VeriCoin has come a long way from its launch back in 2014. After a rough start of being hacked, it has managed to bounce back a bit. The main reason for this is its changes to its proof-of-stake minting process. In a bid to make itself unique, VeriCoin implemented a new Proof-of-Stake protocol entitled Proof-of-Stake-Time in 2015. This has quickly become the cryptocoin’s signature service.
VeriCoin mining does not happen at all. What people call mining is the processing of data blocks in the blockchain network. Those who manage to process a block first are rewarded by the network for their effort. This is called the proof-of-work system and is used in most cryptocurrencies to add to the currency’s stock of coins. VeriCoin is different because it uses a Proof-of-Stake-Time standard. This is an evolution of the original Proof-of-Stake system, the first alternative to the proof-of-work system.
Proof-of-work has several problems that made proof-of-stake attractive. First is that it uses up a lot of resources. Mining consumes electricity and trying to beat others to the solution will require a lot of effort. This is why miners often have high electricity bills. The second problem is that the network can be taken over by a miner with enough computing power.
Proof-of-Stake deals works by having miners bid on the network to take a block to process. The normal way that the blockchain protocol judges who processes a block is by having it competed over via Proof-of-Work. Proof-of-Stake lessens the pressure on the miners. Proof-of-stake allows for people to mint coins without even needing a lot of processing power. Additionally, trying to control the network will require owning over 50% of the coins in the market – which is practically impossible.
However, proof-of-stake does have a problem. This is that the rich become richer and the poor remain the same. To stake coins requires coins to begin with. This is where proof-of-stake-time comes in. VericCoin pioneered the system and it has been associated with it since its debut.
It uses coin age to determine the probability of a given account mining a block rather than the amount the account has staked. The basic formula used is to multiply the number of coins by the period during which they have been held at a given address. This can be tweaked to encourage some actions. In Vericoin, the system is designed to encourage the rich to spend and to reward the poor for holding.
With the time factor added, miners can adjust the level of their investment. It sets an interest rate scheme to be implemented where users who stake their coins for longer periods of time are rewarded more interest. This ensures stability in the long run.