What is Peercoin? (in light of NuBits)

NuBits is a DAC = Decentralized Autonomous Corporation, offering shares that rewards its holders with dividends
taken from the proceedings of the economical VALUE it produces, as a service. Namely, selling a currency whose nominal value is stable against the USD.

Now, Peercoin - Peercoin is a network of nodes and minters that generate tokens called PPC, either by PoS or PoW.
Why should that token (PPC) have any value in the 1st place?

The value of PPC can be measured in USD or other currencies, because of the demand for Peercoin. As the supply can’t be created except for the PoS and the PoW process of Peercoin, the price needs to reflect that.
But I think you might have had something different in mind…

Basically it’s like asking:
Why does Bitcoin have any value?
Why does gold have any value?
Why do USD have any value?

The other part of the answer I’d like to give is:
because things that can be used to trade, exchange, buy, sell, store have a value, if they are (sufficiently) accepted and can be carried or stored more easy than 1 cow, half a house or 12 hamburgers - if you know what I mean :wink:

I tend to agree with Vitalik Buterin’s view here:

I think we'll end up seeing a highly complicated multichain setup where chains follow a power law distribution in size, with dapps that need to talk to each other a lot congregating on a few chains, and things that are mostly standalone being separate, but with inter-chain linkages for communication/trade when needed.

(As another point, at ethereum we generally don’t see blockchains as being financial tools exclusively; they’re more like decentralized computers that people run services on

Peercoin’s mature and efficient network is more interesting than its tokens (the coins).

I believe so too. What is particularly interesting with Peercoin is the fact it “informatizes” the mining aspect of bitcoin or “softwarizes” it so to speak, so that its security becomes “code” instead of “heat” to put things simple.
Now, it is easy to build things on top of it since it would amount to “traditional” software engineering.
Still, the financial part will remain.
I bet that the value of peercoin would be derived from the usefulness of the tools created on top of it or the services using it.
We can see it already with Nu.
Nu uses peercoin as a dividend transfer instrument.
If dividends increase, the demand for peercoin will increase, increasing its price.
Here peercoin is used as a way to quantify a reward.

So peercoin is software and at the same time a commodity used to quantify a reward produced or by extension a value output within an ecosystem using it.
What is the difference with bitcoin?
Well as bitcoin’s security is very expensive to maintain, it is not worth building things on top of it or building services using it because it is not sustainable. Therefore no sustainable ecosystems centered around bitcoin can exist.
So the value derived from it is thin. Therefore the demand for bitcoin in order to quantify that value is thin.

So peercoin or bitcoin are tokens used to quantify the value produced by the ecosystems using them.

Thanks MoD, mhps and cryptog for your insights -

In the mean time, tomjoad from the nubits community today on peercoin:

“I would hope that our community realizes that Peercoin is failing (as far as price is concerned) because it has no true value proposition, not the lack of someone aggressively speaking about it. PPC does not store value reliably, it no longer has the benefit of being the only PoS implementation, and its community spends more time talking about potential projects than actually implementing them. As the Nu ecosystem grows I expect that many other projects and leaders (such as Ronny at CCEDK) will be speaking about the advantages they’ve found by using NuBits.”

Nu has its battles to fight against peer stable currencies.

Don’t put all eggs in one basket.

I just wanted to repost this, since it’s relevant for this thread too…

PPC does not store value reliably

Peercoin stores value in a more sustainable way compared with proof-of-work, but Tomjoad is right that Peercoin doesn’t store value reliably in a price stable way. That’s what NuBits is for. But maybe this is the way it’s supposed to be though. Maybe Peercoin was never meant to be money or a day to day transactional currency? Bitcoin has always tried to be a currency, but this will never happen as long as it has its volatility. NuBits could end up taking over the currency role from Bitcoin in the future.

Peercoin supporters also originally thought Peercoin was supposed to be a currency in the very beginning, but then that viewpoint slowly changed over time. At first people wondered how Peercoin could be used as a day to day currency because of the fixed transaction fee. The fee would prevent microtransactions. We finally realized that off-chain networks like Open Transactions could allow us to bypass the fee and it was something that Sunny hinted at in his interviews.

