I’m creating this topic first because I want to know what you all think about this and second, to help ease fears that Peercoiners might have when NuBits and this forum goes public.
So NuBits will be the world’s first stable cryptocurrency by solving price volatility, as opposed to Bitcoin and Peercoin, which can violently swing in price from day to day. As I started reading the whitepaper, Peercoin was described as a 2nd generation crypto while NuBits is a 3rd generation crypto, due to the advance in price stability. This part of the whitepaper struck me with fear, since most of my wealth is in Peercoin. Obviously I don’t want Peercoin to become an obsolete technology after I’ve put so much time and work into it. But I kept reading and realized that Peercoin does play a vital role in the new system. My concerns further evaporated when I started this thread to learn more about the dividend mechanism and how the network makes revenue.
In the Reddit sticky thread I made, I wrote an intro to Peercoin. In that intro is a section titled “microtransactions & off-chain networks”. I wrote this section to alleviate people’s fears that microtransactions will never be possible with Peercoin. I explained about how the 0.01 PPC/kb fee is designed to prevent blockchain bloat, but that microtransactions would still be possible by connecting Peercoin to off-chain networks. These off-chain networks would allow people to bypass the fee and transact with their Peercoins instantaneously. Now that I know what NuBits is though, I realize that this off-chain solution does not solve everything. It solves the problem of microtransactions with Peercoin, but it doesn’t do anything to solve price volatility. So Peercoin in the end would still be limited as a transactional currency by its volatility. NuBits solves this problem.
So the question I’m asking here is that if Peercoin is not destined to be used as a day to day transactional currency, what will its role be in the future cryptoeconomy? I understand it’s meant to be used for dividends in the NuBits system, but beyond that, what will Peercoin’s function be in the future, given that it cannot be used for day to day transactions. What is Peercoin’s purpose and what will its future role be?
Here is a possible scenario, which I’ve taken from another thread…
We can debate about this, but if it did happen it would most likely be far in the future. The question remains though. In case this scenario doesn’t play out and Peercoin retains its price volatility, what will its role or function be in the future cryptoeconomy?
I agree that paying dividends in Peercoins increases liquidity and a potential upward pressure as long as people believe that not everyone will sell their Peercoins immediately, which won’t likely be the case.
The only reason to hold would be either it being an appreciating asset/commodity or increased usage as a currency providing adoption rates, security, liquidity and available functionality would exceed that of Bitcoin many times.
In my opinion it is more likely that Peercoin would take an appreciating commodity role and that NuBits would take the currency role in the foreseeable future (which I think is only 6 months at best in this world).
That doesn’t exclude Peercoin from playing some role as a currency. It will be just a relatively volatile one which would limit it’s value as such. I do think that many of the Peercoin developments can be applied to NuBits without too much effort, so most of the efforts won’t be wasted.
It becomes interesting when demand for NuBits decreases and parking rates will be offered. Depending on the risk/reward balance it is possible that Peercoins (and others cryptos and fiat) will be sold to obtain the offered interest rates. Given the risks in a shrinking market these rates will need to be relatively high to attract money. As someone else mentioned elsewhere the current interest rates on Bitcoins are around 18%.
At the end of day it is all about weighing chances and options and nothing is 100% guaranteed in this world without paying a huge premium. The cryptocoin world is still young and very dynamic and competitors will respond at some time.
Check bitvc, okcoin and bitfinex. They provide interest on Bitcoins. Don’t have a direct source to the rates but 18% would make sense to me given the volatility risks. Can’t find the source who mentioned 18% now (might stumble across it later)
It makes little sense to me that a competent entity would pay 18% annual interest on any fungible commodity with decent liquidity, unless they are operating a fractional-reserve Ponzi scheme or their credit-worthiness is so poor that they cannot qualify for any other loan. The entity could, instead, borrow USD (or their local currency) at a lower rate, buy the desired commodity (bitcoin) with it, and then buy a put option, which gives them the right to sell at a specified price in the future.
Regarding your edit, you might also read the comments on that article. It doesn’t give me confidence in Huobi’s creditability.
You’re right, they did offer this, probably as a publicity stunt. This is a little off-topic from the thread – sorry for derailing.
On the security aspect, Peercoin can survive a nuclear war. It runs as long as a few wallets are running on the Internet. So do Peershares (NuShares and NuBits) on technical level. However NuBits pegged to the USD will likely to be less robust than Peercoin because it needs support from its infrastructure, which includes many elements as shown on the Process map. Nu is carefullt deisgned and will be greatly improved. Still, simpler systems tend to be more robust.
I am not sure what will happen to Peercoin but I can see in the short-term that it will be fine if not great. I think NuBit’s demonstration of Peershares will garner more attention to Peercoin. In my eyes, NuBits isn’t a completely decentralized system and it has a lot of moving parts. This seems essential for the stability it brings to these early cryptocurrency times.
NuBits seems like a beautiful system and it will bring a stable cryptocurrency but there will be plenty of criticisms.