(script draft) Peercoin Primer #5: Mission

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!

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.

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.

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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.

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

And showing the foresight.

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.

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.

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.

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