That answer satisfied us for a while until the release of NuBits, when we all realized how unlike a currency Peercoin really was. Sure, we could still use OT to bypass the fee, but why use Peercoin as a transactional currency or store your money in it if it sways in price? You can’t store money in something that is volatile. Sure, proof-of-stake will ensure that your money is always stored securely and in a sustainable way, but how much will the value of that money change by the time you go to retrieve it? Because of this, I don’t think many people believe that Peercoin is destined to be a currency anymore.

So without the currency role, what is Peercoin good for? That’s the $1 billion dollar question! I sure wish Sunny would chime in on this. Maybe the answer lies in building things on top of Peercoin through sidechains? In this way, Peercoin would become similar to NuShares I think. The NuShares blockchain is like a backbone from which pegged currencies and other assets can be built on top of. The value of the entire NuShares network and everything built on top of it (all currencies & assets) is displayed in the price of individual NuShares.

Owning Peercoin would be similar to owning shares in the network. Peercoin would be the backbone of the network, while all the exciting stuff gets built on top of it in the form of sidechains. Sidechains would prevent the main blockchain from growing too much in size, unlike the NuShares blockchain where everything is under one chain. With more useful things being built into Peercoin sidechains that satisfies different needs, the value of the network itself will rise and that will be displayed through the rising price of individual Peercoins.

I’m basically just throwing out ideas here. I’m not totally sure how all this would work, but it should give Peercoin its own purpose outside of the currency role.

I think many people are realizing this. Progresses (if technically obscure) have been made in this direction such as OP_RETURN and ppcd by the developers.

An advantage of peercoin is that it is similar to bitcoin except for the POS part. For better or for worse peercoin is The POS Version of Bitcoin. Many features made on top of the bitcoin network can be relatively easily ported to peercoin. This cannot be said on other POS coins such as nxt.[/quote]

I don’t want to go into a technically detailed comparison between Nu and Peercoin.
To me Peercoin seems like a kind of protocol; not only a backbone currency, but a background currency as well.
I’ve already made that comparison in another thread: Peercoin is like the TCP/IP of crypto currencies.
Nu is a corporation. NuBits is an offer to a demand. Nu is built on Peercoin technology. This technology has been altered to suit the needs of Nu.
Nu is required to be economically successful to have a purpose.
Peercoin is required to be used to have a purpose.
I expect Peercoin to be the centre of several side chain concepts, concepts which replicate systems and services that are needed, but so far only centralized available.
Emercoin can give you an example in which direction this may head: decentralized DNS. You may say: we already have that with Namecoin. Right, but based on PoW. Emercoin is a Peercoin fork and hence secured by PoS. Emercoin also offers a decentralized PKI.
But all of that is in the Emercoin block chain so far. I think these kinds of concepts will be created as side chains for Peercoin as well.
The way to create them might be based on Counterparty, Peershares or something else. I expect to see DACs resembling services that are needed for using the internet.

And Peercoin has a good chance to be what that will be based on.

Because Peercoin is secure and sustainable and running for over 2 years already!

When Peercoin is ‘just’ the TCP/IP of the crypto world (and I think that could be true) it would be hard to make it economically viable without building services on top of it.
Others cloning Peercoin are building those services in an effort to increase the value of their tokens which they would likely own themselves. The question is why are those services not directly build on Peercoin?

Probably because people would have to buy a lot of coins first before they can get a stake in the coin. That is a risky proposition and less attractive than starting your own coin and ignore all those existing holders which are also tend to be relatively inactive or wary of new services. The NuBits model is better build for that with the Shares. A new Peercoin specific service might also have to look at Peershares to make it viable in order to get a large share of the benefits from the new services directly in the hands of those who invested in the service (see also my Peercoin CounterParty business model in another thread).

One thing is sure, Peercoin need to be economically viable otherwise people would slow down minting and mining and with that the blockchain slowly weakens. I think we can’t only rely on volunteers minting, there has to be an economic incentive… which is a relative stable or rising value of Peercoin.

