(script draft) Peercoin Primer #5: Mission

General
1

Hi, I’m Chronos, and welcome to Part 5 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: Mission

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 touch on the legacy that Peercoin brings to the world. What is Peercoin’s mission?

Sunny King, one of the anonymous founders of Peercoin, once talked about this in an interview. He wrote, "From my point of view, I think the cryptocurrency movement needs at least one ‘backbone’ currency, that maintains a high degree of decentralization, maintains a high level of security, but doesn’t necessarily provide a high volume of transactions. Pure proof-of-work systems such as bitcoin are not 100% suitable for this task. This is because the transaction fee is not a reliable incentive to sustain network security.

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

So what does a backbone currency actually do? It secures value. Efficiency, sustainability, user governance, scalability, and a fair distribution. All these qualities combine to form a long-term minded blockchain network that is focused on its core role as a distributed mechanism for securely storing all types of value.

This value can be anything from wealth being stored as Peercoins, to data being stored on the chain in the form of tokens, records, or contracts. Regardless of the type of value being stored, Peercoin was built with the fundamentals in mind to always ensure that your value remains safe and secure.

One really cool project I want to share is Perpera, a data audit protocol that lives on top of Peercoin. Using this tool, you can prove and transfer document ownership, notarize documents, and even track document revision history. It comes with an easy-to-use web interface, and this is just one example of the kind of innovation that Peercoin makes possible. The sky is truly the limit.

If you enjoyed these videos, and want to learn more about Peercoin, be sure to head over to the official website at peercoin.net. There’s also a great community, very knowledgeable and friendly, on the official forums at talk.peercoin.net. And lastly, there’s a ton more educational material in the Peercoin University, at university.peercoin.net, where you can really get in-depth with this beautiful blockchain.

If you have any questions or comments, let us know! Post below the video, or just head over to the forums. We’d love to hear from you.

Oh, and don’t forget to subscribe. :slight_smile: I’m Chronos. Thanks for watching!

1 Like
2

I think this script is probably going to need some additional work done to it. There are two separate ideas in Sunny’s quote, but I feel only one of them is being represented.

This part of the quote is referring to the store of value argument. The chain is able to be secured efficiently without reliance on transaction fees. That makes Peercoin a blockchain that is built to last, so obviously storing value in it long-term makes sense.

This part of the quote however is referring to scalability. Blockchains are not scalable, meaning they cannot handle all of the world’s transactions by themselves. They need help from additional supporting layers to improve transaction capacity.

So to me, backbone currency or base layer (whichever label you prefer) are two ideas intertwined in one term. The base layer blockchain is a great high security mechanism for storing value, however it is not scalable by itself and forcing it to support an increasing number of transactions will bloat the chain and damage its decentralized security. In order to achieve a higher degree of scalability so large numbers of people can transact with the value stored on the chain, the base layer needs to discourage on-chain transactions in favor of off-chain transactions through layer 2 networks. That is what Peercoin does. It uses the fixed 0.01 kb fee to discourage on-chain transactions in favor of using something like Lightning instead.

I’m sorry. This is probably the most difficult idea for people to grasp as there is a lot of moving parts to consider. I’ll need to think about how we can approach this.

3

I’d thought I’d make a few comments on Video 5. Regarding the title, I don’t think Peercoin is old enough to talk in terms of Legacy, so I think it would be better to call Video 5 “Mission”, or perhaps “Why Peercoin?”

Previously, PPC’s mission was to be different to Bitcoin - for example, Bitcoin was a currency for spending whereas PPC was more of an asset/backbone. But Bitcoin people are discovering that the currency idea is harder than it sounds, so their interest is turning more to the blockchain, itself. This puts Bitcoin’s vision closer to Peercoin’s, which retains its overall idea of base layer/digital gold/backbone, etc.

So, Peercoin’s mission is not to be different to BTC, but to be (as Peerchemist said at one point) a drop-in replacement for Bitcoin. I recall one of the very early descriptions of PPC as being “Bitcoin done right”. I don’t think Video 5 can put it as frankly as that, but I think we can make the proposition that Peercoin is a worthy competitor to Bitcoin.

