The Complete Guide to Minting

General
1

Minting and Proof of Stake is what differentiates Peercoin from other cryptos, yet all the information on it is spread across many sources. I think we need a complete guide that will make it easier for newcomers to understand it and hopefully even increase the number of minters. This guide is currently a work in progress and feedback/suggestions/corrections are appreciated. Thanks to all the forum members whose posts on minting I have plagiarized :wink:

Contents:

  1. What is minting?
  2. Why should I mint?
  3. How do I mint?
  4. How often should I mint?
  5. What happens if I solve a block?
  6. Is minting safe?
  7. The future of minting

1. What is minting?

Peercoin’s equivalent to Bitcoin’s Proof of Work is Proof of Stake, and instead of Bitcoin’s mining, Peercoin has minting. Rather than needing vast amounts of computer power to secure the network, Peercoin’s security is based on “coin age”. Coin age is calculated by multiplying the number of coins by the “age” of these coins i.e. the amount of time since they were last transacted. This means you can contribute to network security with almost any computer. You don’t need expensive and wasteful dedicated hardware like with Bitcoin.

To reward people for contributing to network security, Peercoin gives a reward to those who mint. This reward is equal to approximately 1% per annum. You do not receive this reward evenly over time, instead it comes in chunks every time you “solve” a Proof of Stake block. The amount you receive from each block is based on the coin age used to mint that block.

It is important to note that Peercoin does also use Proof of Work currently. However, it plays no role in network security, which is based completely on Proof of Stake. Proof of Work is only retained for distribution purposes in the early stages of the coin. It will likely be phased out or reduced to a negligible amount in the future. This method of distribution allows for a wider and fairer dispersal of coins than would be possible with an IPO or brief initial mining phase. Given that the number of coins someone owns is taken into consideration while minting, this wider distribution is vital to the security and viability of a Proof of Stake currency.

2. Why should I mint?

The most important reason for minting is to contribute to network security; as such, you are helping to protect your own investment. This is the beauty of Proof of Stake; control of the currency is in the hands of the people who actually own and use the currency, not some small group of unknown miners. As an additional incentive, people who mint receive a reward of approximately 1% of their peercoin balance per annum.

The complete removal of checkpoints will also arrive sooner if more people mint (there are already plans to make them optional in the next release of Peercoin). As the currency is likely to attract much more attention when that day comes, by minting you are helping the growth and adoption of the coin, and possibly even raising the price.

3. How do I mint?

Minting is very easy. All you need to do is enable it in your client, and leave your client running with a connection to the Peercoin network. To start with, you will need to have either the Peerunity client (recommended), or the Peercoin core client. You will also obviously need some coins in your wallet!

Next, make sure you have encrypted your client with a strong passphrase that you will not lose.

If you are using Peerunity, simply press the “Unlock Wallet for Minting Only” button, enter your passphrase and press OK.

That’s it! You are now minting, congratulations. If you don’t believe that anything crypto-related could be that easy, you can check you are minting by looking at the little padlock in the bottom right corner of the client. It should now be unlocked. If you hover your mouse over it, it should say “Wallet is encypted and currently unlocked for block minting only”.

Alternatively, if you are using the Peercoin v0.4 client instead of Peerunity, follow these steps to start minting:

Go to help>debug window>console and enter:

walletpassphrase abc 999999 true

where abc is your passphrase and 999999 is the time you want to mint for in seconds (you can change this to whatever you want, but in most cases it is easiest just to enter a very large number). If your passphrase has spaces then enclose it in quotation marks.

Clear your passphrase by entering Ctrl-L.

That’s all there is to it. Again, you can check to see if you are minting by looking at the padlock in the bottom right corner (it may take a few moments to update.)

For those who would like to mint without using a graphical user interface, you can find out more here for Windows and Linux, here for Mac, and here for Peerbox.

Finally, it is also possible to mint by simply leaving your client unencrypted, as minting will occur automatically when it is synchronized to the network. However, be warned that this is not advised, as leaving your wallet unencrypted increases the chances of having your coins stolen.

