How to Buy and Trade Peercoin in 2017

The Beginners Guide to Buying, Trading and Selling Peercoin

What is Peercoin?

Peercoin is a peer-to-peer digital currency, which uses cryptography to achieve a 'distributed consensus' between its users.

It uses a hybrid of both the 'proof of work' (which is the one Bitcoin uses) and 'proof of stake' system. The reason it uses a hybrid is to attempt to address the vulnerabilities the proof of work system has.

Walkthrough Video that Explains How to Buy Peercoin Online

Receiving coins as rewards declines over time when using the proof of work system. This may reduce the incentive to mine for coins because their value is reduced. The possibility of a monopoly can then be apparent and one user could own 51% of the mining share and in turn could create a 51% attack.

Proof of stake means new coins are generated based on holdings of individual users. The chance of a monopoly is still present but reduced as it makes the monopoly costly.

Peercoin and Bitcoin relationship

Peercoin was inspired by Bitcoin and so shares lots of its source code and technical features. It has a similar hash function (the algorithm that solves the mathematical problems to add each new block) to Bitcoin. This means that miners can easily jump between mining either Peercoin or Bitcoin.

When we saw the Bitcoin fork, the number of Bitcoins rewarded to the miners reduced from 25 to 12.5. This is a considerable reduction and meant that mining was less profitable.

As this happened, Peercoin saw a spike in its mining. Lots of Bitcoin miners jumped over and began mining Peercoin because it was more profitable.

This relationship is entirely opportunistic for those miners with little benefit to Peercoin. Should we see this happen again, miners may jump to different altcoins.

How does Peercoin work?

Those who hold Peercoins can verify the transactions, the more you hold the more important your verification is for the network.

This means that Peercoin doesn't rely on mining powerhouses to generate coins, in fact this system makes each computer equal in their ability to mine. 

The argument then is that it encourages saving rather than to spend, therefore leads to stores of wealth. 

Creation of Peercoins

There are two ways to generate new Peercoins. The first is mining, where a hash function directly secures the network. 

Minting

The second, is minting. This rewards users in proportion to the coins they hold (the target is 1% annually), which helps secure the network. The longer-term plans of Peercoin is to reduce gradually the amount of mining and rely more on minting. This will create a fair distribution and could lead to an increased reward from minting.

This is more energy efficient because it is only done per transaction and so does not require the computing fire power needed to mine.

Once a transaction is completed and a Peercoin enters your wallet, it must age for 30 days before minting can occur. The longer Peercoin ages, the higher the chance minting will happen and add a block to the blockchain. This is true until it reaches its cap of 90 days, where the probability then plateaus.

Once minting happens (block is created), the coin is frozen for 520 blocks and cannot be used. This usually lasts for three and a half days.

Should I buy or trade Peercoin?

Buy Peercoin

Given Peercoins relationship to Bitcoin I think it is hard to see this cryptocoin going away anytime soon. The fact that miners can switch between mining for Peercoin and then Bitcoin does allow miners to take advantage of the each one depending on the difficulty of mining.

Due to the fact Peercoin intends to reduce its dependency on mining and increase minting as a method of generating Peercoins, they intend to reduce the fee paid to the network when mining occurs. This will increase minting and combined with its increased energy efficiency should allow for greater long-term scalability.

Due to its smaller blockchain, it can sync quicker to your computer and makes it attractive to any future innovations.

With this in mind I think there is certainly scope for this cryptocurrency in the future.

Trade Peercoin

Currently you cannot trade Peercoin as a CFD however you can still trade it through cryptocurrency exchanges. The likes of Bittrex, Coinswitch and other exchanges make trading Peercoin very easy. 

As with all cryptocurrencies, price movements are very volatile due to the nature of such a new phenomenon. Unlike traditional currencies that have been around for hundreds of years, the recent introduction of cryptocurrencies into the world of trading is very exciting. 

Seeking out the best places to buy and sell is certainly an opportunity to make some short-term cash but as with all trading, you run the risk of losing your investment. Given the volatility we see in the cryptocurrency markets, caution is advised.

How to buy Peercoin Online - Step by step Guide:

Despite Peercoins similarities to Bitcoin and its age (founded in 2012) it finds itself just about in the top 50 of cryptocurrencies in terms of market share.

Major exchanges focus on the coins with the largest market share and so it is very difficult to directly buy Peercoin using fiat currency (GBP, EUR, USD etc). That’s not to say it is impossible but I recommend you go through familiar institutions who have a good reputation within the industry.

This will create an extra step in the process of buying Peercoin. The extra step is involves buying another more popular cryptocurrency that is easy to buy directly with your fiat currency. Once you have a cryptocurrency, it is very easy to exchange it for Peercoin, there are plenty of excellent exchanges to do so.

Before you can buy Peercoin, you must first get a wallet that you can keep your Peercoins in, which acts much the same as a cash wallet. This is similar to your email, you will be given a wallet address where people can send Peercoin to you and a password that only you will know. Simply download from the Peercoin website {https://peercoin.net/wallet}.