That might make a good theme or angle for Video 5. I wonder whether we’re trying too hard to define what Peercoin is, tying ourselves in knots in trying to explain backbone currencies, when really all Peercoin is seeking to do what BTC wants to do, but to do it correctly. According to Peerchemist’s recent interview, “Blockchain is a tool to deliver trust where trust is hard to find. It’s a tool, not money. Peercoin’s vision is that its blockchain should only serve as the cryptographic base layer and used for trusted time-stamping”.

Chronos’ current script for Video 5 brings security/distribution threads together, but I suggest that these threads are more ‘tactical’ in nature and should be brought together sooner in Video 2 by way of answering the “what if” attack scenario. That will free up Video 5 to go a little deeper into why PPC makes a worthy competitor to Bitcoin as the crypto base layer. I think alot of it comes back to the question of fees, and the conflict of interests that it creates between miners and coin owners.

At this point, I refer to the points made in Peerchemist’s recent interview with Jack (paraphrased by me, so apologies if I’ve lost any of the accuracy):

+++

Peercoin’s distinction is where it differs from Bitcoin [and other POW-only coins]. The core principles of the economic system set forth by Bitcoin is that there is a fixed number of Bitcoins and that miners live off transaction fees. In this system, transaction fees must become expensive enough to enable miners to maintain their operation when the block reward perishes. [Bitcoin is limited to] the following ways to ensure transaction fees sustain miners:

i) The price of Bitcoin must continually rise.
ii) Bitcoin holders are forced to pay higher fees.
iii) Bitcoin developers find new ways to reward miners, such as deploying sidechains with more transaction fees.

In Peercoin, network maintenance is cheap because of proof-of-stake, meaning minters don’t have to compete for transaction fees. Transaction fees are instead destroyed. Instead, Peercoin owners who produce blocks are fairly and continually rewarded by the fixed 1% minting reward which will continue forever. Because there is no competition for fees, there is no need to limit the block size artificially and make transactions scarce.

As for second layer scaling, Peercoin’s elimination of the need for transaction fees means there is no competition between block producers and second layer operators. And due to the fixed cost of transactions (0.01 PPC per kB), Peercoin will function well as a settlement layer as the user can always expect timely inclusion in the next block for a reasonable price, and the cost of a transaction can always be easily calculated.

+++

Perhaps these points could form the meat of Video 5? They demonstrate why Peercoin is a credible alternative to Bitcoin, with Perpera being cited as a practical example of an application.

It’s high brow stuff, but we need to demonstrate Peercoin is a serious proposition, and Chronos can make it fun at the same time.

1 Like
5

I agree that ‘settlement layer’ is perhaps a better place to land than ‘backbone currency’, especially with regards to the word ‘currency’. Starting with Sunny’s quote is fine, but we need to interpret it more. That’s where I think the words ‘settlement layer’ will really shine, especially when referencing Lightning network. I’m not such a huge fan of pointing out Bitcoin’s failings, but rather to talk about Peercoin’s advances.

I believe this is the section we are working on, the rest of the script is fine. Perhaps:

When Sunny talked about backbone currency, he was introducing a concept that has become known in the broader cryptocurrency as a ‘settlement layer’. The efficiency, sustainability, user governance, scalability, and fair distribution of Peercoin make it a superior decentralized settlement layer that is able to secure tokens, records, and contracts in addition to the traditional wealth represented by the individual coins. Regardless of what is being stored, Peercoin was built with the fundamentals in mind to always ensure that it is safe and secure.

Maybe we can add a section about the transaction volume and the burnt fees after ‘the sky is truly the limit’? It might not even need that though.

6

I think this is very neat, explaining the change from the old terminology to the new.

7

And showing the foresight.

8

Yes, I’m definitely going to use that. Thanks for suggesting it. The same can also be said about the term “base layer.” Settlement layer seems to refer more to the idea that the majority of transactions take place elsewhere, while final settlement takes place on the blockchain. Base layer refers to the idea that Peercoin is the foundation with other layers built on top, without specifying what their function is. Each term may paint a slightly different picture, even though it basically means the same thing. Also there is the combined term, which I use on our website home page, “base layer settlement network.” I wonder which term more people would be familiar with.

9

I dropped the reference to lightning network by accident. When referencing lightning, you should refer to ‘settlement’, then you can use base after that, or something to that effect.

