Tracking Difficulty Level & Block Reward & Comparing to Bitcoin

Looking at the current difficulty level here:
http://www.coinwarz.com/cryptocurrency/coins/ppcoin

Looking to monitor this over time.
As of 14 September 2013,
Difficulty is currently at 1,739,280.478
Current block reward is currently 275.34 coins for PoW
Current price is ~0.19 USD or 0.0015 BTC

It seems to me that PPC is really undervalued at the moment.
Curious what other make of this.

Edited: per below post :slight_smile:

[quote=“coolbeans94, post:1, topic:362”]Looking at the current difficulty level here:
http://www.coinwarz.com/cryptocurrency/coins/ppcoin

Looking to monitor this over time.
As of 14 September 2013,
Difficulty is currently at 1,739,280.478
Current block reward is currently 275.34 coins (every 10 minutes)
This is currently about 39,600 coins per day, compared to Bitcoin’s approximate 3600-4800 coins per day (depending on miners speed)
Current price is ~0.19 USD or 0.0015 BTC

This would be about 14,454,000 new coins per year (if the difficulty stays the same).

It seems to me that PPC is really undervalued at the moment.
Curious what other make of this.[/quote]
Take a look here: http://ppc.cryptocoinexplorer.com/chain/PPCoin

The 10 minutes is for PoW AND PoS blocks alltogether. In the average one PoW block is generated every 40 minutes, the rest are PoS blocks with a low reward. 11,868 new coins have been created the last 24 hours. Up to 550 of them are PoS block incentives.

Okay, so basically at the rate we are going now, in a year from now, less than ~4,000,000 more new coins will be minted from PoW? The rest of the money supply will come from PoS at ~1% of the total coins, or about 204,000.

So basically, we can predict that the total coins in circulation a year from now September 2014 will be approximately
~20,340,000+4,000,000+204,000 = 24,544,000?

It then follows that in the following year (2015), the amount of new coins from PoS will be ~245,440.
That is only an increase of ~(254,440-204,000)/204,000 = 25%

Compare this to the rate that new coins are being generated from PoW.
The increase of new coins (inflation) from PoW is falling much faster than 25%.
So it wont be long too long now before PoS minting will be more profitable than PoW. (like within a couple years at the current rate!)

This looks like the PPCoin inflation rate could soon be going lower than Bitcoin’s inflation rate :o

As of 19 September2013,
I spent the better part of my day today running calculations and projections…fine tuning some estimates and here is where we are:

Disclaimer: these projections are based on my calculations (I do this sort of analysis for work during my normal day job, so I am not just pulling things out of my @$$), but these chart the are forward looking statements that represent the outlook based upon my tracking of historical and current rates of adoption. I believe these to be reliably accurate, but use at your own risk.


Both of these charts are generated using the same data. So they are related to each other.

Notes & Observations: If the current adoption rate keeps up…Everything will get really interesting in 9 years…(around 2022)… If the adoption rate increases, things will get really interesting even sooner. The rate that inflation is falling is soon going to SEVERELY pull the price per coin to the upside. Inflation is decreasing at a faster rate than Bitcoin is. At the current rate we will be at 0% inflation in about 12-13 years. In other words, PPCoins are going to become increasingly more rare than many previously thought. This will most probably result in higher demand and market price per coin. At the current rate of adoption, the deflationary aspect of PPC should be able to entirely offset the inflation from the PoS process by the end of year 2021. By the end of 2022 (or 10 years), PoS will overtake PoW in total new coin production.

Comparison to Bitcoin:
IMO: Price should currently be about 20-50% the price of a Bitcoin. :o (It may be wise to save your coins, price could easily jump up soon)
If price does goes up, mining PPC gets more profitable & miners will switch from mining Bitcoin to mining Peercoin.
If more miners switch to mining PPCoin, it will drive the difficulty up even further, and the current adoption rate will increase even faster than the above estimated scenario.

Total Money Supply:
Projection estimates total money supply will find equilibrium at about 35 million coins. (complicated to explain, but the market will likely find a balance at some point between the PoS & PoW inflation and transaction fee deflation, thereby keeping the money supply somewhat fixed.

very interesting, i was wondering this value of 20-50% of bitcoin ppcoin should currently have, do you expect this to be true in 9 years too? some think bitcoin will also go up , say bitcoin is worth $1000, do you think ppcoin will stil be 20-50% of bitcoin value?

it will also be interesting to see how deep the dollar will sink

Can you explain in some detail how you calculated these figures?
I’m interested in your underlying theories of PPC dynamics.

