Cryptocurrency, issued on August 19, 2012. The main purpose of its appearance is to test in practice a new method of generating Proof-of-Stake blocks as replacement of the currently existing Proof-of-Work.
Proof-of-Work means that you need to do some amount of calculations to perform an operation from the user. In bitcoin, this principle is used as the basis for generating blocks – for the successful generation, it is required to solve a variable complexity problem. Accordingly, the more power users have, the higher the probability of generating a block.
The creators of PPCoin implemented a different approach. Blocks are generated not by mega-shashes, but by coin-days (or rather coin-years) – the number of coins in the wallet, multiplied by their “age” or the time they lie on the wallet intact. In the literal sense of the word “money goes to money”.
In theory, this approach has several advantages. The main one is the general long-term energy efficiency of the currency. Bitcoin (and all others like it) require computational power to generate blocks, and considerable, considering the possibility of an attack of 51%. This means spending energy and money just to keep the currency afloat. In PPCoin this is not important.
Other advantages of Proof-of-Stake include a lower probability of 51% attack – for its implementation, you will not only have to buy a lot of coins but also keep them long enough. At the stage of primary emission, when there are still few coins, the blocks are generated by the Proof-of-Work method. Strictly speaking, at all stages the generation is hybrid, it is simply assumed in the future that Proof-of-Stake will become the main one.