10

Since it looks like script 4 is nearing completion, I have moved on to the final script here. This will be the most difficult script of all of them to get right, since it contains some advanced topics with a lot of moving parts, so I’m going to really take my time with it. It’s possible that you might not here from me on this until sometime next weekend. Video 2 still hasn’t been released yet, so we should have time to finish the editing phase before it is needed. I have not started editing anything yet. Right now I’m simply contemplating Sunny’s quote, all the information you posted and thinking about how I can organize it all into an easy to understand way. I’ll post again here once the first draft is complete.

1 Like
11

So obviously script 4 was not ready yet and Peerchemist asked us to make changes. I’ve finished that now and am just waiting on some feedback from Robert before making it final. In the meantime I will move back to working on the final script here. One good thing is that we were able to move all the fee market stuff to script 4. I had originally planned on including that in script 5, but it is better laid out in 4 since it is the video on economics. With that out of the way now, it will help free up a lot of space in script 5, which I really needed to be able to fit everything in.

12

Hope to get to script 4 shortly, have a family visitor at present.

1 Like
13

First, I’d like to apologize for taking so long to finish up this final script. We’ve had a lot of work to do with preparing for the hard fork, plus some events in real life have been taking up my time. Regardless, here is the 1st draft of script 5. My reading of this script took about 5 minutes and 30 seconds.

The script focuses on the mission of the Peercoin blockchain, which treats Peercoin as a value store/backbone/settlement layer by maximizing decentralization and scaling transactions through layer 2 networks. Please review: @RobertLloyd @peerchemist @Nagalim

With Formatting

Hi, I’m Chronos, and welcome to Part 5 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: Mission

These videos are designed to be watched in any order, so feel free to jump directly to what most interests you. Today In this video, we’re going to touch on the legacy that talk about Peercoin’s mission. Peercoin brings to the world. What is Peercoin’s mission? Rather than focus on its mission as a useable currency though, a topic which was already thoroughly covered in video 4, we will instead focus on the mission of the Peercoin blockchain itself. Sunny King, one of the anonymous founders of Peercoin, once talked about this in an a 2013 interview. He wrote the following:

"From my point of view, I think the cryptocurrency movement needs at least one ‘backbone’ currency, that maintains a high degree of decentralization, maintains a high level of security, but doesn’t necessarily provide a high volume of transactions. Pure proof-of-work systems such as bitcoin are not 100% suitable for this task. This is because the transaction fee is not a reliable incentive to sustain network security.

Peercoin is designed to serve as a backbone currency. The proof-of-stake technology in Peercoin is not only energy efficient, it also maintains a high level of security without relying on transaction fees."

So what does a backbone currency actually do? In his quote, when Sunny talked about designing Peercoin as a backbone currency, he was actually introducing a concept that has now become widely known in the broader crypto community as a settlement layer. Before we delve further into this though, it’s vital that we first understand why decentralized blockchains are weak on scalability.

Specifically, it is difficult for a blockchain to remain decentralized while simultaneously supporting an ever increasing number of users and transactions. The reason is because increasing the number of transactions places additional strain on the block producers who are processing these transactions and providing security for the network. Many block producers are not properly equipped to handle the additional transaction load that would result in trying to support mass usage levels on their chain. It would only result in a shrinking number of block producers and the eventual centralization of the blockchain itself.

Many blockchain projects have therefore been faced with either supporting the scaling of transactions on the blockchain along with the resulting loss of decentralization, or supporting the scaling of transactions off the blockchain through the use of layered scaling solutions. This is the central debate between Bitcoin and Bitcoin Cash, whether to scale usage primarily through on-chain or off-chain transactions.

In the layered scaling approach, the majority of transactions are conducted off the blockchain through separate, independent layers specifically built for high volume, high speed, low cost transactions. This takes significant pressure off block producers, with final settlement occurring on the blockchain. In this model, the blockchain is treated as the foundational settlement layer, upon which the entire system is built. The blockchain acts as a trustless and secure cryptographic base layer, while other 2nd layer networks are built on top of the blockchain to support additional scaling and expand the transaction capacity of the network. An example of layer 2 is the Lightning Network, which was built to scale Bitcoin.