I will now take you through how to buy Peercoin.

- Firstly, you must buy another cryptocurrency to exchange it for Peercoin. I will use Bitcoin because it is the largest cryptocurrency. The easiest way to buy Bitcoin is through Coinbase, which is one of the largest and most trusted exchanges. You must set up and account, filling in your details. 

Coinbase Sign Up

- Once you set up an account, you must add a payment method. You can either directly link your bank account to the Coinbase account or use a credit / debit card. Click 'add payment' and select the method you wish to use. You will then have to wait for this to be verified by Coinbase, this may take a little time because of the huge upswing in popularity for Bitcoin and other cryptocurrencies. 

Coinbase peyment method

- Once verification is complete, you will be able to fund your account with USD, EUR or GBP. Once you have funded your account, you can then buy as much Bitcoin as you choose.

- Once you own some Bitcoin, you must then find an exchange to transfer your Bitcoin into Peercoin. I recommend coinswitch.co because it give you a choice of exchanges to use and lets you compare which price exchange offers the best price.

- On coinswitch.co, click 'continue' to get to the price comparison page.

Coinswitch Exchange

- Enter the amount of Bitcoin you intend to exchange in the 'You have' section. This will determine how many Peercoin coins you are due and then gives you the options of different exchanges for you to choose. Click 'Exchange' on the one you want to use.

Coinswitch price comparison

- Next you will be required to enter the address of your Peercoin wallet. This is the address you will have been given when you opened your Peercoin wallet. Tick 'I agree to terms' and then click 'next.

- You will then be taken to a processing page where the transaction is completed. You will then receive an address to send your Bitcoins to. You must go back to Coinbase and make a payment for the same amount to the address you were provided with.

How to buy Peercoin with a credit card

There are no straight forward methods to buying Peercoin using a credit card. The methods that are available are untested I recommend you avoid until they are proven. Be careful if you are buying Peercoin directly using a credit card.

The safest method to buying Peercoin with a credit card, is to go through the process mentioned above and buy Bitcoin using a credit card and exchange for Peercoin.

How to buy Peercoin with Paypal

PayPal once embraced digital currencies and made it possible to buy things like Bitcoin through its payment platform, but recently it has withdrawn somewhat and only offers users of cryptocurrency the option of depositing money from the sale of Bitcoin into their PayPal accounts. This is again done through Coinbase, and because of that, only works with Bitcoin, Ethereum and Litecoin.

To use PayPal with Peercoin, there is not much opportunity, but it once again is linked back to Bitcoin, and is only useful when depositing money. A Peercoin holder could sell their Peercoin for Bitcoin, send it to Coinbase, and then withdraw that money into PayPal for fiat currency such as Dollars.

How to trade Peercoin

There are various exchanges whereby you can actively trade Peercoin, Bittrex is one of the most trusted sites to trade Peercoin with other cryptocurrencies. Given the huge price swings Peercoin and other cryptocurrencies are experiencing there is no surprise at the increase of people wanting to trade these markets. 

Brokers are now getting in on the act and allowing you to trade cryptocurrencies using CFDs, this opens a huge market for speculators who want to profit from the price movement of markets like Bitcoin, Ethereum and Peercoin.

A popular broker that offers you access to trading cryptocurrencies is AVA Trade. Creating an account with AVA Trade is just as quick and easy as setting up an account with Coinbase.

- Go to AVATrade.com and sign up by providing basic details. Alternatively, you can sign up using Facebook or Google+. 

AVA Trade Sign Up

- You will be asked to provide information on various topics, so AVA Trade can gage your experience and in turn the level of support they can offer you.

- When asked to select a trading platform, I would recommend selecting 'Floating Spread Account' with MetaTrader4 (MT4). MT4 is a hugely popular trading platform thousands of people use across the world. This will give you access to all the cryptocurrencies they offer.

- You then must fund your account. Decide the method you with to do so with and similar to Coinbase you can make a direct deposit into your newly created account. Click web-trading or download MT4 and you can begin trading.

AVA Trade Platform

The future of Peercoin

One of Peercoins most attractive features was its new technology, however, that was new technology in 2012. In 5 years the cryptocurrency market has evolved drastically, first moving towards mining on CPU and now with smart contracts, all gradually overtaking Peercoin.

That’s not to say Peercoin is a caveman in the world of crypto, they are and have prepared technological novelties which has kept miners attention. 

The slide from mining to minting is also an attractive prospect for users who do not own super software to mine these cryptocurrencies. This will also stop Bitcoin miners that are mining for Peercoin from being rewarded Peercoins and immediately selling them. The aim is to rely more so on minting, which will them promote saving.

This then provides scalability to the coin, which is often something to look for in any type of business.

I would be surprised if this was ever a leading light in the crypto world but would also be surprised to see it dwindle away and fail. 

Guide list

Enjoyed this Peercoin guide? Then see our other cryptocurrency guides:

 

Disclaimer: None of this is intended as advice, these are merely my thoughts

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