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The reason for the high energy consumption of the Bitcoin is the procedure for confirming the individual transactions. Put simply, this is done by users providing computing power.

The system was deliberately designed to be computationally intensive in order to make it more difficult for individuals to contribute more than half of the computing power and generate false confirmations. This process is known as "proof of work" and ensures high power consumption. The peer coin also uses this approach. The SHA-256 algorithm is used here.

However, this so-called mining should only be used until sufficient coins are in circulation. Then the confirmations are to be made by "Proof of Stake". The decisive factor is then no longer the computing power provided, but the number of coins owned by a user and how long he has held them. This approach therefore requires significantly less computing power and thus energy.

This is how the expansion of the money supply works with Peercoin

However, in order for users to be prepared to confirm transactions at all, they receive a reward. This is a maximum of one percent of the coins they own each year. However, this also increases the number of coins in circulation continuously. In economics one speaks of the expansion of the money supply - or of inflation. It is difficult to predict how high the peer coin will be.

This depends on the number of confirmed transactions. However, the inflation generated by the proof of stake can amount to a maximum of one percent per year. A further countermeasure has also been established: For each transaction, 0.01 peer coins are due as a fee - and thus withdrawn from circulation.

Peer coin transactions

The individual payments within the network are processed via so-called addresses. In fact, these are digital signatures to ensure that the users involved are authorised to carry out the transaction. A payment is considered secure as soon as six confirmations have been received for the transaction. In other words, as soon as six more blocks have been added to the block chain.

One block is generated in the peercoin network every ten minutes, making it easy to calculate: The confirmation of a transaction takes about an hour - and is therefore much faster than with a Bitcoin payment. In theory, peer coins are therefore better suited to be used as a means of payment in everyday life.

The price development of the peer coin

With a market capitalisation of just over 173 million dollars, peercoins are still a rather smaller crypto currency. There are currently 24.6 million digital coins in circulation, which are valued at around seven euros - a historic high. It is interesting to note that there was already a similar price development around the turn of the year 2013/14.

At that time, the exchange rate rose to almost six euros before it plunged massively and remained below the 1 euro mark for several years. It was not until the spring of 2017 that the upswing began to fluctuate again. History shows: Trading in crypto currencies is never risk-free.

It remains to be seen whether the peer coin will be able to constantly confirm its high altitude this time. However, the more the high energy consumption of Bitcoin mining is addressed, the more people are likely to look for an efficient alternative. The only uncertainty is whether they will actually opt for the peer coin.