Why do you suppose the price of PPC should be at least 20% of bitcoin price?
That would require a market capitalization for PPC in the same order of magnitude as that of bitcoin. But bitcoin is far ahead of PPC in public acceptance (i.e. webshops accepting BTC, exchanges, etc), so I don’t expect this to happen within the next few months.

Your PoW supply curve apparently anticipates a factor 10000 increase in hash rate over the next 10 years. I think that is possible in principle, but only if many bitcoin miners switch over to PPC and the efficiency of mining continues to improve according to Moore’s law.

I will hopefully be able to expand some more details and analysis as I get free time (hopefully this weekend).
My above analysis could actually be a very very underestimated. I tried to be conservative.
Things may be developing even MUCH faster…like we may be hitting the above crossover points even within 1-2 years.

This is because of one very big variable we have to seriously look at right now…
The speed (or rate) at which the block reward for PoW is declining.
The Peercoin block reward is dropping super fast because it is not tied to a time period (like Bitcoin is at 1/2 every 2 years) but is tied to difficulty (or Moores law) and can compound upon itself really quickly to catch up with Moores Law.
Currently, PPCoin’s block reward is declining at a MUCH faster rate than Bitcoin is.
In the last week the PoW block reward has dropped by at least ~20 coins.
On 13 September 2013 the block reward was 278 coins…and today reward is 258 coins.
(278-258 = 20)
20/278 = 7.19% decline in block reward in 1 week!

If this rate were to continue week upon week for the rest of the year, we will be at a block reward of 6 by this time next year!
RED ALERT! RED ALERT! This is WAAAY FASTER THAN BITCOIN!!!
Bitcoin reward = 1/2 every 2 years.
Peercoin reward is currently reducing at a rate of = 3/139 every year!

To be more conservative, let us just assume the reward declines by only half of this amount per week, which is ~3.5%
A the end of 52 weeks (1 year) we will be down to a block reward of ~45 coins.
Even at this rate…PPCoin’s block reward is declining waaaaay faster than Bitcoin’s rate of decline. If we go 2 years at this rate block reward will be ~7 coins!

If we use this rate (~3.5%) per week, and if we assume a generous 50 PoW blocks generated per day, we get the following curve for the next 52 weeks (year):

PPCoins are and will be getting rarer and rarer, extremely fast. This comparison of block reward rate of decline demonstrates that Peercoin is vastly less inflationary than Bitcoin. When you calculate in Peercoin’s deflation from destroyed transaction fees, it is already deflating the currency by thousands of coins per year already, if the block reward keeps declining at the pace it is… it could be only a year or 2 before Peercoin’s inflation grinds to a complete halt.
This puts a quasi-automatic limit on the total money supply, forcing people to save their coins for ~1 year before trading trading them to offset transaction fees. Otherwise, (if people don’t save) the Total Money Supply Curve will start to turn and we could actually see it go down!

I can and will probably try to chart these scenarios for you later, so you can have a visual :slight_smile:

Basically, in 9 years, 1 PPC could be worth more than 1 Bitcoin, more than $1000. It does need people to understand it, believe in it, and adopt it. We need people to develop applications etc. But primarily, the future outlook of PPC does not tend to look like a good micro-currency, if prices go up transaction costs would be inhibiting, unless done “off blockchain”. I see PPC rather as a good currency to store wealth over the longer term, which requires less applications and development. I agree we could use better charts and videos, animations, explaining PPC to the world though. At this point it there is still a lot of confusion and misunderstanding about how PPC works, how it’s money supply is controlled etc.

when i read it first, i thought bitcoin would be more scarce than gold (and ppcoin would be more close to gold), now it seems ppcoin might be more scarce than bitcoin
never did all of the analyses myself, stupidly i assumed bitcoin would be more scarce than gold , maybe like diamonds are, so ppcoin would be a step below that, but i guess i am wrong about that

Right, but you didn’t address what happens to PPC if the hash rate suddenly plummets, for instance, if there is some economic destabilization unrelated to PPC’s code which causes people to stop mining. Because of the exponential increase in PPC’s reward as hardcoded, if the rapid generation of PPC is large enough won’t the PoS system eventually be compromised by the PoW system?[/quote]

The reduction is reasonably slow, 16x difficulty = 1 halving. Yes the mint rate would pick back up if hash rate drops, but over a period of time it just average out.

