buried in a forum somewhere. Maybe it should be made a sticky?

See this post: http://www.peercointalk.org/index.php?topic=930.msg8306#msg8306

12

The issue is not the transaction fee.

Just think about it for a second. If you moved the transaction fee lower, it will just be a matter of time before the price increases again to a point where “certain” people complain about it. The transaction fee is an important part of the design and is what serves to regulate and stabilize the currency. It is a good thing, just give it time to do what it is designed to do.

Sunny King confirms the point in this thread: http://www.peercointalk.org/index.php?topic=526.msg4301#msg4301

Personally, I think if anything would be changed it would be to increase the PoS reward rather than lower the fee. Say 2% instead of 1%. But really you have to look at it long-term and think about the implications. You could end up having a situation of runaway inflation if the compound interest gets out of hand. I believe the current parameters are set very well. Peercoin will do exactly what it is designed to do, just give it time for people to understand it and adopt it for what it is. I think the .01 fee and the 1% per year provide perfect set of balance for the coin.

Think about Peercoin as Gold. Not everyone can afford to own it, or use it but is and has been a very important structure for the financial system for thousands of years. Peercoin is like Gold. Other currencies will be the silver, and copper. The reason why we need Peercoin to exist as the Gold is there needs to be a sustainable, energy-efficient, secure, way to store bulk wealth and value. Other coins are not good for saving large of amounts of wealth because they are not energy efficient, and eventually the energy efficiency issue will catch up to them. It will catch up to Bitcoin and Litecoin eventually too. If people store their wealth in Bitcoin/Litecoin it forces the price higher, which draws in more miners because the price of the coins are higher, this means more and more energy problem. Peercoin solves the energy problem, long-term. Peercoin will allow the Bitcoin and Litecoin to be used for transactions only, rather than for savings, thus keeping their prices low and save energy costs and our environment.

EDIT:
And the .01 transaction fee puts an eventual limit on the total network hashrate for Peercoin. (when the profit from mining is lower than the transaction fee cost). This is when Peercoin becomes orders of magnitudes more energy efficient. This is when the value of PPC will continue to increase, but the hashrate (energy cost) will stay about the same. This is why the fee is important to stay what it is. If you lower the fee, the energy efficiency will be diminished, long-term.

13

[quote=“Alertness, post:12, topic:1026”]The issue is not the transaction fee.

Just think about it for a second. If you moved the transaction fee lower, it will just be a matter of time before the price increases again to a point where “certain” people complain about it. The transaction fee is an important part of the design and is what serves to regulate and stabilize the currency. It is a good thing, just give it time to do what it is designed to do.

Sunny King confirms the point in this thread: http://www.peercointalk.org/index.php?topic=526.msg4301#msg4301

Personally, I think if anything would be changed it would be to increase the PoS reward rather than lower the fee. Say 2% instead of 1%. But really you have to look at it long-term and think about the implications. You could end up having a situation of runaway inflation if the compound interest gets out of hand. I believe the current parameters are set very well. Peercoin will do exactly what it is designed to do, just give it time for people to understand it and adopt it for what it is. I think the .01 fee and the 1% per year provide perfect set of balance for the coin.

Think about Peercoin as Gold. Not everyone can afford to own it, or use it but is and has been a very important structure for the financial system for thousands of years. Peercoin is like Gold. Other currencies will be the silver, and copper. The reason why we need Peercoin to exist as the Gold is there needs to be a sustainable, energy-efficient, secure, way to store bulk wealth and value. Other coins are not good for saving large of amounts of wealth because they are not energy efficient, and eventually the energy efficiency issue will catch up to them. It will catch up to Bitcoin and Litecoin eventually too. If people store their wealth in Bitcoin/Litecoin it forces the price higher, which draws in more miners because the price of the coins are higher, this means more and more energy problem. Peercoin solves the energy problem, long-term. Peercoin will allow the Bitcoin and Litecoin to be used for transactions only, rather than for savings, thus keeping their prices low and save energy costs and our environment.[/quote]

I don’t want the fee to go anywhere either. The issue is how we market and communicate it. Way too many people think PPC is just BTC+PoS. It’s really a whole different thing and I think that has been communicated very poorly. I didn’t even understand the significance of it until like two months ago and I’ve been holding PPC since April. I think the earlier we get this out there the better.

14

Right. Well I think people need to know that:

“the .01 transaction fee puts an eventual limit on the total network hashrate for Peercoin. (when the profit from mining is lower than the transaction fee cost). This is when Peercoin becomes orders of magnitudes more energy efficient. This is when the value of PPC will continue to increase, but the hashrate (energy cost) will stay about the same. This is why the fee is important to stay what it is. If you lower the fee, the energy efficiency will be diminished, long-term.”

15

I wrote this message like 5X over. I got like 10 paragraphs in, and tried to re-word it multiple ways.

If it sounds like a big ramble, I apologize. There is no concise way to spell it out for people.

