Peerchemist has been working with the Peercoin project for five plus years now. As Project Leader and President of the Peercoin Foundation, he has greatly contributed to the development of the Peercoin protocol, as well as being the creator of PeerAssets and Perpera.
What do you do for Peercoin?
My primary role is organizing projects, keeping our team engaged, and making sure we are meeting deadlines. Aside from management, I also work on creating new features for Peercoin like PeerAssets or Perpera. It is also my responsibility to maintain a number of libraries that are required for the functionality of the project.
Do you receive payment for your work on Peercoin?
I volunteer for Peercoin as I always have. I do get some donations from the community, and I am thankful for it. I feel that what little funds we have in the Foundation are better put to use with people like Backpacker (our main developer) who is skilled with C++, the language our core code is written in (I am not proficient in C++). Perhaps in the future, I’ll be able to dedicate myself to Peercoin full-time, with a salary from the Foundation.
Can you give us some background about your entry into the cryptocurrency/blockchain space?
Computers were just a hobby back then as I was just getting into Python and toying with the Raspberry Pi was my first venture into development. Cryptocurrencies came along as something new and amazing, and like any good “hacker” I had to learn what “crypto” was about and that’s how I fell into the rabbit hole five years ago. I felt that it was worth my attention, and I was not wrong. My involvement with Peercoin started with my tinkering with the Raspberry Pi single board computer and getting an idea that it could be useful for a PoS-based blockchain project like Peercoin. My entry as a developer to the scene was a now retired project called Peerbox, which provided a secure OS for running Peercoin nodes.
What was your goal when you took over the project in 2016?
The project was in pretty bad condition before 2016. Pull requests and issues were ignored on the main repository, so the community was forced to maintain their own client called Peerunity. Peercoin’s co-founder Sunny King would code in his private repository and only publish the code once it was release ready, which sucked for contributors and other interested parties. There was no formal organization. There was no infrastructure to support the project (libraries, integration, documentation, general infrastructure like block explorers, etc.). There was no formal way to propose protocol changes, as it came down to nagging Sunny King on the forum chat or via private messages. It was impossible to get the project moving in any direction. My mission was basically to properly organize the project, set the core repository, implement a procedure for proposing protocol changes (RFC’s), create the base of its ecosystem, and reboot active development.
You can say the goal was to make Peercoin have its head and its tail, to make Peercoin a proper open-source project. All of these goals are complete now. There is the Peercoin Foundation as the legal face of the project. Supporting infrastructure for the ecosystem is now in place in the form of various integration libraries, extensive documentation and other relevant texts. Relevant projects reside in the core repository, a house-maintained block explorer has been deployed, a developer hired to take care of the reference implementation as a full-time job, and development is at an all-time high.
What was your role in the formation of the Peercoin Foundation? Why was it necessary? How does it function and how is it funded?
Having a Foundation was a topic even before my time with Peercoin (pre-2014), but many resented this idea mostly due to the negative aspects of having a centralized organization. The Bitcoin Foundation, for example, ended up as a dumpster fire. There was no need for a Peercoin Foundation before 2016, to be honest, though it would have been great to have one on the ice, on standby. The need for the Foundation only became apparent in 2016/2017 with the commercialization of the blockchain scene when startups were popping up left and right under the guise of “ICOs”. It then became apparent that a legal face was required if we were to remain in “the game”, and able to secure new exchange listings, partnerships and other things which require a legal contract. Basically, due to an amazing amount of scams floating around, everyone and their aunt started requiring a legal contract so they could deny any legal responsibility.
I was the one that finally pushed for the Foundation in late 2016. I felt it was time to do it, so we went forth. The process was slower than one would anticipate as we took extra precautions not to give power to the wrong people. As Peercoin is a decentralized, open-source project that none of us own, it was important to form a Foundation which respects that. Thus, prominent and active members of the community were invited to join the Foundation board. The board is fully democratic and the absolute majority of votes is required for every decision.
Funding for the Foundation came from us who initially proposed it, as there was no time to wait for donations. We covered all the legal expenses out of our own pockets to set it up. After it was established in 2018, the project could finally be financially supported by community donations. The community has sustained the project’s development for the last six years, which is something of note.
To this day, donations are steady and the Foundation is getting some 12k PPC a month. I understand that while this is not a fraction of what our alleged competitors receive for funding, it’s a start. I am sure it will get better as the community realizes how much is being done with this money. The Peercoin Foundation’s finances are naturally public. Everyone can check how much is being spent and on what.
