Pillow's Peercoin Myths


#56

#Peercoin was Pre-Mined

Myth: Peercoin was pre-mined/insta-mined.

Busting the Myth
This myth is false. Sunny King announced the planned release of Peercoin nine days before the release. There were no blocks mined prior to launch.

Sources
Bitcointalk, was at the time the official forum for posting new coin announcements:

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#58

#Peercoin is Extremely Inflationary

Myth: New coins are created all the time, it will be incredibly inflationary.

Busting the myth
The money supply curve is totally dependent on user adoption. Currently, the network is producing less coins each month. It will likely take hundreds of years to reach 1 billion peercoins, if ever.

The change of money supply is determined by:

  1. Proof-of-Work difficulty level: In Peercoin, the miners only purpose is to increase the supply of coins.
  2. Proof-of-Stake: Minting nodes build blocks and as a reward they get coins. This increases supply at a rate up to 1% per year.
  3. Number of transactions: Every time there is a transaction, the coins in the fee is destroyed. This decreases supply.

Learn More
Learn more about the details here:

Official source code repository:

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#60

#Peercoin is Unfair

Myth: The coin is designed to make the rich richer and enrich early adopters.

Sunny Kings’s Response
"The proof-of-stake minting provides a service to the ppc network, so why shouldn’t those who provide the service receive some compensation? The rich and the poor are treated the same here,
both can provide proof-of-stake minting, and rate of income is proportional to their holding.

So you can say that the rich get richer, and the poor also get richer, at the same rate, so long as they both try to provide the service to the community. Meanwhile, those who transact in the network with high velocity pay the security cost via low inflation." (Sunny King, http://www.peercointalk.org/index.php?topic=617.0)

The Proof-of-Work difficulty algorithm in Peercoin, is designed so that the greater the interest the lower the award paid out to miners. Early adopters was able to accumulate more coins. This is a common practice in crypto currency and it also true for Bitcoin. The idea is to compensate early adopters for taking on the risk and to create an incentive structure to ensure continued health of the network. Sunny King announced the launch nine day in advance of its release, to ensure a fair distribution of coins.

Counter-argument
In Bitcoin only those who can afford to buy a purpose built mining machine, can participate in solo mining and receive a reward. If the user is willing to take on a third-party risk, there is also the option of buying mining derivatives from example cloud mining service provides. The later may push the Bitcoin network towards a centralization. Peercoin on the other hand, is designed to be resource efficient and therefor requires no special hardware. It can even run on very cheap devices, such as Raspberry Pi.

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#62

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#64

#Peercoin is a Scam

Myth: Its just a scam coin with no long-term plan.

Busting the Myth
As a Bitcoin fork, Peercoin benefits greatly from much of the work developers put into Bitcoin. There are however many important distinguishing features. It is resource efficient, requires relatively low bandwidth and is energy efficient. It is the first Proof-of-Stake coin and one of the truly unique coins that are in the top market cap.

Peercoin is designed to be a long-term store of value and was partly born out of the concern that Bitcoin might someday suffer from the tragedy of the commons.

Learn More
Wikipedia

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#66

#Peercoin is Highly Vulnerable to 51% Attack

Myth: Given enough coins, it’s very easy to control the blockchain

Concerns are Overblown
By design, the blockchain can only be updated by an entity controlling coins. While different myths details different ways of acquiring and using coins to attack the network, most of them is based on the assumption that given enough coins, the blockchain can easily be controlled. But is it really that easy?

The short answer is that, no it’s not easy. The implementation of Proof-of-Stake (PoS) in Peercoin is designed in such a way that there are several counter measures against attacks on the blockchain. It’s difficult to describe these defense mechanisms, without going into technical details, but the general idea is that those that create blocks (in Peercoin this is called minting) must commit coins to a stake and therefor has money at stake in the wellbeing of the network.

An example of a defense mechanism, is that the coins used in the stake, will be locked for a period of time and therefor can not be sold on an exchange or likewise. Another defense mechanism is that coins have to mature for a period of time, before they can be used in a stake again. Perhaps the best way to understand the implications of this, is to compare it with how Bitcoin works, where mining machines can be used uninteruptedbly in a 51% attack. In Peercoin, an attacker have to wait a long period of time before the coins used in the attack, can be used again in a new attack. Another difference compared to Bitcoin, is that AltCoin compatible mining machines can be used to attack the Bitcoin network, whereas in Peercoin the attacker has to use peercoins, i.e. the attacker can not use coins from an AltCoin as a stake in Peercoin.