As I said, the mint rate design is very low future inflation comparable to bitcoin, but with non-deterministic money supply. It more closely resembles gold actually in my opinion.[/quote]

Unless you think gold is for keynsians too.

Seriously it is designed this way for good reasons. Scarcity is enforced by Moore’s Law. Check PPC’s inflation rate, it is now much lower than LTC. In the first four years both PPC and XPM have stronger scarcity model than BTC. For the long term they still simulate gold better, without the uncertainties surrounding the long term security prospects of BTC’s scarcity model.[/quote]

[quote=“coolbeans94, post:7, topic:362”]If this rate were to continue week upon week for the rest of the year, we will be at a block reward of 6 by this time next year!
RED ALERT! RED ALERT! This is WAAAY FASTER THAN BITCOIN!!![/quote]

Relax, this trend will not continue.
To go from block reward 250 to 6 (factor 40) requires a factor 40[sup]4[/sup] = 2,560,000 increase in hash rate. That is 10 exahash/s or 10000 times the current bitcoin hashrate. It won’t happen in one or two years.

The reason why we see a dramatic increase in PPC hash rate right now is because bitcoin miners are hopping over to PPC and because the transition to ASIC mining is happening. Both trends are temporary.

Most people predict a doubling of computational efficiency every 1.5 years. Assuming that the rate of energy investment stays the same, this leads to an increase in hash rate of 60% per year, which leads to a decrease in block reward of 12% per year. The only way to reduce the block reward faster than that is by investing more resources into mining, and that will only happen if the PPC price increases.

PPCoins are and will be getting rarer and rarer, extremely fast. This comparison of block reward rate of decline demonstrates that Peercoin is vastly [b]less [/b]inflationary than Bitcoin. When you calculate in Peercoin's deflation from destroyed transaction fees, it is already deflating the currency by thousands of coins per year already, if the block reward keeps declining at the pace it is... it could be only a year or 2 before Peercoin's inflation grinds to a complete halt.

This is very interesting. Apparently there is some future time at which transaction fees will destroy more PPC than what is created through minting. (Although I think this will happen on a different time scale.) Indeed, this suggests that PPC is not usable as money in the long term.

That conclusion worries me. It now seems that PPC will never be able to replace bitcoin as a currency. Instead PPC is just some freaky investment game. The only reason why I am interested in PPC is its potential as a digital currency that does not waste huge amounts of energy. But now it looks like PPC does not have much potential as a currency at all. I’m very interested in further insights.

[quote=“singlethread, post:9, topic:362”][…]

This is very interesting. Apparently there is some future time at which transaction fees will destroy more PPC than what is created through minting. (Although I think this will happen on a different time scale.) Indeed, this suggests that PPC is not usable as money in the long term.

That conclusion worries me. It now seems that PPC will never be able to replace bitcoin as a currency. Instead PPC is just some freaky investment game. The only reason why I am interested in PPC is its potential as a digital currency that does not waste huge amounts of energy. But now it looks like PPC does not have much potential as a currency at all. I’m very interested in further insights.[/quote]

no time to relax yet ::slight_smile:

I wished the fee would be made dependent of the PoS difficulty, if possible technically.

fee; difficulty
0.10000000; 0 - <1
0.01000000; 1 - <10
0.00100000; 10 - <100
0.00010000; 100 - <1000
and so on

can we decrease the fee as the price goes up?

if fee stays at 0.01 no matter the price, then ppc will not be a viable currency.

[quote=“whifmoi, post:11, topic:362”]I wished the fee would be made dependent of the PoS difficulty, if possible technically.

fee; difficulty
0.10000000; 0 - <1
0.01000000; 1 - <10
0.00100000; 10 - <100
0.00010000; 100 - <1000
and so on[/quote]

PPCoins are and will be getting rarer and rarer, extremely fast. This comparison of block reward rate of decline demonstrates that Peercoin is vastly [b]less [/b]inflationary than Bitcoin. When you calculate in Peercoin's deflation from destroyed transaction fees, it is already deflating the currency by thousands of coins per year already, if the block reward keeps declining at the pace it is... it could be only a year or 2 before Peercoin's inflation grinds to a complete halt.
This is very interesting. Apparently there is some future time at which transaction fees will destroy more PPC than what is created through minting. (Although I think this will happen on a different time scale.) Indeed, this suggests that PPC is not usable as money in the long term.