As Sunny stated in his quote above, the mission of the Peercoin blockchain is to maintain a high degree of decentralized security without providing a high volume of on-chain transactions. Instead, the majority of transactions are pushed onto secondary layers built specifically for transaction processing, while Peercoin is utilized as the base layer which secures the entire system and allows final settlement to be permanently recorded. Peercoin is therefore the very definition of a trustless settlement network, which shows the incredible forethought of Sunny King as Bitcoin did not adopt this strategy until years later after it became obvious the blockchain alone could not support mass global usage of a transactional cryptocurrency.

In fact, Peercoin actually acts better as a trustless settlement layer than Bitcoin, since Peercoin’s security is maintained through a continuous block reward, which means there will never be competition between block producers and 2nd layer node operators for transaction fees. This fact alone makes Peercoin more compatible with second layer scaling infrastructure than many other blockchains that rely on security through on-chain user transaction fees.

It secures value. Efficiency, sustainability, user governance, scalability, and a fair distribution. All these qualities combine to form a long-term minded blockchain network that is focused on In conclusion, Peercoin’s primary mission of maximizing decentralization works to preserve the trustless, immutable and censorship resistant nature of the blockchain so that it can always be relied upon to fulfill its core role as a distributed mechanism backbone for securely storing all different types of value. This value can be anything from wealth being stored as peercoins, to data being stored on the chain in the form of tokens, records, or contracts. Regardless of the type of value being stored, Peercoin was built with the fundamentals in mind to always ensure that your value remains safe and secure.

One really cool project I want to share is Perpera, a data audit protocol that lives on top of Peercoin. Using this tool, you can prove and transfer document ownership, notarize documents, and even track document revision history. It comes with an easy-to-use web interface, and this is just one example of the kind of innovation that Peercoin makes possible. The sky is truly the limit.

If you enjoyed these videos, and want to learn more about Peercoin, be sure to head over to the official website at peercoin.net. There’s also a great community, very knowledgeable and friendly, on the official forums at talk.peercoin.net. And lastly, there’s a ton more educational material in the Peercoin University, at university.peercoin.net, where you can really get in-depth with this beautiful blockchain.

If you have any questions or comments, let us know! Post below the video, or just head over to the forums. We’d love to hear from you.

Oh, and don’t forget to subscribe. :slight_smile: I’m Chronos. Thanks for watching!

Without Formatting

Hi, I’m Chronos, and welcome to Part 5 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: Mission

In this video, we’re going to talk about Peercoin’s mission. Rather than focus on its mission as a useable currency though, a topic which was already thoroughly covered in video 4, we will instead focus on the mission of the Peercoin blockchain itself. Sunny King, the anonymous founder of Peercoin, once talked about this in a 2013 interview. He wrote the following:

"From my point of view, I think the cryptocurrency movement needs at least one ‘backbone’ currency, that maintains a high degree of decentralization, maintains a high level of security, but doesn’t necessarily provide a high volume of transactions. Pure proof-of-work systems such as bitcoin are not 100% suitable for this task. This is because the transaction fee is not a reliable incentive to sustain network security.

Peercoin is designed to serve as a backbone currency. The proof-of-stake technology in Peercoin is not only energy efficient, it also maintains a high level of security without relying on transaction fees."

In his quote, when Sunny talked about designing Peercoin as a backbone currency, he was actually introducing a concept that has now become widely known in the broader crypto community as a settlement network. Before we delve further into this though, it’s vital that we first understand why decentralized blockchains are weak on scalability.

Specifically, it is difficult for a blockchain to remain decentralized while simultaneously supporting an ever increasing number of users and transactions. The reason is because increasing the number of transactions places additional strain on the block producers who are processing these transactions and providing security for the network. Many block producers are not properly equipped to handle the additional transaction load that would result in trying to support mass usage levels on their chain. It would only result in a shrinking number of block producers and the eventual centralization of the blockchain itself.

Many blockchain projects have therefore been faced with either supporting the scaling of transactions on the blockchain along with the resulting loss of decentralization, or supporting the scaling of transactions off the blockchain through the use of layered scaling solutions. This is the central debate between Bitcoin and Bitcoin Cash, whether to scale usage primarily through on-chain or off-chain transactions.