How many coins are actually needed to pull off an attack, is still being debated (http://www.peercointalk.org/index.php?topic=3141.msg29474#msg29474) but consensus is that a huge amount is needed. As the price of peercoins increases the cost of acquiring these coins increases. The incentive for more people to mint also increases which pushes up the Proof-of-Stake difficulty and hence the attacker has to acquire even more coins, which will push up the price even more. But let’s say the attacker is able to pull it off, then what happens?

Just as in Bitoin, a reorganization attack on the Peercoin blockchain can’t do anything that goes against the protocol. More coins then the protocol allows for, can’t be created. Other peoples coins can’t be spent. Coin days can’t magically appear from nothing and the attacker still has to consume coin days during the attack. So why would the attacker even attempt an attack? Perhaps one of the most cited reasons for doing so, is to double-spend coins.

The double-spend attack works like so, first the attacker sell all of his coins and then publish a new version of the blockchain where the sale of the coins didn’t happen. In the attack scenario detailed above, this means that the market have to be able to absorb a very large chunk of the total supply of coins. In the current environment this could create a market crash. But let’s say the attacker has bought a financial derivative where he stand to profit from a market crash, what happens then? To begin with the attacker has now increased both the cost of the attack and increased his own financial risk, should the attack fail. Then one has to consider that one does not simply consume so much coin days required for an attack, without network participants noticing.

Besides the massive amount of coin days consumed, the mere fact that 6 blocks have been replaced, is an inescapable symptom of an attack taking place. This in-itself would be enough for the receiving end of all of those peercoins sold, to wait more then 6 confirmations.

Yes, protecting oneself against this attack is just that easy. When the alarm bells goes of, one simply just wait a few more confirmations (the receiver can actually calculate how many confirmations he should wait, since it is known how many coin days have been consumed) thereby decreasing the odds of the attacker successfully pulling off the attack considerably. Its also noteworthy that the attacker can’t possibly know with certainty how many confirmations the receiving end of the transaction will wait under such conditions, which complicates and increases the cost of the attack even further.

In summary, as Peercoin matures the difficulty and cost associated with this attack will go up considerably. Even if an attacker is able to accumulate all the coins needed for an attack, it’s still not risk free and far from certain that it will be economically justifiable to do so. Instead of attacking the network, the coins could be used to ensure the integrity of the blockchain and for this work, there is an almost guaranteed risk free return.

Counter-argument
In Bitcoin a mining pool could decide to attack the network and do so continously, making money by double-spending coins and shortselling bitcoins on financial markets. It’s not certain that the mining pool have a vested interest in Bitcoin either, since there are several AltCoins that are using the same hashing algorithm as Bitcoin, which the mining pool could decide to mine instead after the attack on Bitcoin. Furthermore there is clear evidence that mining is an expensive operation and that the current trajectory of the Bitcoin network is that of cloud mining services, pool mergers and centralization.

Peercoin is in many ways the total opposite. Only money invested in peercoins, can be used to mint new blocks. Minting is energy efficient and reqires no special hardware. It’s an open network with a trajectory towards decentralization.

Sources

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Formula for calculating odds of blockchain reorg?
#67

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#68

Imported some myths from peercoinmyths.com.


#69

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#70

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#71

Need some fresh eyes on this one:

I want to make sure that I got the calculations right. Did I?

Any argument that are flawed?

Should I add something?


#72

Added to the marketing tools sticky


#73

I just referred this thread here…

I changed the title to something simpler: Pillow’s Peercoin Myths.

I also bought peercoinmyths.net and .org and forwarded them to this thread, since John Manglaviti allowed .com to expire.


#74

I’ve been referencing this thread to individuals asking about Peercoin in the BTC-e Trollbox lately. Typically the knowledge of most can be summed up by the myths spread within the BTC-e troll box about PPC. I want to direct them towards useful information that can clarify why most of these myths are incorrect.

If anyone thinks that I should be directing them to a thread other than this, please let me know.

Thank you.


#75

This thread should be pinned