Author: Norah Amboko

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Peercoin

What is Peercoin?

Peercoin (short form PPC) is a peer2peer cryptocurrency that uses both proof of work (PoW) and proof-of-stake (PoS) consensus algorithms. The cryptocurrency is premised on a paper released by Sunny King and Scott Nadal on August 2012. Note that Sunny King is a pseudo name that was also involved in the creation of another coin referred to as Primecoin. But the other Peercoin founder, Nadal, diminished in 2013.

Peercoin creation was largely inspired by Bitcoin and, therefore, has a lot in common when it comes to the source code as well as technical implementation. The code of the network is issued and distributed under the MIT/X11 open license. However, it features some fundamental differences from Bitcoin and other similar coins such as Litecoin and Namecoin. For example, it does not have a hard limit on the coins, though it is designed to achieve inflation of 1% per year.

What is the problem that Peercoin Solves?

Since the inception and introduction of Bitcoin by Satoshi Nakamoto, the main consensus model in the industry has been proof of work (PoW) algorithm. However, this algorithm opens serious flaws in the industry including the following.

(i)   Centralization of mining

Use of proof of work (PoW) protocol at Bitcoin and other cryptocurrencies meant that only those who could manage the ever-growing hashing power could mine the coins. Things moved from bad to worse as expensive ASIC mining equipment hit the market. Most of the common miners for proof of work (PoW) based cryptocurrencies were edged out as mining pools and those who could afford the expensive equipment took center stage. The idea of decentralization that Satoshi wanted to advance was being pushed away.

(ii) Higher security risks

With centralization taking over in most proof or work cryptocurrencies, related security threats also became predominant. The commonest of these risks was the threat of 51% attack. This is a threat where more than 51% of tokens for a cryptocurrency are held by one party or mining pool. In such cases, the controlling party takes full control and could decide to harm the network.

(iii) High energy costs

Proof of Work (PoW) algorithm model used at Bitcoin and other coins is highly energy intensive. The respective nodes have to work against an ever-growing complex algorithm to mine blocks and earn native coins. The high cost of energy has brought to fore the argument on whether mining makes sense in the light of the high energy costs. In the Peercoin whitepaper, the founders ask the question; must miners maintain energy to run a decentralized cryptocurrency?

How does Peercoin Solve the problem?

To address the above issues, the Peercoin founders discovered the concept of coin age. This concept simply denotes currency amount times holding period. Take the example of Johann who received 20 Peercoins from Dennis, and held them for 60 days. The founders argued that Johann accumulated 1200 coin-days of coin age. Therefore, when Johann spends the 20 Peercoins, the coin age has been destroyed/ consumed.

The new concept (Coin age) made the team dig deeper and come up with an alternative consensus protocol referred to as proof-of-stake (PoS). They decided to implement the proof of work (PoW) and proof of Stake (PoS) together.

1)   The application of hybrid model of PoW and PoS consensus models

  • The application of coin age to strengthen the Peercoin model

The proof of work algorithm in the Peercoin is used to facilitate spreading of the distribution of new coins. However, PoS is used to help secure the network and prevent it from mining-related attacks. Remember that since Peercoin still utilizes the SHA-256 hashing model, you can also mine it with common Bitcoin mining rigs.

The Proof of Stake (PoS) notion implies having some form or ownership in the network. This means holding a significant amount of peercoins. At Peercoin, the Coin age consumed when a transaction is completed is considered part of the stake. The philosophy of stake was meant to help strengthen the monetary system and preventing it from forgery.

  • Block generation using proof of stake (PoS)

In the Peercoin’s hybrid model, the blocks are separated; proof of work blocks and proof of stake blocks. The proof of work (PoW) blocks are generated pretty the same way it happens in other POW platforms such as Bitcoin. You have to use the computer’s hashing power to solve a complex mathematical puzzle to find and add new blocks into the public ledger. But using PoS is a little different.