That conclusion worries me. It now seems that PPC will never be able to replace bitcoin as a currency. Instead PPC is just some freaky investment game. The only reason why I am interested in PPC is its potential as a digital currency that does not waste huge amounts of energy. But now it looks like PPC does not have much potential as a currency at all. I’m very interested in further insights.

[quote=“teddyb797, post:12, topic:362”]can we decrease the fee as the price goes up?

if fee stays at 0.01 no matter the price, then ppc will not be a viable currency.[/quote]

No, we can’t decrease the fee as the price goes up. The transaction fee is fixed at 0.01 PPC per transaction. It will scale with the price of the coin.

No, it’s not just some freaky investment game…

PPC can be utilized as both an investment or as a currency…it all depends on what the market decides - it follows the free market for supply and demand. The fixed transaction fee should serve to balance the currency out over the long-run. If price goes really high, really fast, then people will save, rather than carelessly use PPC for micro-payments. This will add more inflation over time via PoS. Then eventually, this inflation will catch up, and people will use them once again more for micro-payments. If price remains low, PPC will be used more for micro-payments and this will cause more deflation from transaction fees.
PPCoin is designed to work upon implementation.
It is designed to fall into a balance between use for savings and investment, and use for spending as a common micro-currency.
It will find an equilibrium and balance over the long-term between use as investment or use as a micro-currency.
The currency is designed not to get too inflationary, but also not get too deflationary. It is supposed to work out so that due to free market supply and demand, over time it will be neither inflationary or deflationary, but remain in perfect balance.

It may take some time for a full and stable market for PPC to be fully developed and built up.
PPC has strong potential to serve as a “store of value” long term. If the price goes high, then people will utilize PPC to store large sums of wealth, and utilize other coins such as Bitcoin to do small micro-transactions. PPC is more secure from 51% attack than Bitcoin is long-term, so it makes sense that it will be the Crypto-used for storing wealth, while Bitcoin will only be used for smaller transactions because it carries more risk of 51% attack.

In the future:
Bitcoin (or Primecoin) = used for small transactions (better for small payments, not as good for savings)
PPCoin = used for savings (better long-term, larger payments, better safe-haven like gold)

Bitcoin (or Primecoin) = checking account
PPCoin = savings account

I believe both types of cryptocurrencies compliment each other and both could both be viable, long-term. They solve different problems, fulfill different needs.

Difficulty is going up a lot, following price trend. Things could get interesting.

@coolbeans94

Where is this last chart from?

Free markets do not work with a reasonable regulation. The government is missing this reasonable regulation, therefore cryptos have been evolved with the protocol as a substitution. The government at this time is supporting the superrich only, and we should not repeat this failure.

Take a look onto the blue list of this unregulated market, see it as the proof of my complaint:
http://www.cryptocoincharts.info/
This list does simply mean take the money of the infantile and run away. We should not wonder if this becomes regulated to save people.

[quote=“whifmoi, post:14, topic:362”]Take a look onto the blue list of this unregulated market, see it as the proof of my complaint:
http://www.cryptocoincharts.info/
This list does simply mean take the money of the infantile and run away. We should not wonder if this becomes regulated to save people.[/quote]
I don’t think it is a concern. Cryptocurrency is a new market…it has not had time to mature. So there will be volitility, there will be new coin starts, and failures. People just need to take responsibility for their decisions, and know the risks. Competition breeds excellence. Time will tell, which cryptocurrencies will last. Give it time to work itself out.

My life is based upon confidence, not excellence. Elites and many excellents are destroying lifes for their own profit in these times.

The most excellent of Goldman Sachs, BlackRock and JPMorgan have manipulated the aluminum market. Believe me, there will be no criminal conviction about this, same as all years before. Deutsche Bank and others manipulated the base rates, nobody will go into prison for this. Bangsters are paying the politicians for their decisions, this is the “free market” for financial terrorism.