4. How often should I mint?

While there isn’t any right answer to this (it is really up to you), minting constantly is generally seen as the best idea. By doing this you are always helping the security of the network, as well as slightly increasing your return due to compounding rewards.

Having said that, it is also true that you can work out the likelihood of you solving a block within a certain time-frame. Some may find it more convenient to do this and only mint for the amount of time that they have a high chance of getting a reward.

In calculating the odds of getting a reward, there are a few things that are taken into account. The first is that you must wait 30 days after a transaction before those coins are eligible for minting. The second is that after 90 days, your coin age no longer increases for the purposes of solving a block (it does however continue to increase for the purpose of calculating your reward, but we’ll get to that later). These measures exist to make minting more equitable, as well as making it much more difficult for someone to try to abuse or attack the network.

Thankfully, you don’t really need to worry about these things, because there is a website to do it all for you! If you go to poscalculator.peercointalk.org you can enter the number of coins, age since transaction, and the current Proof of Stake difficulty. You can find the current Proof of Stake difficulty by entering getdifficulty into the debug console of your client, or by looking at a recent Proof of Stake block on a block explorer. The new version of the Peerunity client also contains a minting tab which displays some of this information.

I mentioned before about how your coin age for the purposes of calculating your reward continues to increase after 90 days. So in a way, by not minting now you are deferring your reward to a later date. When you do eventually start minting, your reward will simply be larger. However, it is still better to mint regularly so you can get rewards more often (allowing them to compound) and provide more benefit to the network.

5. What happens if I solve a block?

If you solve a block, a new transaction will appear in your client called “Mint by stake”. Now, for the next 520 confirmations (about 3 and a half days), the coins you used to mint that block will be locked under the “stake” balance in your client. Don’t worry, they are still completely safe, this is just another measure to make minting fairer as large holders cannot constantly solve blocks (giving smaller holders a better chance) while also helping to ensure network security. After 520 confirmations, they will simply return to your normal balance and will be available for spending.

If you think you will need to spend your coins in the near future, then it is best not to mint for that time in case you solve a block and have them unavailable for a short period. It is also possible to set a “reserve balance” of coins that won’t be used for minting by using the reservebalance [<reserve> [amount]] feature in the client.

The amount of reward you receive will depend on the coin age you put up for stake. An easy way to get an idea of how this works is to take a look at the recent blocks on a block explorer. There you can see the reward, amount staked, and coin age destroyed of each Proof of Stake block (you will also notice the less regular Proof of Work blocks that were mentioned earlier.)

6. Is minting safe?

There are no known vulnerabilities with minting, but as with any situation keeping cryptocurrency in a wallet connected to the internet, it is important to take precautions. Some optional extra steps you can take to increase security are mentioned below:

[ul][li]Ensuring you have a strong passphrase and that your system is free from malware, keyloggers etc.[/li]
[li]Minting without port forwarding enabled (if you never have more than 8 connections, then port forwarding is not enabled)[/li]
[li]Setting a very strong RPC password[/li]
[li]Minting on a dedicated device such as a Raspberry Pi[/li]
[li]Minting with tor needs more work to make this option user-friendly[/li][/ul]

7. The future of minting

There are many projects currently in progress to make minting easier and safer, such as a dedicated OS and hardware. You can read about the Peerbox project here.

Another feature that is often discussed is known as “cold-locked” or “cold-storage” minting. This is where the private key can be held offline without removing the incentive to run a node. This is currently being planned for the next release of Peercoin (v0.5). More info can be found here.

The most important thing at the moment is that as many people mint as possible to ensure that Peercoin remains secure and strong in the future, and I hope this guide is some help towards that.

2 Likes
2

Please post suggestions here and I will update the original post to include them.

3

You should also set a very strong RPC password for secure minting.