Proof of stake in the new design blocks is a different type of transaction referred to as Coinstake. In this model, the transaction block owner is required to pay. This implies that he has to consume his coin age in order to generate a new block. The first input is referred to as Kernel and it is aimed at helping to make the proof of stake (PoS) blocks as similar as possible to those generated via proof of work method. However, it is important to appreciate that in the PoS model, hashing is implemented over a very limited search space compared to the unlimited search space in PoW. This implies that there will be no significant consumption of energy when using PoS.

The hash target that each stake kernel is required to meet is only a target per unit coin age consumed in every kernel. This is a major contract from the PoW model used in top networks such as Bitcoin where nodes have to meet a specific (fixed) target value. This implies that the more the coin age that gets consumed in a kernel, the higher the chances of hitting the target protocol.

It is important to also appreciate that in both the PoW and PoS protocol application systems at Peercoins, the hash rates (mining difficulties) are adjusted continuously as opposed to a fixed period of time. For example, Bitcoin has a set hash rate adjustment interval of two weeks which opens the gateway to a sudden network generation rate when a miner/s discovers the hashing rate.

2)    The Peercoin’s protocol shift to reliance on consumed coin age

The protocol that determines the competing block that wins to become the main chain in Peercoin was changed to use consumed coin age. What this implies is that proof of stake was expanded to encourage nodes to use the native coins more. Therefore, the transactions in every block help to contribute to the overall consumed age. Then, the blockchain that has the highest total coin age is selected as the main chain. This model differs from the PoW application where the main chain is determined primarily on the work done.

What makes Peercoin better than it’s competitors?

  • By employing the PoS protocol, the Peercoin system is less susceptible to 51% attack. This makes the network safer because an attacker would have to struggle and own more than 51% of the entire coin age of the total Peercoins. Whether you are mining the network or simply holding the tokens waiting for the price to shoot up, this is one network that provides high security.
  • The average transaction charges at Peercoin are relatively lower compared to other networks. Take a random example such as mid-2018. The average cost of transactions in Bitcoin was $1.20, Ethereum was $0.28, and Bitcoin Cash was $0.076. However, transactions on the Peercoin only attracted a small fee of $0.034. This has been cited as a major reason for the large inflow of users even from other networks.
  • The Peercoin development team progressively researches the blockchain technology to take the industry to the next level. For example, the development team hinted at the possibility of introducing a new consensus protocol referred to as proof-of-excellence. If the new protocol comes to fruition, it implies that tournaments will be held occasionally to mint coins depending on the performance of participants in the competition. It mimics live tournaments in standard sports competition. This is an indication that Peercoin is likely to grow even better in future.
  • The Peercoin has continued to grow progressively and delivering a high return on investment. Between May 2013 when the price of Peercoin was $0.11 and mid-June 2018, investors experienced a growth of more than 1200% ROI (Return on Investment). This is huge ROI at a time when many cryptocurrencies have been struggling to survive.
  • Application of proof of work protocol alone would imply that when the mint rate is tending zero, the incentives to mine goes very low. This could make the miners to completely stop mining and risking the network. However, Peercoin is better than others because even if such disincentives hit the network, the proof of stake would still protect the network.

How can Peercoin be categorized?

Peercoin is one of the most important cryptocurrencies that have helped redefine the blockchain sector. With its founders being the first to discover the concept of proof of stake that has become so crucial in the industry, people can only expect better things. But this is not all. The cryptocurrency network also demonstrated that the current technologies do not have to be thrown away when crafting something newer.

  • It demonstrated the ability to use proof of work together with proof of stake algorithms.
  • The founders demonstrated that proof of work can also be improved to deliver better results.
  • Their suggestion for better technologies such as the proof of excellence demonstrates that people should indeed expect more from the platform and its development team.

What’s Peercoin’s vision on Security?

The Peercoins vision for security is to become the most secure blockchain network in the market. At this point, it is important to note that Bitcoin and other early blockchain networks were faced with serious security threats. For example, Bitcoin suffered the worst attack when a bug known as Number overflow error was planted by an attacker in 2010. Other serious security threats of the time included the hack at Mt. Gox and the Silk Road Scandal. All these lapses made Peercoin developers work harder to keeping the network more secure.

