Inspired by https://www.reddit.com/r/peercoin/comments/5y6t5r/why_im_buying_ppc_again/ this post is why my interest in Peercoin went away and why it came back.
For what it’s worth…
I first discovered Bitcoin when I was searching for a good trade. Being a computer geek with an academic background, I read the whitepaper. Not knowing who Satoshi was and being totally ignorant of both crypto and the cypherpunks, I dismissed the viability of the “one CPU one vote” as a solution to achieve decentralization. Ignorant as I was, I didn’t realize that this was blasphemy.
But I also understood that mining centralization would emerge over time and wouldn’t present a problem until much later on. Actually I think Satoshi knew that some degree of centralization was un-avoidable and even details his prediction in the whitepaper. In my words, not his, what we can hope for is at best: a federated system. Not a decentralized one. At worst, a single big miner will emerge but bitcoiners wont know about it because it will be kept a secret.
Anyway… if the current financial system of the world worked 100% efficiently and without problems, Bitcoin would be of less interest to me. However that isn’t the case.
Way back in 2012 when I first read the whitepaper, I predicted that bitcoins would be used to escape capital controls and when in times of banking crisis and bail-outs, Bitcoin would emerge as a superior alternative to gold. A few months later the Cyprus bailout occurred and Bitcoin made the news. Seeing my prediction coming true only solidified my view that crypto currency would emerge as the modern way to escape third-party risk, government control and so forth and so on… I also thought that even if the legacy systems didn’t get into bitcoin, system D definitely would. Silk Road being the obvious proof that this is indeed the future for the un-bankable of this world.
BUT… there in lies the conflict…
First: To begin with we have a world that is moving towards what is arguably un-serviceable levels of debt, financial repression as means of dealing with this problem and today we see the cash-less society emerge as means of capturing more taxes and to enforce financial repression in ways that could not even be dreamt of even fifty years ago.
Secondly: It is extremely likely that big PoW Bitcoin mining farms will emerge (Satoshi wrote that himself) and it will be nearly impossible to hide them. You have the chip manufacturing, the power consumption and economies of scale at work here… some argue that in the future the refrigerators and heating devices will be equipped with PoW chips and that way PoW could be decentralized - but I would argue that if this was ever to occur, we would first go through a phase of super centralization.
So what do we got? We got a way to exit from the government (bitcoins) and we got a government that will do everything in their power to stop such means of escape and then we got the Bitcoin blockchained that is being time-stamped by massive mining farms.
It doesn’t take a genius to see that even if BItcoin doesn’t commit suicide on its own, the government would have no problem taking control over the Bitcoin mining. I know there are many ways suggested as to how fix this issue (such as blacklisting, changing PoW, etc) but these all comes with their own set of new problems (mining botnets, chip manufacturing).
What I think will happen is that either A) Bitcoin will be attacked, the price will tank and confidence evaporate together with the viability of the network B) governments will use Bitcoin as a financial weapon against other governments (much like China and Russia is accumulating huge amounts of gold) and the “attacked governments” will have to counter-attack by creating their own mining farms and so forth and so on. If this were to happen a bitcoin would probably be trading for several tens of thousands of dollars and the protocol would be controlled by state run agencies, competing and collaborating with other nations states.
However, the most likely thing to happen I believe is A. Bitcoin will be attacked by a government somewhere and possibly other nation states will join in and try and kill it. I don’t believe that this will happen as long as bitcoins are “cheap”, but if a bitcoin is worth more then $10 000 and keeps moving up in price I think we will see state sponsored attacks. The current “blocksize debate” will be a joke in comparison.
Enter Peercoins… since Peercoin doesn’t require PoW to secure the network (save for the entropy), I see this as the only viable option to Bitcoin. I always thought that Peercoin was a long-play and a bet on Bitcoin failing and I think Bitcoin failing is only a question about time (either it will be co-opted by centralized mining operations first and then attacked by government, or government crack down happens first).
As can be verified by reading my posts here on the forum, this has always been my view and it has only strengthened.
I always also suggested that Peercoin should interface with as many other crypto networks and “IT stuff” as possible. Also, probably THE most important thing is to get as many coins of centralized exchanges as possible - since the peercoins there can be used in an attack. Actually one of my very first posts on the forum, I expressed my concern and it hasn’t changed.
With the advent of TumbleBit (check lock time verify + payments channels) atomic cross-blockchain transactions are possible. Decentralized crypto trading just might be possible and have low fees - if this is possible I think it’s important that it happens and that Peercoins is a part of it. These kinds of technologies (TumbleBit and Lightning Network) offers the same benefits as Open Transactions (that I always thought would be a good match for Peercoin) BUT with added bonus such as increased privacy etc - which are very important if Peercoin is going to be en exit from financial repression and government crack downs.
Anyway… much of what I’ve been predicting (crypto as means of escaping inflation, wallet+coinservices such as Exodus and much much more) has been proven correct. The PoW problems in Bitcoin is starting to emerge and wel… since my track-record has been so good I can’t help thinking that the rest of it will come true as well. I also predicted that NuBits would die and when I saw the brain-drain effect it had on Peercoin and its price, I had to sell all my peercoins. BUT it’s also clear to me know, that the people involved today are driven by more then only capital gains and for the most part seems to share my vision of what the futures has in store for both Peercoin and for the future of crypto. I’m feeling bullish again.
My only regret is that I don’t have enough time on my hands to do some actual programing. Hopefully that will change in year to come.
Anyway… just my thoughts and my take on it.