I wouldn’t say the elites operate a free market. It is a closed market because their regulations gives them loopholes. It favors them. It is not a fair playing field for everyone. The current financial system is a scam because of fractional reserve banking. Take away fractional reserve banking and make it illegal. Take away debt. All of the problems are based on debt. They operate an illusion of a free market, yet they control the regulation so that they are exempt. The regulation should focus on preventing leverage. This is when things get out of balance. Leverage is pure “manipulation” of the free market. Debt is the problem that screws the free market up so that it becomes something it was never intended to do or be. Regulation should focus on preventing the ability to use debt and leverage to influence the market. Leverage is what corrupts the system and is what does not make it “free”, but manipulated and controlled by those who have the power to manufacture money out of nothing. Leverage/debt doesn’t give the free market the chance to do what it is supposed to do.

Getting back to main topic. Let’s take a closer “long-term” look at this again, and compare it to Bitcoin.

In all actuality I don’t see there any cause for alarm, long-term (as far as the block reward decreasing too much too fast).
PPC has actually been designed very well… a lot better than I previously understood in this regard, because we do have to factor this in:

The current PPC hash rate is about 2.2T
The current BTC hash rate is about 1,100.T

If PPC hash rate grew to the size Bitcoin is today, the difficulty would only be halved a little over 2 times.
2.216 = 35.2T
35.2
16 = 563.2T
563.2T*16 = 9,011.2T

So basically,
PPC hash rate needs to grow to 35.2T before the PoW block reward will be 131 coins.
PPC hash rate needs to grow to 563.2T before the PoW block reward will be 65.5 coins.
PPC hash rate needs to grow to 9,011.2T before the PoW block reward will be 32.8 coins. (almost 10x the current Bitcoin network)

So basically the following quotes from some of my previous posts are unsustainable and is unrealistic, namely:

[quote=“coolbeans94, post:7, topic:362”]Currently, PPCoin’s block reward is declining at a MUCH faster rate than Bitcoin is.
In the last week the PoW block reward has dropped by at least ~20 coins.
On 13 September 2013 the block reward was 278 coins…and today reward is 258 coins.
(278-258 = 20)
20/278 = 7.19% decline in block reward in 1 week!

If this rate were to continue week upon week for the rest of the year, we will be at a block reward of 6 by this time next year!
RED ALERT! RED ALERT! This is WAAAY FASTER THAN BITCOIN!!!
Bitcoin reward = 1/2 every 2 years.
Peercoin reward is currently reducing at a rate of = 3/139 every year!

To be more conservative, let us just assume the reward declines by only half of this amount per week, which is ~3.5%
A the end of 52 weeks (1 year) we will be down to a block reward of ~45 coins.
Even at this rate…PPCoin’s block reward is declining waaaaay faster than Bitcoin’s rate of decline. If we go 2 years at this rate block reward will be ~7 coins!

… it could be only a year or 2 before Peercoin’s inflation grinds to a complete halt.[/quote]

So basically, PPC’s 16x increase = 1/2 reward is really good. It really provides stability for the coin.

To recap:
PPC hash rate needs to grow to 35.2T before the PoW block reward will be 131 coins.
PPC hash rate needs to grow to 563.2T before the PoW block reward will be 65.5 coins.
PPC hash rate needs to grow to 9,011.2T before the PoW block reward will be 32.8 coins. (almost 10x the current Bitcoin network)
PPC hash rate needs to grow to 144,179.2T before the PoW block reward will be 16.4 coins.

Do you think these are reasonable curves then?

This means PPC will have more time to be adopted.
This will actually prevent the slashing of the supply too quickly, and shocking the currency. This is good because deflating the currency too fast is actually completely unnecessary…From an economic and sustainability standpoint, it is wise because it prevents PPC from being easily replaceable with dozens of other equally unnecessary altcoins. This ultimately means that if PPC price goes very high, profitability for PoW miners will still be there for longer, because of the 16x increase per halving, makes it take longer to faze out the PoW.

Does anyone have new numbers for the probable coin cap on this? It would be nice to see the different graphs due to the recent jump in interest.

Hey guys, I´m interested in actual graphs on infaltion and total epected coincap. Does anybody have actual ones?