4

River, this summary is a great idea

At the risk of sounding pedantic, the following sentence is not correct, since Peercoin does not replace anything of Bitcoin’s:
“Peercoin replaces Bitcoin’s Proof of Work with Proof of Stake, and Bitcoin’s mining with minting”

You could amend it to something like:
“Peercoin’s equivalent to Bitcoin’s Proof of Work is Proof of Stake, and instead of Bitcoin’s mining, Peercoin has minting”

5

Regarding Part 3 (How do I mint), you need to explain whether the minter has to be online or not and/or whether their computer needs to be switched on. This is because the coins are on the block chain, not the computer itself, so there might be confusion to newcomers as to the relationship between the computer, the wallet, and the coins themselves

Regarding the title to Part 4 (How often should I mint?), I would amend the title to: How long should I mint?

Edit: “often” and “long” are two different aspects, so I think you could stick with “How often should I mint?”, so long as the text covers both the frequency and length of minting

6

Thanks, added to part 6.

[quote=“RobertLloyd, post:4, topic:2524”]River, this summary is a great idea

At the risk of sounding pedantic, the following sentence is not correct, since Peercoin does not replace anything of Bitcoin’s:
“Peercoin replaces Bitcoin’s Proof of Work with Proof of Stake, and Bitcoin’s mining with minting”

You could amend it to something like:
“Peercoin’s equivalent to Bitcoin’s Proof of Work is Proof of Stake, and instead of Bitcoin’s mining, Peercoin has minting”[/quote]

Thanks, changed it.

[quote=“RobertLloyd, post:5, topic:2524”]Regarding Part 3 (How do I mint), you need to explain whether the minter has to be online or not and/or whether their computer needs to be switched on. This is because the coins are on the block chain, not the computer itself, so there might be confusion to newcomers as to the relationship between the computer, the wallet, and the coins themselves

Regarding the title to Part 4 (How often should I mint?), I would amend the title to: How long should I mint?

Edit: “often” and “long” are two different aspects, so I think you could stick with “How often should I mint?”, so long as the text covers both the frequency and length of minting[/quote]

Added in “All you need to do is enable it in your client, and leave your client running with a connection to the Peercoin network.” to part 3.

Will try to add more on frequency to part 4.

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There was also this suggestion from reddit which I will add in:

You could also say how compounded interest is yet another incentive to mint and also throw in what the steps are for importing the private key from a cold wallet.
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Can someone please clarify whether configuration of RPC password should be an essential step in minting? Due to previous threads I was under the impression that no configuration was necessary since v0.4, and minting has worked for me without it.

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You do not need to have a ppcoin.conf file to mint, if you use the console.

If you use the daemon for anything, the configuration file is needed, so you’ll need to have values in the RPC user and password parameters or it will throw an error.

10

If you want the guide to be complete, the how to section perhaps should include the old method of running ppcoind walletpassphrase ... 99999 true on OS command line with the server running and communicating.

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[quote=“river333, post:1, topic:2524”]2. Why Should I mint?
Well, so you can get your 1% reward! However, there are other advantages to minting. The most obvious one is that you are contributing to network security, and as such you are actually helping to protect your own investment. This is the beauty of Proof of Stake; control of the currency is in the hands of the people who actually own and use the currency, not some small group of unknown miners.[/quote]

In the above paragraph, I am not keen on the first three sentences (from “Well” to “protect your own investment”), as they are putting the reward before the network security. I would swap it around, thus:

2. Why Should I mint?
The most important reason for minting is to contribute to network security; as such, you are helping to protect your own investment. As an additional incentive, people who mint receive interest of approximately 1% of their peercoin balance per annum.

12

Something I am not clear on is how is the 1% distributed. For example, the following three people each have 1,000 peercoins:

Person A mints 24 hours a day, 365 days a year
Person B mints 8 hours a day, 365 days a year
Person C mints 24 hours a day, 121 days a year

Only Person A is minting their 1,000 peercoins 100% of the time - presumably, they get 1% reward/interest (10 peercoins)

But Persons B and C mint for only a third of the year. Do they still get 10 peercoins each, or do they get 3.3 peercoins?

What if someone mints only a couple hours each weekend? That is only about 1% of the year (104 hours per year divided by 8760 hours in the year). Does that mean they get 1% of the 1% reward i.e. a tenth of a peercoin?

13

The amount of interest paid is related strictly to the age of the coins. It is calculated based upon a 1% annualized return prorated by days. It is very similar to a conventional banking CD or savings account except that you get a payment every time you mint a POS block instead of on a regular monthly schedule.

