12] [13] This could be worked around using centralized check-pointing.

Novacoin (code: NVC) is the 2nd known cryptocurrency based on an implementation of a combined proof-of-stake/proof-of-work system. It is presently the twelfth largest cryptocurrency., according to Coinmarketcap. [Two] [Trio] [Four]

Contents

Transactions

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

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

Addresses

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

Confirmations

Transactions are recorded te the Novacoin blockchain (a ledger held by most clients), a fresh block is added to the blockchain harshly every Ten minutes (whenever a puny enough hash value is found for the proof-of-work scheme), a transaction is usually considered accomplish after 6 blocks, or 60 minutes, however 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 wasgoed designed to address vulnerabilities that could occur ter a zuivere 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 prizes from mining are programmed to decline exponentially, which may decrease the incentive to mine. Spil 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 overheen half the mining share, which would permit this entity to double-spend coins). [9] With a proof-of-stake system, fresh coins are generated based on the holdings of individuals. Te 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. [Ten]

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

Sustained inflation

It is designed so that it will theoretically practice 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. Albeit Novacoin technically has a cap of Two 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 lightly 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 eliminated ter favor of one chosen by the network (presently 0.01 NVC). Transaction fees removal is one of the inflation limiting technics.

Issues/controversies

Stake generation issues

The main proof-of-stake vormgeving problem is that unlike proof-of-work hashing rate, stake weight could be used numerous times without any overhead. It permits potential attacker to repeat his attempts to generate consecutive stakes until he will get fortunate 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 kwestie using balanced weighting scheme. [14]

Centralized check pointing

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

Unfair difficulty algorithm

Novacoin’s difficulty algorithm is designed so that the greater the rente the lower the dividends awarded to miners. What this meant wasgoed that Novacoin’s coin production rate commenced out high, and has bot falling everzwijn since, which meant that early adopters gained a large portion of coins. However, this kwestie wasgoed 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.

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