Do you think public blockchains should be private or at least support private transactions in the future? How do you see Peercoin approaching privacy in the future? Is there any talk of coin mixing, ring signatures, zkSNARKS, or similar ideas?
Yes, I think the privacy aspect of public blockchains should be improved. I understand that there is potential for backlash against fully private-public blockchains, so the safe way to do it would be to allow users to opt-in to privacy features. As for Peercoin and privacy, I believe that for now, coin mixing is a good first step. It looks like Chaumian coin mixing would fit well with our network.
Ring signatures have scaling issues and zkSNARKS are still in infancy. Certainly, we’ll keep an eye on these developments and see to get them included in the future.
What are your thoughts on the Lightning Network?
I believe it’s a step in the right direction and a decent first mover in the second layer scaling arena. I do expect it to gain both traction and competitors in the next year or so. While it has some rough edges, I think its importance in cross-connecting blockchains and enabling instant payments is hard to downplay.
Why did you pursue Lightning Network and SegWit over alternative paths that other projects have taken such as Bitcoin Cash?
Because I don’t think blockchains can scale well, at least not decentralized deployments of the tech. I don’t see the point of the blockchain if it only runs on 6 nodes. Also, I don’t think every bit of information should be written down in a transaction, paid for, propagated, parsed, and verified by the entire global network. It’s just a massive waste of resources.
In my vision, a blockchain should only serve as the cryptographic backbone and something you can use for trusted time-stamping. You can build wonders on top of these aspects alone. No need to write down every token swap and crypto-kitty transaction on the immutable chain.
I know, I know, “SegWit bad”. I agree it’s not really an optimal solution, and Bitcoin politics of the era have influenced the technical design quite a bit. But we don’t really have the resources to offer an alternative at this point.
What are your thoughts on tokenization? Is it a pipe dream or is it inevitable?
I’d say it’s a pipe dream. People need to be more skeptical when approached by someone who wants to sell them some blockchain tokens. It usually just does not make sense. Most of the token deployments are a user-facing in front of a murky startup with a convoluted and unsustainable business model. Imagine if your corner shop only took payment in their self-issued token. How long before they go out of business? This is precisely what is going on with crypto. Startups are basing their business models around the thesis that their future customers will accept handling thousands of tokens and each token is only valid for one service.
I believe the tokenization of stocks, bonds, metals, and other financial instruments is something that evolves the global economy by making access easier and handling cheaper. So you could say that I am all for security tokens, but utility tokens — Nah.
Does Peercoin plan to implement tokens?
Peercoin has implemented support for tokens, the PeerAssets protocol.
What are your thoughts on ICOs?
I see ICOs as the evolution of the relationship between startups and venture capital, a way for startups who would usually have no chance of getting any funding to get some funding after all. Because of this, these startups are forced into convoluted and unsustainable business models, mainly revolving around excessive tokenization. Some have even resorted to making a living off market making of their own token as well. It’s bad.
What does v0.8 mean for the future of Peercoin?
v0.8 is a major step for Peercoin, perhaps the biggest one since the first couple versions which proved to the world that a proof-of-stake blockchain network is possible. We will speak more about the importance of v0.8 as we get closer to release.
Community Questions
What inspired you to take on a significant leading role on Peercoin? (asked by Mihai)
I had felt that it lacked organization and cohesion and was in danger of “stalling out” development-wise. There was an obvious need for a “leader” who would push the talented minds revolving around the project to become productive again. The core concepts of the coin and its human capital are too good to be allowed to go to waste.
Do you see a future for Bitcoin (BTC) with small blocks and layer 2 scaling? Can these solutions work better for Peercoin? (asked by Mihai)
Yes, I see the future with small blocks and second layer scaling for Bitcoin. At least it will work in the near future, while I am not sure it will work in the far future. Second layer scaling is the only future direction presented by competing Bitcoin factions which makes sense in the context of Bitcoin.
It comes down to the core principles of the economic system set forth by Bitcoin’s original designer(s) in 2008; that there is a fixed number of tokens in the system and that miners eventually have to start living off transaction fees. In this system, the transaction fees must become expensive (expressed in USD, because utility bill is in FIAT/USD) enough to enable miners to upkeep their operation when the block reward perishes. There are several ways to ensure that transaction fees eventually sustain the miners.
- Bitcoin must continually rise against USD.
