Skycoin Coin Hours

The Fuel for Skywire

Mar 18, 2018 · 6 min read

Simply put, Coin Hours are the “fuel” for Skycoin.

Holding Skycoin in a Sky wallet automatically generates Coin Hours at a rate of 1 Coin Hour per Skycoin per hour. The most prominent feature of Coin Hours is that they keep the Skywire network free of transaction fees. This means no fee-jacking by miners for profit, as commonly seen with Bitcoin. It also means that a virtual cat game can’t skyrocket the network transaction fees up 1600%, a recent issue the Ethereum network had to grapple with. Users will never have to pay in Skycoin or fiat currency to access and use the network. Coin Hours will take care of that for you.

Coin Hours aren’t just for maintaining zero transaction fees on the network, they will also be used to purchase services, buy bandwidth on Skywire, play games, and more. Because they will be transactable in various use cases, Coin Hours will also have a monetary value that is set by the market.

NEO is a close example, but not quite there.

One could compare Sky’s Coin Hours to NEO’s GAS, and they wouldn’t be wrong. They both facilitate transactions in a manner that allows you to keep all of your base cryptocurrency, and they’re both earned passively and for free by parking your cryptocurrency in their respective wallets.

Coin Hours have the advantage of being used for many different features on the Skywire network, and are much more than just GAS.

Whether its for utilizing Coin Hours to access a VPN service, expedited packet forwarding, playing online games built on the network, or using them as movie tickets to stream video on sites like Popcorn Time, Skycoin and the Skywire network support these services and more.

In addition to accessing resources and features of the network, Coin Hours will hold a monetary value which will eventually be decided by the market. The value will also be maintained by an OTC buy-back program for a time, which will allow holders of Coin Hours to trade them in for more Skycoin.

If Coin Hour holders wish to trade their Coin Hours for other cryptocurrencies, when Skycoin’s Decentralized Exchange comes online to the Skywire network that will also be possible.

Unlike Bitcoin or Ethereum, Skycoin users do not need to give away part of their balance as incentive for miners to process their transaction.

Instead, they use Coin Hours as fees. A transaction requires a minimum percent of input Coin Hours to be destroyed. The maximum number of Skycoins which can be produced is 100 million. Therefore, the theoretical maximum number of Coin Hours which can be produced is 100 million per hour. Although this number will not be reached for decades, and if no transactions ever took place on the network, the number of Coin Hours would not exceed a uint64 for centuries.

Every time Skycoins are spent, 25% of the Coin Hours in your wallet from any unspent outputs are transferred with them to another wallet. In addition to this, 50% of the accumulated Coin Hours from the unspent outputs that are used are then burned when transferring Skycoins around. This calculation is based on “unspent outputs”, and is therefore challenging to calculate and predict.

Thankfully, the node automatically figures out which outputs are optimal and required to make the payment and ensures that the maximum possible number of Coin Hours remain in your wallet after the transaction.

The concept of ‘unspent outputs’ can be a bit tricky, so let’s break it down.

If Mr. Sky owns 100 Skycoin and stores them in a Sky wallet he will generate 100 Coin Hours per hour, so that means 2,400 per day and 876,000 per year. That part is pretty clear.

Now, let’s imagine Mr. Sky buys 100 Skycoins at once, puts them in his wallet, and then waits one hour. After that hour has passed, Mr. Sky now has 100 Coin Hours which were generated by the 100 Skycoins. Because he purchased those 100 Skycoins in one batch, he now has one potential unspent output in his wallet. He then decides that he wants to play Kittycash, so he buys a kitty which costs 1 Skycoin. When Mr. Sky sends that 1 Skycoin to purchase his virtual kitty, a Coin Hour burn is initiated. In order to facilitate this transaction, 50 of the Coin Hours in his wallet (50% of the total) are burned when Mr. Sky sends one Skycoin over for the kitty, leaving him with 50 Coin Hours. From these remaining Coin Hours, 25 of them (25% of his original total) are sent over along with the Skycoin. After this transaction Mr. Sky now has 99 Skycoin, 25 Coin Hours, and a new virtual kitty. He will continue to accrue Coin Hours at the rate of 99 Coin Hours per hour, since he now has 99 Skycoin in his wallet.

However, if Mr. Sky had purchased those Skycoins in 2 batches of 50 each, he would have 2 potential unspent outputs in his wallet. If he held those Skycoins for 1 hour, each group of 50 Skycoins would have generated 50 Coin Hours. So to purchase his kitty for 1 Skycoin the node would calculate that only one of those potential outputs needed to be spent, therefore only 25 coin hours would be burned, 12 would be sent with the Skycoin (since there are no fractional Coin Hours and they are rounded down), and 12 would remain in his wallet from that output. This would leave Mr. Sky with 99 Skycoin, 62 Coin Hours, and a new virtual kitty.

Clearly, as Skycoins are received and transferred in and out of wallets and potential unspent outputs build up, this calculation will become increasingly complex to calculate. Therefore, the node will handle it all for the user and will calculate the optimal way to complete the transaction automatically.

These mechanisms work together to ensure that Coin Hours are kept scarce and valuable, thus allowing the market to find an equilibrium in price. For further information on this, see the Coin Hour dev documents on the Skyblog.

Coin Hours will be used in many different ways, and many new use cases are being tested and experimented with right now to encourage spending and ensure they remain valuable and useful.

Coin Hours are used to purchase bandwidth on Skywire, thus incentivizing the mesh network. Coin Hours can be used to purchase items in games like Kittycash. Coin Hours will be used to pay for services on dapps built on the network. Coin Hours can also be used as currency and will be tradable on the Sky DEX for other cryptocurrencies when it is available. When the privacy protocol CoinJoin is implemented Coin Hours will be used as collateral during the merging and mixing process, discouraging users from backing out or slowing down an ongoing CoinJoin operation. Other use cases are being tested right now and will be announced after they are fully developed.

Accruing Coin Hours is simple! To get Coin Hours all you have to do is:

  1. Purchase Skycoin from one of the many exchanges where it is available (or purchase them through the Skycoin team’s limited OTC).
  2. Download the Skycoin wallet for the OS of your choice.
  3. Transfer the Skycoin into your new Sky wallet.
  4. Sit back and relax as the Coin Hours start accumulating automatically!

Every SKY investor can become an integral part in the growth and development of this exciting new technology.

Soon, having a wallet full of Coin Hours will become the norm, as we utilize them to build and fuel the Skywire network and its use across the globe together. As we continue to aggressively onboard new projects and partnerships into our platform you can expect to hear more about the exciting ways to earn and use your Skycoin and Coin Hours!

We’re constantly looking for new and exciting ways to evolve our platform, so join the Skyfleet community and be the spark of revolution.


Skycoin is the first solid foundation for the decentralized internet.


Written by


Skycoin is the foundation for a new decentralized internet and the most advanced blockchain application platform in the world.



Skycoin is the first solid foundation for the decentralized internet.