Hi, I’m Chronos, and welcome to Part 3 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 talk about what Peercoin brings to the table: what makes it stand out from the huge pack of competing cryptocurrencies?
I considered called this video “Green Crypto”, because Peercoin is so environmentally friendly. This has been a huge criticism of traditional blockchains, since bitcoin’s proof of work consumes huge amount of electricity to secure its transactions. In the summer of 2019, researchers at MIT and the Technical University of Munich put out a report that equated this power consumption with the entire city of Las Vegas. Wow. https://www.cell.com/joule/fulltext/S2542-4351(19)30255-7
But Peercoin uses energy-efficient proof of stake security. Here, you just need enough power to run your computer or laptop, because the network is secured by ownership of the Peercoins themselves, not by the operation of mining equipment. The planet is continuing to suffer the effects of manmade pollution, so I think this will become more and more important as the blockchain ecosystem matures.
Also, Peercoin’s security is as decentralized as its coin holders, which can be much better distributed, especially geographically, than proof of work miners. That’s because mining is most profitable wherever electricity is cheapest, and that means that you’re going to see concentrations of power in those few places around the globe. Peercoin minting can be done, anywhere, anytime. I’ve even done it from inside my own living room, and if I can do it, anyone can. On the other hand, I would not want a bitcoin miner in my living room: those things are hot and loud. They’re better off inside a giant warehouse.
Another great aspect of Peercoin’s security is that it doesn’t depend on the market price to be stable. Let me explain: imagine if the price of a cryptocurrency crashes. Some miners will drop out, because they can’t make a profit anymore. The price of the coin can actually get so low that miners would spend more in electricity than they’d be able to make in coins! But with Peercoin’s proof of stake, the electricity usage is almost nothing, so minters don’t have to drop out in a price crash. In fact, price movements often attract attention to bring new traders and enthusiasts to the coin, helping to make it more decentralized in the long run.
And those users collectively co-own the network. Stakeholders of Peercoin can even decide its future through protocol voting. This happens in the same way that Peercoin is secured: you simply install the version of Peercoin that you support, and start minting with it. Every new minted block gives you more Peercoins, and a vote for that protocol version. This makes Peercoin the first blockchain capable of allowing its rules to be governed directly by its users, making for a network that is more decentralized, democratic, and easily secured by everyday people around the world.
If you have any questions or comments, post below the video. I’m Chronos. Thanks for watching!