Novacoin

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Date introduced: 09 February 2013, 16:00 UTC
Inflation Limited release (Geometric series), there is also dynamic inflation due to the proof-of-stake system.[1]
Symbol ₪, NVC

Novacoin (code: NVC) is the second known cryptocurrency based on an implementation of a combined proof-of-stake/proof-of-work system. It is currently the twelfth largest cryptocurrency., according to Coinmarketcap.[2][3][4]

Transactions

A peer-to-peer network handles Novacoin's transactions, balances and issuance through scrypt, the proof-of-work scheme (Novacoins are issued when a small enough hash value is found, at which point a block is created, the process of finding these hashes and creating blocks is called mining). The issuing rate forms a geometric series.

Novacoins are currently traded for fiat currencies, bitcoins, and other cryptocurrencies, mostly on online exchanges. Reversible transactions (such as those with credit cards) are not normally used to buy Novacoins as Novacoin transactions are irreversible, so there is the danger of chargebacks.[5]

Addresses

Payments in the Novacoin network are made to addresses, which are based on digital signatures. They are strings of 34 numbers and letters which always begin with the number 4.[6]

Confirmations

Transactions are recorded in the Novacoin blockchain (a ledger held by most clients), a new block is added to the blockchain roughly every 10 minutes (whenever a small enough hash value is found for the proof-of-work scheme), a transaction is usually considered complete after 6 blocks, or 60 minutes, though for smaller transactions, less than 6 blocks may be needed for adequate security.

Distinguishing features

Proof-of-stake

Novacoin's major distinguishing feature is that it uses proof-of-stake [7]/proof-of-work hybrid system. The proof-of-stake system was designed to address vulnerabilities that could occur in a pure proof-of-work system.[8] With Bitcoin, for example, there is a risk of attacks resulting from a monopoly on mining share. This is because rewards from mining are programmed to decline exponentially, which may decrease the incentive to mine. As miners decline, the likelihood of a monopoly increases, which leaves the network vulnerable to a 51% attack (a 51% attack is when a single entity possesses over half the mining share, which would allow this entity to double-spend coins).[9] With a proof-of-stake system, new coins are generated based on the holdings of individuals. In other words, someone holding 1% of the currency will generate 1% of all proof-of-stake coin blocks. This has the effect of making a monopoly more costly, and separates the risk of a monopoly from proof-of-work mining shares.[10]

The proof-of-stake system also has other effects (listed below).

Steady inflation

It is designed so that it will theoretically experience a dynamic inflation,[11] yielding an unlimited number of coins. This is a combined result of the proof-of-stake minting process, and scaling of mining difficulty with popularity. Although Novacoin technically has a cap of 2 billion coins, it is only for consistency checking, and the cap is unlikely to be reached for the foreseeable future. If the cap were to be reached, it could easily be raised, hence for all practical purposes Novacoin can be considered to have a dynamic inflation, with a limitless money supply. The inflation rate depends on popularity just like proof-of-work minting does.

Transaction fees

It is designed so that variable transaction fees are removed in favor of one chosen by the network (currently 0.01 NVC). Transaction fees removal is one of the inflation limiting techniques.

Issues/controversies

Stake generation issues

The main proof-of-stake design problem is that unlike proof-of-work hashing rate, stake weight could be used multiple times without any overhead. It allows potential attacker to repeat his attempts to generate consecutive stakes until he will get lucky enough. And there is high probability to success without holding large stake, 20–25% of total weight (not coins) will be more than enough. Attacker can retry his attempts to generate consecutive stakes 1,000, 50,000, or 1 million times without any problem, using the same outputs.[12][13]

This could be worked around using centralized check-pointing. Novacoin creators resolved this issue using balanced weighting scheme.[14]

Centralized check pointing

As PPCoin ideas descendant, Novacoin is not truly a decentralized currency as it still requires centralized check pointing to avoid several issues.[15] The Novacoin developer has announced however that this check pointing is only a temporary measure which will be removed once the currency grows sufficiently stable. The centralized checkpoints feature could be disabled manually using -nosynccheckpoints option for official client.

Unfair difficulty algorithm

Novacoin's difficulty algorithm is designed so that the greater the interest the lower the dividends awarded to miners. What this meant was that Novacoin's coin production rate started out high, and has been falling ever since, which meant that early adopters gained a large portion of coins. However, this issue was partly dealt with by developer Balthazar through the self-mining since startup with the following public destruction of mined coins.[16]

Major markets

Novacoin can be traded for other currencies through various online exchanges.

See also

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References

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  2. Crypto-Currency Market Capitalizations
  3. NVC/BTC, BTC e, 11-08-2013
  4. The real "pyramid" scheme built using a Bitcoin virtual currency (In Russian), RBC Daily, 25-07-2013
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External links

Coins

ANC ARG BET BQC BTB BTC BTE CGB CLOAK CLR CRC CSC Curecoin DEM DGC DOGE DTC DVC EZC FLO FRK FTC GLC GLD GME GRC I0C IFC IXC JKC LKY LTC MNC MSC NET NMC NRB NVC NXT PPC PTS QRK Ripple SBC SXC TAG TIX TRC WDC XPM XSPEC YAC ZET

Novacoin (NVC) is a hybrid scrypt combined proof of work and proof of stake altcoin. There's no hard cap to the number of NVC except the max of 2 billion in the code, which could be changed in the future.

Difference between NVC and Peercoin

  • NVC has a slightly different model of emission
  • NVC is using scrypt for proof of work
  • NVC implements BIP34
  • NVC has separated target limits for PoS and PoW
  • New block signing protocol with fool p2pool support

External links

Coins

ANC ARG BET BQC BTB BTC BTE CGB CLOAK CLR CRC CSC Curecoin DEM DGC DOGE DTC DVC EZC FLO FRK FTC GLC GLD GME GRC I0C IFC IXC JKC LKY LTC MNC MSC NET NMC NRB NVC NXT PPC PTS QRK Ripple SBC SXC TAG TIX TRC WDC XPM XSPEC YAC ZET