The current business model SunnyKing build into the Peercoin protocol are the transaction fees. The question is whether that is enough to keep Peercoin viable in the long run. It also likely requires more transactions and a growing blockchain. Looks we are facing some choices, hopefully sidechains bring along new business models.

Here’s an incentive suggestion that’ll be brought with cold minting: P2P decentralized minting pool (which rewards anyone who’s actively minting with other people’s coins)


  • Receive “minting rewards” more often.
    - Provides an incentive to non-Peercoin holders to be rewarded to help strengthen the security of the blockchain by minting coins (even if these are not their coins) and have more active nodes on the network.
  • Helps against attacks whose purpose would be to weaken the security of the blockchain by targeting and shutting down minting pools.
  • Adjusts and helps the inequality of PoS rewards between rich and poor coin holders
  • Gets more people involved into Peercoin “for free”.[/quote]

[quote=“Cybnate, post:10, topic:3215”][…]
Others cloning Peercoin are building those services in an effort to increase the value of their tokens which they would likely own themselves. The question is why are those services not directly build on Peercoin?

I can tell you why it is beneficial to build those services on Peercoin:

[quote=“masterOfDisaster, post:9, topic:3215”][…]
Because Peercoin is secure and sustainable and running for over 2 years already![/quote]

That can be of utter importance when trying to bootstrap a business!

In what sense? chains are independent

Nu is already securing a chain within itself - we could imagine it would have sidechains in the future

Nu could take this role too, potentially- any objection?

In what sense? chains are independent[/quote]

The chains are, the technology isn’t.

Nu is based on Peershares.
Peershares are based on Peercoin.
Peercoin is based on Bitcoin.
Each adaption made adjustments to be better suited for the intended use than the predecessor.

I invite you to have a look at that discussion: https://discuss.nubits.com/t/on-silos-by-vitalik-buterin-ethereum-team-how-does-nu-position-itself/1023
and in particular to the graph.

Cybnate and desrever suggest that NuBit could have sidechain or implement many other functions, including: contracts, identity, data storage etc.

Nu could take this role too, potentially- any objection?[/quote]

While Nu could take this role, Peercoin has some big advantages over Nu for being the backbone of these solutions.

[ul][li]Peercoin is an established player in the crypto currency world[/li]
[li]Peercoin is not (and will likely not become) dependent on side chain solutions (while the side chains are dependent on Peercoin); read: Peercoin will not (necessarily) fail if a side chain fails[/li]
[li]Nu is dependent on the success of its products (just imagine what would happen to Nu if NuBits failed…)[/li]
[li]I expect sustaining Peercoin easier than sustaining Nu (in terms of speculation on price development you might be better off at Nu; the possibly higher gain comes at a higher risk, though…)[/li]
[li]To dwell on the TCP/IP analogy: why create something new if you can rely on something established?[/li]
[li]Peercoin’s development might appear slow compared to other crypto coins (including Nu), but that is mainly due to the fact that all about its development is about being secure and sustainable; Peercoin cares for itself[/li][/ul]

I think Nu has a lot of chances to do important and great things.
But I expect Peercoin more like a safe harbor if you need something you can rely on.
Peercoin is quite simple compared to Nu. It’s just there, being fine and being well-maintained.

If you expect solutions provided by Nu to fulfill services that might be implemented as side chain for Peercoin, you need to be aware that these will be other products of Nu. They will be controlled by Nu. They will succeed and fail together with Nu.
Repeating myself I’d like to say (again) that I consider Peercoin the more established concept.
Side chains for Nu is no feasible concept as side chains can be sent to hell by nothing more than a motion of the NuShares holders, who don’t like to share that business with the side chain.

Do you remember http://www.coindesk.com/developers-battle-bitcoin-block-chain/ ?
You might perceive it as you like - these kinds of changes can be used to “defend” against whatever feels threatening.

Thanks MoD for your elaborate answer.
Perhaps that converges with how peercoin and nu are positioned in this graph:

(source: https://blog.ethereum.org/2014/12/31/silos/)

Nu being a DAC is placed on layer 5.
Peercoin is an independent chain, and so is placed on layer 0.

A clear use-case of peercoin at least: Distribution vehicle for NuShares’ dividends.