  • Proof of stake protocol was designed to help with better distribution of Peercoins and avoid the threat of 51% attack.
  • Advanced encryption is applied in the platform to help keep the details of users and their accounts as private as possible. Even when miners follow back the network, they can only pull out balances in the respective public addresses as opposed to personal details.
  • Checkpoints, though heavily contested, were crucial in helping to help solidify the Peercoin’s history. They are used to reduce the danger and lower risks associated with double spend.
  • The Peercoin system also applies the duplicate protocol to help protect the system from the proof of stake getting copied by attackers. Every node in the Peercoin system collects a pair of all coinstake transactions that it has seen. Therefore, when the node notes a block with a duplicate, it is ignored.

Examples of Peercoin’s use cases / applications.

  • Sending value on the Peercoin network on a peer2peer basis.
  • Mining the network to earn Peercoins.
  • Trading Peercoins in the cryptocurrency markets.
  • Investing and saving on the network. Many people opt to buy the native coins and hold them waiting for the price to grow over time.
  • You can opt to use Peercoins directly on the stores that accept them. These include VerbenaProducts.com, 1eo.us, and Vintage furniture. Others are WoodShotGlass, Cryptoart, and CryptoTotal.com.
  • If you want to trade Peercoins in the markets, you can also use the native coins to pay the transaction fee.
  • Buying and holding the Peercoins can also help you to increase your coin age and raise the chances of getting selected to mint the next block.

 

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Nexus

What is Nexus?

Nexus is a decentralized computer network created in 2014 to help improve security, scalability, and blockchain protocols accessibility. The Nexus idea is derived from the term Nexus which implies connecting two or more things. Nexus also has its own native coin referred to as Nexus (NXS). The founder of Nexus is Colin Cantrell, the son of Jim Cantrell of Space X fame.

Unlike other cryptocurrencies such as Bitcoin and Ethereum that have fixed coin supply, Nexus is different. There is no cap on the total NXS to be minted. Instead, Nexus is following a ten-year distribution plan where 78 million NXS will be distributed.

The ten year period ends on 23rd September 2024. Once this time lapses, the NXS supply will inflate annually by a maximum of 3% via the holding channel and additional 1% via the hashing and prime channels.

What is the problem that Nexus Solves?

The society is fast gravitating towards decentralized types of governance. This type of operation was demonstrated to be possible by the first blockchains network, Bitcoin by Satoshi Nakamoto. While the idea is noble and has been demonstrated to solve many issues that had refused to go away such as big data, it has been held hostage by serious bottlenecks. Here are some of the main issues that most blockchain networks face and that Nexus was designed to address.

  • Scalability: As more people come to the blockchain systems to reap associated benefits, most of the networks are easily getting overwhelmed. This has resulted in massive inefficiencies and even rising cost of transactions. At Bitcoin, the system can only handle one block every ten minutes which translates to about 60 transactions per second. Even the second highest placed blockchain network, Ethereum, can only handle about 15 transactions per second. These figures are dwarfed so much by financial transaction leaders such as Visa that can handle up to 45,000 transactions per second.
  • Security: Every person joining the blockchain industry rarely feels completely secure. Some blockchains such as Ethereum and Bitcoin Gold have been victims of attacks and huge losses as hackers up their games. Other security issues include sole reliance on a public ledger, the risk of 51% attacks especially for those using POW (Proof of Work) consensus, and politics of execution.
  • Protocols accessibility: Even as blockchain technology gains speed, accessibility, especially for people away from major cities, is a big issue. The poor accessibility now acts as a serious bottleneck threatening adoption, application, and success of blockchain technology.

How does Nexus Solve the problem?

To address the outlined problems and help with faster adoption of blockchain network, Nexus uses quantum resistant 3D blockchain with space satellites.

When this is combined with the native Nexus coin (NXS), the Nexus founder, Colin Cantrell and his development team, want to decentralize the decentralization (taking decentralization completely free from mining pool monopolies and governments).