Presuming the 3 minters in your example all eventually mint at least 1 block per year, they will all earn at least 10 PPC per year over time. Person A has an advantage, however, because he/she will likely mint more blocks per year than the other two. Minting more blocks means more small fractions of the 1% are paid “early” and compounded into the next payments.

Also, by not minting continuously, Persons B and C are missing opportunities to find blocks that they may not get again for a very long time. Every second that a wallet is minting with aged coins is like a new lottery ticket to win a POS block. The more seconds you “play” the greater your chances of eventually winning. For example, Person C may take 3 or more years before finally getting lucky and minting a block. At that point, he/she will get ~30 PPC but will have missed opportunities for earlier payouts and compounding.

In summary, once cold storage minting is implemented people should just run their wallets continuously.

14

River, this thread is going to be linked from the new Reddit sticky in case you need to go over it again and update it. I notice Robert had some feedback that was not replied to.

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Ok, I went through it and updated it a bit. Sorry I haven’t really been paying attention to this thread as I was thinking that it would eventually be covered by the website or wiki, and so might have to be re-written.

This requires configuration, right? It might be better if someone else writes that as I have only a little experience using the daemon.

[quote=“RobertLloyd, post:11, topic:2524”]In the above paragraph, I am not keen on the first three sentences (from “Well” to “protect your own investment”), as they are putting the reward before the network security. I would swap it around, thus:

2. Why Should I mint?
The most important reason for minting is to contribute to network security; as such, you are helping to protect your own investment. As an additional incentive, people who mint receive interest of approximately 1% of their peercoin balance per annum.[/quote]

Alright thanks, I changed it to that, but kept the “beauty of Proof of Stake” sentence :wink: Also I changed “interest” to “reward”.

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This requires configuration, right? It might be better if someone else writes that as I have only a little experience using the daemon.[/quote]

The current guide is really “how to mint using the graphic user interface of peerunity when the wallet is encrypted”. It covers 80% of usecases. For the rest 20% I suggest somethink like the following for completeness:

If you want to mint without using a graphic user interface, read here for Windows and Linux, here for Macs, and here for peerbox .

Lastly if you are really sure you prefer not to encrypt your wallet, your wallet will mint automatically when it is synchronized to the network.

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The new website will have a video that demonstrates this, as well. It should be available later today.

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[quote=“mhps, post:16, topic:2524”]The current guide is really “how to mint using the graphic user interface of peerunity when the wallet is encrypted”. It covers 80% of usecases. For the rest 20% I suggest somethink like the following for completeness:

If you want to mint without using a graphic user interface, read here for Windows and Linux, here for Macs, and here for peerbox .[/quote]

Thanks. Those guides aren’t really ideal (apart from the Peerbox one), they need to be summarized with the outdated information removed, but I’ll just link to them for now. Maybe the title of this thread isn’t the best, I wasn’t really trying to claim that the guide was “complete”, just that we should bring the most important information together so the average person doesn’t have to spend so much time reading through multiple threads. In this way we are also preparing for when we have a proper minting guide on a wiki.

Yes, I intentionally omitted this so people wouldn’t be encouraged to leave their wallets unencrypted, but I suppose you’re right that it should be added in. I’ll just put a warning or something beside it.

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[quote=“river333, post:18, topic:2524”][quote=“mhps, post:16, topic:2524”]The current guide is really “how to mint using the graphic user interface of peerunity when the wallet is encrypted”. It covers 80% of usecases. For the rest 20% I suggest somethink like the following for completeness:

If you want to mint without using a graphic user interface, read here for Windows and Linux, here for Macs, and here for peerbox .[/quote]

Thanks. Those guides aren’t really ideal (apart from the Peerbox one), they need to be summarized with the outdated information removed, but I’ll just link to them for now.[/quote]

I think those links are perfect for the minoirity command line users who tends to be technical and have endless questions on details. Keep updating your page, or any page, according to progress of on-going development on all platforms is not a light task in the long run. It’s better to teach them how to fish.