I made the effort to read Primecoin and Peercoin whitepaper seriously for the first time yesterday and realized they are both into solving 2 problems that Bitcoin will encounter inevitably: 1) the energy efficiency issue and 2) having high security/low inflation/low fee at the same time is unsustainable.
In primecoin whitepaper, below are the relevant quotes, that stress Primecoin advantanges.
“However, a non-linear difficulty curve would negatively impact block chain security. Also, using prime size as difficulty indicator would interfere with efficiency of verification. Eventually I discovered that the remainder of Fermat test could be used to construct a relatively linear continuous difficulty curve for a given prime chain length. This allows primecoin to largely keep the security property of bitcoin.”
"Minting Model Primecoin is designed as a pure proof-of-work cryptocurrency , to complement the proof-of-stake design of ppcoin. Primecoin’s proof-of-work mintrate is determined by difficulty. This approach was first experimented in ppcoin. The scarcity of the currency is not ensured by a fixed cap as in bitcoin, but regulated by Moore’s Law via mining hardware advances and by algorithmic improvements. This design is a more natural simulation of gold’s scarcity. Moreover, pure proof-of-work cryptocurrency depends on the m ining market for its security." ----> scarcity depends not a fixed cap, but depends on ability of machines to mine primecoin chains = real gold
-Network mining income , the sum of all miners’ income, is a direct measureme nt of the level of block chain security across competing pur e proof-of-work cryptocurrency networks. A fixed cap scarcity model relies heavily on transaction fees to sustain network security. . —> primecoin does not rely on a fixed cap and fee should be low
Fee vs Security
“However a higher transaction fee reduces the competitiveness of a crypto- currency as payment-processing network. Since last year, bitcoin’s share of network mining income has shrunk much faster than its capital ma rket share. Basically, for a pure proof-of-work design, it’s not real istic to expect all three goals to sustain: high network security, low inflation and low tr ansaction fee. This topic has been explored in ppcoin paper, however it would become more evide nt as the competition intensifies in cryptocurrency market and bitcoin’s infl ation rate drops further. As Moore’s Law approaches its limit, primecoin inflati on rate would taper off and gives a slower drop toward zero. There is still good scarcity pro perty similar to gold while network security is maintained without the need to raise transaction fee.” —> there is still good scarcity with good security wihout the need of raising the fee!
“The inflation in primecoin is designed to drop slower than ppcoin’s proof-of- work minting, to compensate for the need of sustained energy consumption of pure proof-of-work cryptocurrencies.”
Primecoin fills a space that is a blue oean and is its first mover. After Bitcoin and Litecoin, Primecoin positions itself as a serious secure and sustainable payment network that has the potential of lasting.