  1. Three-dimensional chains

Nexus employs not one or two, but three consensus mechanism to create and drive its unique three-dimensional blockchain. This system helps reduce the issue of mining centralization and promote on-chain scaling.

  • The prime channel: This is a proof-of-work channel where miners are required to search for 308-digit Dense Prime Clusters. This form of mining is more ASIC resistant compared to traditional hashing models. It implies that even those with strong CPUs can still mine Nexus.
  • The hashing channel: This is another proof-of-work channel that utilizes Hashcash as opposed to Dense Prime Clusters. It closely resembles the mining used in Bitcoin but differs slightly because miners look for Nsha-3 (with Skein) while those in Bitcoin look for SHA-256. The Nexus block hashes are better because it is 4 times the block hashes of Bitcoin. Users can use GPU to mine this channel.
  • Proof-of-Holding: This protocol is used as a method of securing the network. It is the same as proof-of-stake such as the one used at NEO. What this implies is that you earn some Nexus coins by simply holding a stake in the network. What will determine the amount of the reward for staking Nexus include interest rate, block weight, trust weight, and stake weight.

To further decentralize the operations, Nexus uses a three-pronged distributed telecommunication system.

  • The Mesh Networks: Since Nexus utilizes 3 different mining systems, it implies that almost any person in the globe can indeed run a node and help in securing the network. The nodes in the entire network work together to help solve every block as opposed to competing. Nexus is also working on producing antennas that can help nodes run locally based networks.
  • Cube satellites: Nexus partnered with Vector Space Systems to design LEO (Low Earth Orbit) satellite network of nodes. These, together with the ground mesh network will host the mesh network and the decentralized applications (DApps).
  • The Ground Stations: These stations connect with the Nexus mesh networks and run the downlink/uplink operations. These are things such as address endpoint route defining and caching. The ground stations also operate own instances of Daemon.

What makes Nexus better than it’s competitors?

Nexus is one of the most ambitious blockchain projects in the market today. Its design and operations have set it far apart from peers. Most technologies such as the use of side-chains and decentralized applications that are considered latest additions by other networks had already been figured out by Nexus team back in 2014. Here are other things that make it better than competitors.

  • The growth of Nexus has defied myriads of factors in the industry to deliver huge ROI (return on investment) to investors. For example, a person who invested in Nexus June 2015 when the price was $0.001 enjoyed a mammoth growth of more than 249,000% early June 2018. Most of the other cryptocurrencies reported negative growth or very limited ROI during the same period.
  • Unlike other cryptocurrencies such as Bitcoin, Ethereum, and Bitcoin Cash among others that have a fixed quantity of tokens, Nexus will continue releasing new coins even after the initial 78 million NXS enter the circulation. This will help the network to cater for losses from people who lose their tokens and others who drop off without returning the coins to the network.
  • The platform has a clear system of reaching every user across the globe. By employing various mining models, and the Nexus hardware, it implies that more people including those with standard CPUs can now mine the network and participate in its governance.
  • The Nexus transaction requires a total of 6 confirmations. This sets it apart from most blockchain networks that only require one confirmation before funds or other transactions are completed on the network.
  • Though the Nexus platform charges a fee, they have indicated that sending value on the network will be free once the initial ten years after launch are completed. This will make it even easier for users to send funds across the globe.

How can Nexus be categorized?

Nexus can be categorized as a truly decentralized network that will define the next generation blockchain application. While the value of NXS has not grown fast enough to rival Bitcoin or even Ethereum, the underlying technology tells a different story. But it is its focus on decentralization that has made more people keep trooping to there. Here are the main things that make Nexus the most decentralized network in the market.

  • The three channels chain model makes it easy for anyone with interest in blockchain to join and participate in consensus building.
  • By including the proof-of-holding protocol, it implies that even those who do not want to get involved in complex computational mathematics can still get rewarded by simply holding some stake.
  • The design of Nexus makes it a perfect model for empowering the nodes. For example, the ground stations allow nodes on the network to even run their own instances of Daemon.

Nexus’s vision on Security?