I soon found out, it is better to say nothing, than it is to try and convince people why we have a 0.01 transaction fee, what role Peercoin is going to play in the future, AT THIS STAGE. (Maybe in a few months it will be a much easier time for that once Peercoin’s purpose becomes self-evident)

I think cryptocurrency has three main groups of people interested in it right now:

A) Early adopters, who do research, understand what they are investing in, and get involved (that’s me)

B) Early opportunists. People who don’t do much research. They just follow what some “other guy says” and stick with that… These are people who read newspaper headlines but not the article itself. They might read the LARGE BLURB in the center of the news article too. They are easily swayed and they spend their money on a short-term, quite often, foolish basis.

C) Journalists. These people need something to write about, and many of them will just pander down to the status quo. They hear the “buzz” that everyone is talking about, and write an article to match. Something that will cause the majority to want to read.

What’s that you say? Bitcoin is nothing more than a silk road / drug coin? Ooops, better get out article number 3,000 about that myth, because people seem to love those articles and keep reading them. :frowning:

So I think what we’re talking about now in this forum thread is about a “possible major disaster” of people not understanding the 0.01 transaction fee is for people (B) and © above.

Well the time isn’t right to combat that, because you will spin your gears in circles trying to prove to people why Peercoin is needed now.

I imagine there was a fight initially when fire hydrants were first invented and installed. People thought it was foolish to spend so much time and effort in a water line, when a good old bucket and hose would extinguish most fires as they begun.

Sometimes I feel like Peercoin is the same way. It solves a problem that no one really sees yet. But they will soon enough. Sunny King was has been right so far in his predictions so far, and his design is working. It’s just a matter of time and everyone will understand.

16

What if rather than marketing it as a savings account, we market it as a “Spendable Savings Account?” This way people will know that it’s not just for holding. You can actually still spend the currency.

I agree it’s very important that we keep the design the way it is, but we need to make sure people understand this isn’t like Bitcoin or Litecoin. If we let people assume that then they’re going to be upset and disappointed when the fee gets too high and they can’t do small transactions. It needs to be marketed properly so people have the correct understanding about its purpose.

17

@ppcman, that’s a good way to think about it. Nicely put.

18

[quote=“ppcman, post:15, topic:1026”]I wrote this message like 5X over. I got like 10 paragraphs in, and tried to re-word it multiple ways.

If it sounds like a big ramble, I apologize. There is no concise way to spell it out for people.

I soon found out, it is better to say nothing, than it is to try and convince people why we have a 0.01 transaction fee, what role Peercoin is going to play in the future, AT THIS STAGE. (Maybe in a few months it will be a much easier time for that once Peercoin’s purpose becomes self-evident)

I think cryptocurrency has three main groups of people interested in it right now:

A) Early adopters, who do research, understand what they are investing in, and get involved (that’s me)

B) Early opportunists. People who don’t do much research. They just follow what some “other guy says” and stick with that… These are people who read newspaper headlines but not the article itself. They might read the LARGE BLURB in the center of the news article too. They are easily swayed and they spend their money on a short-term, quite often, foolish basis.

C) Journalists. These people need something to write about, and many of them will just pander down to the status quo. They hear the “buzz” that everyone is talking about, and write an article to match. Something that will cause the majority to want to read.

What’s that you say? Bitcoin is nothing more than a silk road / drug coin? Ooops, better get out article number 3,000 about that myth, because people seem to love those articles and keep reading them. :frowning:

So I think what we’re talking about now in this forum thread is about a “possible major disaster” of people not understanding the 0.01 transaction fee is for people (B) and © above.

Well the time isn’t right to combat that, because you will spin your gears in circles trying to prove to people why Peercoin is needed now.

I imagine there was a fight initially when fire hydrants were first invented and installed. People thought it was foolish to spend so much time and effort in a water line, when a good old bucket and hose would extinguish most fires as they begun.

Sometimes I feel like Peercoin is the same way. It solves a problem that no one really sees yet. But they will soon enough. Sunny King was has been right so far in his predictions so far, and his design is working. It’s just a matter of time and everyone will understand.[/quote]

This is a good post, but I still feel we should be ready to strike when the moment is right. That will require figuring out how to market it.

19

Peercoin isn’t going to be all things to all people. Some people will not understand and be pissed about it. I guess there is nothing you can do about that. Peercoin is just vastly different than Bitcoin/Litecoin in it’s design and vision. People need to look long-term like 30+ years from now, if they are going to have any sort of clue. I believe that this is nothing new, and there is always going to be pull and push on these issues.

20

I’m still not fully convinced about the fixed transaction fee and I believe there could be an improvement overtime on how exactly to balance security and tx fees. Perhaps somebody could come up with an innovative idea.

However, looking at PPC as a long term currency, that hefty transaction fee could be bypassed and still do micro transactions.

  1. Governments and institutions could issue their own currency backed by peercoins much like the USD backed gold (Gold Standard) before fiat.
  2. Creation of physical peercoins like: https://bitcointalk.org/index.php?topic=307468.0. People could buy a candy without having to pay a transaction fee.

These things doesn’t come without a price. We will have to trust the government that we can exchange their issued currency to peercoin or trust the physical coin manufacturer that he doesn’t have the private keys to the physical PPC.

Anyway, the future looks good for PPC but I think there is still alot of room for improvement. If there is a way for the poor to perform microtransactions but still maintain the security of the network, then I’m all for it.