Novacoin has managed to survive its rocky start in 2013 and survive among the different altcoins until today. For an industry that’s pretty young, that is a milestone in itself. Developed as a fork of Peercoin, Novacoin uses Scrypt hashing and combines the proof-of-work and proof-of-stake mining models into one hybrid system.
PoW mining is what powers Bitcoin and it is noted as making the original cryptocoin difficult to use. PoS is supposed to make things easier and faster. The developers behind Novacoin wanted to use PoS but they weren’t convinced that the original Peercoin would be stable enough to give out rewards in the long run, which is why a partial PoW system was implemented.
The problem was that on launch way back in February 2013, Novacoin managed to hit all of the warning signs that it was a “scamcoin,” only created to scam unsuspecting users. Rumors of pre-mining, price manipulation and a “pump-n-dump” scheme came out. Pump-n-dump is what insiders called the way scamcoins were inflated in price by insiders to attract investors who had a lot of coins, then suddenly dumping them in the market when it reached a target price.
The rumors started on the third day of Novacoin’s existence. Allegations of a massive pre-mine emerged on Bitcointalk. Pre-mining meant that the developers mined blocks before the public launch of the coin. With low initial difficulty, they would have managed to generate a lot. To add fuel to the fire, two days after the publishing of the NVC client, BTC-e introduced the NVC/BTC trade pair.
Another three days later, BTC-e announced that it had 110,000 Novacoins in the BTC-e guarantee fund exchange. The news that followed was more devastating. On February 14, BTC-e announced that it had destroyed the 110,000 coins. This resulted in the coin’s market price soaring on BTC-e then nose-diving. This looked like a ‘pump-n-dump.’ However, despite all of the fears, it did not happen.
There was an initial price increase to $24 but the price slowly dropped. In 2014, the price was just over $10 and the market cap hovering around $7 million. The coin has managed to stay solvent and steady for the past three years.
Why get Novacoin?
People should get into Novacoin for two reasons. First, its supporters say it is fair because an effective PoS brings higher rewards to those who stake more coins rather than to those who have more powerful computers.
The second reason is security: there are two blockchains in the system. If an attacker wants to double-spend Novacoin, they need to own more than 50 percent of hashing power in both chains. This is pretty much impossible.
Finally, Novacoin’s low emission rate keeps rewards stay relatively high while ‘return on interest’ is continuously adjusted. This keeps miners interested. It makes the Novacoin cryptocurrency a stable enough investment for those who want to hide their wealth.