One of the primary concerns for the Nexus team was how to guarantee optimal security for users in the network. Being launched at a time when huge losses via attacks on Mt.Gox and Silk Scandal among others were shaking the blockchain network, a reliable solution had to be sought. The Nexus adopted the following methods of securing the network.

(i)    Use of larger keys to address the risk of brute force attacks

One thing that Nexus team appreciated when working on the platform was that most algorithms in the blockchain network can be violated by brute force attacks. In most of the networks, the minimum recommended key length is 224 bits for the Standard Elliptic Curve algorithm. For example, Bitcoin uses 256 key length which is longer than the 224 bits requirement. Now, Nexus has opted for different elliptic curve parameters as well as varied hashing algorithms. Longer keys that are twice as the recommended length imply that a quantum computer will require four times longer to find. Here is the comparison of a Bitcoin and Nexus private keys.

  • Bitcoin private keys:

5Kb8kLf9zgWQnogidDA76MzPL6TsZZY36hWXMssSzNydYXYB9KF

  • Nexus private keys: 6Wuiv513R18o5cRpwNSCfT7xs9tniHHN5Lb3AMs58vkVxsQdL4atHTFVt5TNT9himnCMmnbjbCPxgxhSTDE5iAzCZ3LhJFm7L9rCFroYoqz

(ii)  Protection from side channel attacks

As indicated earlier, Bitcoin utilizes the 256-bit Secp256k1 elliptic curve domain parameters. These are outlined in the Standards for Efficient Cryptography. What this implies is that the Bitcoin Private keys can be generated following the same classical computer in less than 200 signatures (ECC already leaks private keys classically with side channel).

In addition to adopting set571r1 (571 bits), Nexus has opted to implement keys with different curves. They have also committed to adding support for multiple curves in order to provide users with the opportunity to adopt multisig with many curves.

(iii) Protection from 51% attack

In networks that employ the proof-of-work (PoW) consensus algorithm such as Bitcoin, the threat of mining domination by a few individuals has become a serious security threat. Because only a few people can afford the expensive ASIC mining equipment, the danger of most tokens (51%) falling in the hands of a few entities/ mining pools is very high.

To prevent such a problem from occurring in Nexus, the founders and the development team employs three methods of generating a valid Nexus block and minting NXS. Nodes can opt for the proof-of-work channels that allow miners to look for the Dense Prime Clusters of 308 digits. The other channel, proof-of-holding requires users to have some stake in the network. The multiple channels help to guarantee even distribution of NXS to reduce the threat of 51%.

(iv) Nexus puts a lot of weight on trust

Nexus places a lot of weight on building trust. The network is based on the premise that people who can be trusted can help to protect the network. To be a trusted node, you are required to do two things; hold a significant stake in the network and be active in producing new blocks. The network attaches a key to this trust. The development team believes that the strength of the Nexus ecosystem, as well as its reliability, can grow progressively by promoting truthfulness.

Examples of Nexus’s use cases/applications.

  • You can use NXS tokens to pay for transaction fee on the native Nexus platform. You can also use the tokens to pay for transaction costs in different exchanges when trading in the markets.
  • If you want to make direct purchases with NXS, simply check for stores that accept the tokens. Once you have placed all the items on the cart, pay with Nexus. If the store only accepts other coins such as Bitcoin, you will be required to convert NXS to that coin.
  • Sending value across the network both locally and internationally. This is one of the main goals for people coming to Nexus and other cryptocurrencies. As a decentralized network, it implies that you can send NXS directly without involving third parties such as banks and credit card companies.
  • Nexus is a great investment platform. You can buy the tokens and hold them waiting for the price to appreciate. For example, those people who bought NXS in June 2015 enjoyed a mammoth growth of more than 249,000% by June 2018. You can also invest in the token today and hold them waiting for the price to grow in future.
  • Trading the tokens in the cryptocurrency markets. Like other cryptocurrencies or even fiat currencies, Nexus tokens can also be traded in the markets. This is a very profitable option that allows users to optimize on regular price changes to get more profit.