On the discussion thread relating to a change in ticker from PPC to XPC, I referred to this video, and said the text could be updated:
The video’s present script in text format can be found here:
I have worked on the text, and produce the below draft. Sentinel’s “What is Peercoin?” article was very useful in compiling this.
I have found some video slide software, and hope to have a “rough cut” ready by the weekend
Comments welcome
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Bitcoin’s Problem
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The Bitcoin network relies on “Proof of Work” mining to secure its network and confirm transactions.
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Users who mine are rewarded with Bitcoins, providing them with an incentive to secure the network.
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But proof-of-work mining creates increasing demand for powerful computer hardware and electricity to solve computations that rise in complexity.
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This rising computing power has shut ordinary users out of mining and centralised control in ‘mining farms’.
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Proof-of work mining has turned Bitcoin from a decentralized network where anyone can participate, into a network that has centralized control.
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The energy consumed to maintain the Bitcoins network has grown to huge proportions; in 2018, it was equal to the energy consumption of Denmark.
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And the cost of this energy means the cost of Bitcoin transactions must rise to pay the miners.
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Miners must either:
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Increase their fees to cover mining gear and electricity costs, or
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Stop mining altogether.
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If miners: (1) increase their transaction fees, the network loses its competitiveness as a currency.
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But if miners: (2) stop mining, the Bitcoin network will become insecure and be vulnerable to a 51% attack.
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A 51% attack is where a single person or entity gains control of 51% of the mining power, allowing them to reverse transactions, block confirmations, double spend, and perform other attacks.
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Bitcoin is caught between a rock and hard place; mining costs must increase perpetually to prevent the risk of a 51% attack.
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This forever increased need for mining cannot be sustained indefinitely.
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For these reasons, Bitcoin will eventually come to an end.
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Peercoin’s Solution
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Peercoin reconciles the need for blockchain security with low energy consumption
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Like Bitcoin, Peercoin uses Proof-of-Work mining to distribute coins.
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But unlike bitcoin, Peercoin uses “Proof-of-Stake” to secure the blockchain.
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Proof-of-Stake does not rely on mining. It enables people to secure the blockchain by “minting” existing Peercoins - at a low cost
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Users instruct their Peercoin client to mint using the Peercoins they already hold. This secures the blockchain.
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All Proof-of-Stake security needs is enough power to run the client … a standard home computer.
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No mining gear. No high electricity costs.
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Since anyone with Peercoins can mint, Proof-of-Stake allows widespread participation in securing the blockchain.
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Peercoin therefore avoids centralization.
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Minting increases the Peercoin supply by 1% a year, providing mild inflation.
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These new Peercoins are received by minters as an incentive to mint.
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Peercoin does not discard the transaction fee altogether - a nominal fee (0.01 PPC/kb) exists. This prevents unnecessary transaction volume.
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But the fee does not go to miners. Instead, the fee is destroyed.
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This lessens the Peercoin supply and offsets the inflation caused by minting.
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This brings stability to the supply of Peercoin without imposing hard limits.
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Peercoin does not neglect Proof-of-Work mining entirely; it was used to decentralise early distribution of Peercoins, thereby avoiding the need for organised public offerings.
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But Proof-of-Work becomes less significant for the creation of Peercoin as time goes on. It is not used for blockchain security.
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Proof-of-stake security means that Peercoin minters themselves maintain the blockchain, aligning their interests with the security of the blockchain.
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As opposed to Proof-of-Work where miners and coin holders are distinct groups, and therefore represent separate interests.
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Peercoin has been carefully designed with the long-term in mind.
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A blockchain designed to be decentralised, energy efficient and stable.
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To be most secure blockchain at the lowest cost.