Peercoinis the first cryptocurrency to introduce a proof-of-stake and proof-of-work hybrid system. The coins are initially mined through the commonly-used proof-of-work hashing process but as the hashing difficulty increases over time, users are rewarded with coins by the proof-of-stake algorithm. Proof-of-stake block generation is based on the coins held by individuals; thus, someone holding 1% of the currency will be rewarded with 1% of all proof-of-stake coin blocks. <\/p>\n
Block generation through proof-of-stake requires minimal energy as compared to generating hardware-intensive proof-of-work hashes. Thus as the proof-of-work blocks become less rewarding, there is a transition to using theproof-of-stake portion of the algorithm, which requiresminimal energy for generating blocks. This means that over time, the network of Peercoin will consume less energy. In addition, the hybrid system of block generation also helps to increase security. The use of proof-of-stake system raises the cost of an attack, since acquiring 51% of all existing coins is more difficult than acquiring 51% of all mining power. <\/p>\n
<\/p>\n