Hi, I’m Chronos, and welcome to Part 1 of the Peercoin Primer. Peercoin is one of the world’s most established cryptocurrencies, and each video in this series will explore a different aspect of it.
Show overview onscreen:
- Part 1: Launch
- Part 2: Security
- Part 3: Benefits
- Part 4: Economics
- Part 5: Legacy
These videos are designed to be watched in any order, so feel free to jump directly to what most interests you. Today, we’re going to go way back to the Peercoin launch in the year 2012, and talk about Peercoin’s origin story. Then we’ll explore how new coins get distributed, and finally, we’ll cover the value proposition of Peercoin – what makes it stand out, in my opinion, from a sea of competing cryptocurrencies.
When I’m learning about a new coin, the first thing I want to know is, how was it launched, and how were the coins distributed, so let’s start with that.
Back on August 10, 2012, Peercoin developer Sunny King posted in the bitcoin forums, announcing that the project was getting close to release. The founders actually started their work based on the bitcoin codebase, which had already been running for over three years at the time, and they made some fundamental changes to its security model to create a new coin. There was no initial coin offering, or premine, or developer tax – the new project was completely open source and community-driven. On August 19, the blockchain was launched, with the source code already publicly available.
To give you an idea of how established Peercoin is today, consider that only a tiny handful of blockchains existed at that time: Bitcoin, Litecoin, and Namecoin were the big players. This is years before Ethereum had been created, making Peercoin one of the most enduring coins in existence.
Effective cryptocurrencies have fair distributions that are wide enough to ensure that the coin supply doesn’t get concentrated into the hands of too few people. This is especially important for a cryptocurrency like Peercoin, where the coin holders are responsible for securing the network. But blockchains secured by proof-of-stake have a serious problem, because there is no easy way to fairly distribute the initial coin supply. In this kind of network, the entire supply has to be created at the start, from scratch, because new coins just come from existing coins.
To solve this problem, Peercoin’s founders used proof-of-stake for network security, and proof-of-work for distribution, using the same mining algorithm as bitcoin. Proof-of-work miners are always rewarded with new Peercoins that are generated by the network. In fact, Peercoin mining continues today, providing a slow trickle of new coins that decreases over time. This helps to bring new miners into the ecosystem, and keep the economy flowing. And most importantly, the first coins went to the first miners on the network, which I think is a key ingredient of a fair launch.
So, what makes Peercoin unique? It is the absolute first cryptocurrency to use Proof of Stake as a security mechanism for the blockchain. This revolutionary security model has a huge number of advantages, which we’ll explore in the “Benefits” video in this series. But first, in the next video, we’ll cover exactly how Proof of Stake keeps Peercoin secure.
If you have any questions or comments, post below the video. I’m Chronos. Thanks for watching!