- Blocks are to be kept small(ish) to ensure that there is competition by users to get included in the next block or one of the next couple of blocks. Basically, force users to pay extra to get their transactions confirmed within some sensible time frame.
- Find more ways to reward the miners, like deploying sidechains (Liquid, Rootstock) — so they get more transaction fees on other chains.
One can notice that there was a big shift in the narrative about Bitcoin in the past two years. Bitcoin has evolved from P2P cash to “digital gold” and a “settlement layer”. This narrative works with second layer deployments, sidechains, and high transaction fees on the main chain. This works with Peercoin as it fits with second layer scaling, and it does so better than Bitcoin. It’s allowed because Peercoin has a very sane economic model which has always set it apart from other projects.
In Peercoin, network maintenance is cheap because of proof-of-stake and the fact that block producers don’t compete for transaction fees. Instead, block producers are fairly and continually rewarded by a fixed block reward which will continue forever. Recently the same model was adopted by EOS. Because there is no competition for fees, there is no need to limit the block size artificially and make transactions scarce. Block size is only a technical question in Peercoin. There is no need for philosophy or narrative in the debate. So once the technicalities are tackled that allow for bigger blocks without sacrificing the desired decentralization of the network, Peercoin can grow blocks. Luckily, our cousin projects like BCH and SV are working on this for their own reasons and something will surely come out of it.
As for second layer scaling in the context of Peercoin, it’s better than what is offered with Bitcoin once again because there is no competition between block producers and second layer node operators for the transaction fees. Due to the fixed cost of the transaction fee (0.01 PPC per kB) and the open road for increasing the block size, Peercoin will function well as a settlement layer as the user can always expect timely inclusion in the next block for a reasonable price. Also, the user is not forced to outbid peers for inclusion in the block, so the cost of a transaction can always be easily calculated.
Who owns those two addresses that have 7% of coins each, 14% together? Does it threaten the network? (asked by Skazok)
We can only speculate on who owns the two top addresses, but there are some indications that it may be former BTC-e or associated personnel, cold storage and hot wallet addresses respectively. It is known that a lot of peercoins were left on BTC-e at the time of their implosion and many Peercoiners never got a chance to pull their coins back.
I don’t think they pose a threat. The second address has been inactive for over 300 days now and there is a chance that access to those coins has been lost. The top address occasionally mints and does so in a non-threatening way.
Overall, our network has a means to repair the distribution, as distribution is still ongoing via proof-of-work. So current and new minters have access to fresh and relatively cheap coins.
What function of Peercoin blockchain is more important, to be a currency, i.e replace fiat money or things like Perpera, or things similar to smart contracts. Which one has a greater chance for adoption? (asked by Skazok)
I believe both aspects are equally important. It is hard to speculate upon adoption as in general hardly anyone out there uses crypto. Most of the usage comes down to crypto being used for crypto purposes, i.e. Bitcoin being used to trade and speculate and Ethereum is being used to host myriad of tokens.
It is important to have in mind that it’s not likely that any cryptocurrency will replace “fiat money” and one can notice that the general narrative is recently being shifted away from P2P cash replacement to investment/digital gold as a response to that realization. At least that is what is going on now. It may shift again later. I actually expect it to shift again once cryptocurrency gets competitors like Facebook’s GlobalCoin and the concept of non-government money gets mainstream traction.
Peercoin was always pitched and imagined as a digital-gold/investment and I still think that is what will happen eventually as it is perfectly tailored for this task. The Peercoin market is mature and has established cycles, apart from the effects of the 2017 crypto bubble. Another important aspect is that it’s a proven non-scam, and it’s not a security — which leaves the doors open for institutional investments.
I was never really convinced that a token living on a decentralized blockchain (like Peercoin) can work as P2P cash due to scaling difficulties, however with the advent of second-layer solutions like Lighting Network, I now see it being useful as a payment currency. Every coffee purchased out there should not get recorded on an immutable ledger. Our blockchain and Bitcoin were made to be decentralized and trustless first, and usable second. But this is changing fast.
The same thing goes with our in-house tokenization protocol — PeerAssets — I was never convinced that PeerAssets could capture the attention of the industry as the cost-benefit analysis for any token protocol out there clearly states that it’s best to keep with centralized solutions like databases and cloud deployments. Some token platforms are actually less secure and trustless than just using cloud databases. This is an absurd trend. However, with the advent of second layer technologies, like Lightning Network, usage of blockchain tokens becomes cheaper and faster and much more attractive for both industry and mainstream adoption.
Conclusion
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