Novacoin

Novacoin
Denominations
Subunit
0.01	cNVC (centicoin)
0.001	mNVC (millicoin)
Plural	Novacoin, Novacoins
Symbol	₪, NVC
Nickname	Novacoin
Demographics
Date of introduction	09 February 2013, 16:00 UTC
User(s)	International
Issuance
Central bank	None. The Novacoin peer-to-peer network regulates and distributes through consensus in protocol.
Valuation
Inflation	Limited release (Geometric series), there is also dynamic inflation due to the proof-of-stake system.

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.

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.

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.

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 /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. 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). 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.

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, 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.

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

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. 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.

Major markets

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

See also

Other articles of the topic Cryptography : Public-key cryptography

• Peer-to-peer computing

External links

• Official website
• Network statistics resource, maintained by community
• Block explorer, maintained by Robert VanHazinga of Hartland PC (dreamwatcher)
• Novacoin difficulty and block rate charts
• Novacoin network basic statistics
• Official PPCoin white paper
• What is Proof of Stake?
• Novacoin historical price

This article "Novacoin" is from Wikipedia. The list of its authors can be seen in its historical. Articles copied from Draft Namespace on Wikipedia could be seen on the Draft Namespace of Wikipedia and not main one.

📰 Article(s) of the same category(ies)

• TorrentPier
• Digital Lifestyle
• Cashfree
• Dogecoin
• Micro Encryption
• Gofermate Services
• Astound Commerce

---