In the layered scaling approach, the majority of transactions are conducted off the blockchain through separate, independent layers specifically built for high volume, high speed, low cost transactions. This takes significant pressure off block producers, with final settlement occurring on the blockchain. In this model, the blockchain is treated as the foundational settlement layer, upon which the entire system is built. The blockchain acts as a trustless and secure cryptographic base layer, while other 2nd layer networks are built on top of the blockchain to support additional scaling and expand the transaction capacity of the network. An example of layer 2 is the Lightning Network, which was built to scale Bitcoin.

As Sunny stated in his quote above, the mission of the Peercoin blockchain is to maintain a high degree of decentralized security without providing a high volume of on-chain transactions. Instead, the majority of transactions are pushed onto secondary layers built specifically for transaction processing, while Peercoin is utilized as the base layer which secures the entire system and allows final settlement to be permanently recorded. Peercoin is therefore the very definition of a trustless settlement network, which shows the incredible forethought of Sunny King as Bitcoin did not adopt this strategy until years later after it became obvious the blockchain alone could not support mass global usage of a transactional cryptocurrency.

In fact, Peercoin actually acts better as a trustless settlement layer than Bitcoin, since Peercoin’s security is maintained through a continuous block reward, which means there will never be competition between block producers and 2nd layer node operators for transaction fees. This fact alone makes Peercoin more compatible with second layer scaling infrastructure than many other blockchains that rely on security through on-chain user transaction fees.

In conclusion, Peercoin’s primary mission of maximizing decentralization works to preserve the trustless, immutable and censorship resistant nature of the blockchain so that it can always be relied upon to fulfill its core role as a distributed backbone for securely storing all different types of value. This value can be anything from wealth being stored as peercoins, to data being stored on the chain in the form of tokens, records, or contracts. Regardless of the type of value being stored, Peercoin was built with the fundamentals in mind to always ensure that your value remains safe and secure.

If you enjoyed these videos, and want to learn more about Peercoin, be sure to head over to the official website at peercoin.net. There’s also a great community, very knowledgeable and friendly, on the official forums at talk.peercoin.net. And lastly, there’s a ton more educational material at university.peercoin.net, where you can really get in-depth with this beautiful blockchain.

If you have any questions or comments, let us know! Post below the video, or just head over to the forums. We’d love to hear from you.

Oh, and don’t forget to subscribe. :slight_smile: I’m Chronos. Thanks for watching!

14

Thanks, Sentinel. I’m taking a look, will take a day or two.

15

Is that because you foresee it needing a lot of changes or just because you have limited time? This script was actually fairly straightforward I think. Once I started writing I was surprised how quickly I finished it. It was the economics script that I had difficulty with.

16

Is that because you foresee it needing a lot of changes or just because you have limited time?

Both, but it does require more work. I’ve already started and will respond asap.

17

I would not open up this can of worms. The topic is too long and too complex to be covered in two sentences.

When talking about scaling, there is no word about settling sidechains. Which is also a form of off-chain scaling that we actually pioneered with the Peershare project. However, the Peershare never got connected to the Peercoin blockchain, if it did it would be the first sidechain setup. We were at the right track back in the day.

18

So what are you trying to say here? Scaling is a core part of the argument in explaining why the Peercoin blockchain focuses on secure value storage and settlement, rather than on-chain transactions.

19

You can’t explain scaling in two sentences. It’s best to not try to explain it.

Especially this:

it’s vital that we first understand why decentralized blockchains are weak on scalability.

Nobody wants to hear this.

20

Thanks to Chronos for his first draft, and to Sentinel for improving upon it.

I don’t think we need such a long Sunny quote at the beginning, so I’ve pared it back.

I’ve noted Peerchemist’s point above but am putting that to one side, for the moment.

This is a rough redraft, which can be made better.

+++

In this video, we’re going to talk about Peercoin’s mission . Rather than focus on its mission as a useable currency though, a topic which was already thoroughly covered in video 4, we will instead , and particularly focus on the mission of the Peercoin blockchain itself. Sunny King, the anonymous founder of Peercoin, once talked about this in a 2013 interview. He wrote the following said in 2013 :

" From my point of view, I think the cryptocurrency movement needs at least one ‘backbone’ currency, that maintains a high degree of decentralization, maintains a high level of security, but doesn’t necessarily provide a high volume of transactions. Pure proof-of-work systems such as bitcoin are not 100% suitable for this task. This is because the transaction fee is not a reliable incentive to sustain network security .

