What is PPCoin?

PPCoin is an alternative cryptocurrency based on Bitcoin which was released on August 12, 2012. It is the first known implementation of a combined Proof of Stake/Proof of Work system.

As of April 14, 2013, PPCoin had a market cap of 29323 BTC (USD $2,932,300 equivalent), trailing the market cap of Bitcoin, Litecoin, and Namecoin.

Differences from Bitcoin

Proof of Stake

PPCoin’s major difference from Bitcoin is that it uses a proof-of-stake/proof-of-work hybrid system for coin generation. With this system, coins are generated based on proof-of-stake blocks in addition to proof-of-work blocks. Proof-of-stake block generation is based on coins held by individuals. In other words, someone holding 1% of the currency will generate 1% of all proof-of-stake coin blocks.

Potential for Increased Security

Proof-of-stake block generation could reduce the risk of 51% attacks for at least two reasons. First, the cost of acquiring 51% of all stake could in theory be much higher than the cost of acquiring 51% of all mining power, thus raising the cost of attack. Second, in a 51% stake attack the attacker’s investment would be directly at risk of losing value. By contrast, with a 51% mining attack the attacker would still own the mining hardware which could either be sold or used to mine a different cryptocurrency following the attack.

Energy Efficiency

Proof-of-stake blocks require minimal energy consumption. Thus, with PPCoin energy consumption would decrease over time as proof-of-work blocks become less rewarding and coin generation becomes increasingly based on proof-of-stake block generation.

Criticism

Centralized Checkpointing

At present, PPCoin is technically not decentralized as it still requires centralized checkpointing. This is to defend the network until it matures, enabling “a smooth upgrade path if critical vulnerability is found” during its growth period.[2] The developer has noted that based on trends of increasing market acceptance of PPCoin, centralized checkpointing is likely to be phased out later this year.

Premining

There have been some concerns that PPCoin may have been pre-mined. However, this does not appear to be the case, as an examination of the block explorer shows that the first block was mined at 18:19:16 UTC, whereas the coin software was released to the public at 17:57:38 UTC.

Release Protocol

It has been noted that the release of PPCoin did not follow the Alt-chain release RFC, which could have given early adopters a potentially unfair advantage. For example, the official announcement thread for PPCoin was posted two hours after the first block was mined. However, it should be noted that the release was first announced in a pre-release thread 9 days before mining began, and released in that same thread before the first block was mined.[8] Moreover, other efforts were also made to ensure fairness, such as a higher starting difficulty (256) to reduce the initial rush. Compared with other altcoin releases, PPCoin’s release can be considered fair. Litecoin, for example, was released with 4 days advance notice, a starting difficulty of 0, and two pre-mined blocks.

PPCoin is a cryptocurrency which is forked from bitcoin. PPCoin aims to achieve high energy-efficiency while keeping as much as the official Bitcoin properties as possible.

PPCoin works with Stake/Proof-of-Stake, this is a term referring to the use of the currency itself to achieve certain goals. PPCoin uses proof-of-stake to provide minting and transaction processing of place of proof-of-work. Unlike Bitcoin ppcoin does not require the use of energy to sustain the network. Proof-of-work currently remains the most practical way of providing initial minting of a cryptocurrency so it was decided to keep it as part of the hybrid design.

Untill v0.2, central checkpointing was a critical part of the protocol. The main purpose of this is to defend the network during the growth period and to ensure a smooth upgrade path if any critical vulnerabilities are found. Central checkpointing will slowly be weakened and should eventually removed from the coin.

Unlike Bitcoin there is no hard cap on the amount of coins that will be created. Bitcoin is limited to 21 million coins where PPCoin only has a hard cap of 2 billion coin in the code. There is no intention to limit the amount of coins that can be generated.

PPCoin mining

PPCoin is mined in the same way as Bitcoin. However merged mining is not available at the moment due to the differences in the block chains. It can be made possible if the block chain would be altered but if this is done, PPCoin is no different from Bitcoin. PPC would most likely be discarded by the community if the merged mining would start.

Just like bitcoin, it is exchanged through Peer to Peer networking (P2P), has its own blockchain, however there is a new addition to the Proof of Work generation of coins; this being Proof of Stake. Proof of Stake works alongside Proof of Work in the generation of coins, and provides most of the network security. Proof-of-stake is based on coin age and generated by each node via a hashing scheme bearing similarity to Bitcoin’s but over limited search space. This leads to the long term prospect of the Proof of Stake doing most of the work and hence only relies on the coin being in online wallets, as opposed to GPU, FPGA and ASIC farms eating up masses of electricity just to keep the network secure in many years to come. PPCoin is touted to be the only current long term energy efficient currency.

Some other variations on the code

The proof-of-work mint rate to be not determined by block height (time) but instead determined by difficulty, that is mining difficulty goes up, proof-of-work mint rate is lowered. PPCoin destroys transaction fees

History

PPCoin was launched by Sunny King and Scott Nadal on August 19th, 2012 where they wrote this white paper http://www.ppcoin.org/static/ppcoin-paper.pdf and started the PPCoin blockchain. Stats / graphs for the history of the mint, difficulty and value pretty much since day 1 can all be found here http://www.proofofstake.com/

source: https://en.bitcoin.it/wiki/PPCoin and http://cryptocur.com/ppcoin-ppc/ and http://devtome.com/doku.php?id=ppcoin

What is PPCoin?