Peercoin is designed to serve as a backbone currency. The proof-of-stake technology in Peercoin is not only energy efficient, it also maintains a high level of security without relying on transaction fees."

In his quote, When Sunny talked about designing Peercoin as a backbone currency, he was actually introducing a concept that has now become widely known in the broader crypto community as a settlement network. Before we delve further into this though , it’s vital that we must first understand why decentralized blockchains are weak on scalability.

Specifically, it is difficult for a blockchain to remain decentralized while simultaneously supporting an ever increasing number of users, and transactions and functions . The reason This is because increasing the number of transactions places additional strain is placed on the block producers who are processing these transactions and providing security for securing the network . Many block producers are not properly equipped to handle the additional transaction load, that would result in trying to support mass usage levels on their chain. It would only resulting in a shrinking number of block producers and the eventual centralization of the blockchain itself.

Many blockchain projects have therefore had to transfer been faced with either supporting the scaling of transactions on the blockchain along with the resulting loss of decentralization, or supporting the to scaling of transactions off the blockchain through the use of layered scaling solutions. This is the central debate between Bitcoin and Bitcoin Cash, whether to scale usage primarily through on-chain or off-chain transactions .

In the Layered scaling approach, means that the majority of transactions are conducted off the blockchain through separate, independent layers specifically built for high volume or high speed low cost transactions . This takes significant pressure off block producers the blockchain, which need only be used to permanently record the final settlement occurring on the blockchain. In this model, the blockchain is treated as the foundational settlement layer upon which utilities the entire system are built . The blockchain acts as a trustless and secure cryptographic base layer, while other 2nd layer networks are built on top of the blockchain to support additional scaling and expand so that the transaction capacity of the network can be expanded . An example of layer 2 is the Lightning Network, which was built to scale Bitcoin.

As Sunny King intended in 2012 , his quote above , the mission of the Peercoin blockchain is was to be this foundation, now known as a “settlement layer” high degree of decentralized security without providing a high volume of on-chain transactions. Instead, the majority of transactions are pushed onto secondary layers built specifically for transaction processing, while Peercoin is utilized as the base layer which secures the entire system and allows final settlement to be permanently recorded . Peercoin is therefore the very definition of a trustless settlement network, which shows the This shows incredible forethought of by Sunny King, as Bitcoin did not adopt this strategy until [how many?] years later after it became obvious the blockchain alone could not support mass global usage of a transactional cryptocurrency.

This means that, from the outset, all of Peercoin’s design choices have been geared towards being a foundational settlement layer, upon which the second layers can be is built . We’ve discussed these design choices in videos 1 to 4; to recap, they include: removing the conflict of interests between miners and coin-holders, by coin-holders doing their own minting; achieving an inexpensive security protocol based on scarcity of time, rather than electricity; allowing for 1% annual inflation to prevent deflation; and removing transaction fees as a means of paying block producers.

Note: the five lines crossed out two paragraphs above, which I have reproduced below, are too similar in my view to sentences elsewhere. Instead, I think we should focus on the three phrases that I have enboldened, and expand on them specifically, to give a layman’s account or example of how this all works, in semi-technical terms. For example: is the secondary layer another blockchain? How does it talk to the base layer blockchain? How does the latter permanently record the actions of the secondary layer? Such a paragraph could commence: “Let’s delve a little into how all this works”.

high degree of decentralized security without providing requiring a high volume of on-chain transactions. Instead, the majority of transactions and functions are pushed onto processed via secondary layers built by other parties specifically for transaction processing, while Peercoin is utilized as the base layer which secures the entire system and allows final settlement to be permanently recorded . Peercoin is therefore the very definition of a trustless settlement network,

In fact, Peercoin’s design choices mean that it actually acts better as a trustless settlement layer than Bitcoin. For example , Peercoin’s security is maintained through a continuous block reward, which means there will can never be competition between Peercoin’s block producers and 2nd layer node operators for transaction fees. This fact alone makes Peercoin more compatible with second layer scaling infrastructure than many other blockchains that rely on security through on-chain user transaction fees, since it eliminates the conflict of interests inherent in both the settlement layer and the 2nd layer node operators chasing the same users for fees.

Peercoin also has an advantage over blockchains based solely on POS. By retaining POW … [ note see my post further below ]

In conclusion, Peercoin benefits from a head start over all other blockchains in its primary mission of being a settlement layer maximizing decentralization works to preserve the trustless, immutable and censorship resistant nature of the blockchain so that it can always be relied upon to fulfill its core role as a distributed backbone for securely storing [is “storing” right? Recording? Managing?] all different types of value utility . This value can be anything from wealth being stored as peercoins, to data being stored on the chain in the form of tokens, records, or contracts [how does data on the change relate to second layers?]. Regardless of the type of value being stored, Peercoin was built with the fundamentals in mind to always ensure that your value remains safe and secure.

21

With proposed edits incorporated.

+++

In this video, we’re going to talk about Peercoin’s mission, and particularly focus on the Peercoin blockchain itself. Sunny King, the anonymous founder of Peercoin, said in 2013:

"… the cryptocurrency movement needs at least one ‘backbone’ currency, that maintains a high degree of decentralization, maintains a high level of security, but doesn’t necessarily provide a high volume of transactions”.

When Sunny talked about a backbone currency, he was actually introducing a concept that has now become known in the crypto community as a settlement network. Before we delve further into this, we must first understand why decentralized blockchains are weak on scalability.

Specifically, it is difficult for a blockchain to remain decentralized while supporting an ever increasing number of users, transactions and functions. This is because additional strain is placed on the block producers who are processing these transactions. Many block producers are not equipped to handle the additional transaction load, resulting in a shrinking number of block producers and the eventual centralization of the blockchain itself.

Many blockchain projects have therefore had to transfer the scaling of transactions on the blockchain to scaling of transactions off the blockchain through the use of layered scaling solutions.

Layered scaling means the majority of transactions are conducted off the blockchain through separate, independent layers specifically built for high volume or high speed transactions. This takes pressure off the blockchain, which need only be used to permanently record the final settlement. In this model, the blockchain is treated as the foundation upon which utilities are built so that the transaction capacity of the network can be expanded. An example of layer 2 is the Lightning Network, which was built to scale Bitcoin.

As Sunny King said in 2012, the mission of the Peercoin blockchain is to be thisfoundation, now known as a “settlement layer”. This shows incredible forethought by Sunny King as Bitcoin did not adopt this strategy until [how many?] years later after it became obvious the blockchain alone could not support mass global usage of a transactional cryptocurrency.

This means that, from the outset, all of Peercoin’s design choices have been specially geared towards being a foundational settlement layer, upon which second layers can be built. We’ve discussed these design choices in videos 1 to 4; to recap, they include: removing the conflict of interests between miners and coin-holders, by coin-holders doing their own minting; achieving an inexpensive security protocol based on scarcity of time, rather than electricity; allowing for 1% annual inflation to prevent deflation; and removing transaction fees as a means of paying block producers.

[Proposed new paragraph] “Let’s delve a little into how all this works” - is the secondary layer another blockchain? How does it talk to the base layer blockchain? How does the latter permanently record the actions of the secondary layer?

Peercoin’s design choices mean that it actually acts better as a settlement layer than Bitcoin. For example, Peercoin’s security is maintained through a continuous block reward, which means there can never be competition between Peercoin’s block producers and 2nd layer node operators for transaction fees. This makes Peercoin more compatible with second layer scaling infrastructure than blockchains that rely on security through transaction fees, since it eliminates the conflict of interests inherent in both the settlement layer and the 2nd layer node operators chasing the same users for fees.

Peercoin also has an advantage over blockchains based solely on POS. By retaining POW … [ note see my post below ]

In conclusion, Peercoin benefits from a head start over all other blockchains in its mission of being a settlement layer for securely storing [is “storing” right? Recording? Managing?] all different types of utility. This can be anything from wealth being stored as peercoins, to data being stored on the chain in the form of tokens, records, or contracts [how does data on the change relate to second layers?]. Regardless of the type of value being stored, Peercoin was built with the fundamentals in mind to always ensure that your value remains safe and secure.