First, I apologize for the sensationalist headline I used. I just want to make sure all my old HCU friends that still visit GameSpot read this. While it's true, I'm not encouraging anyone to be irresponsible with their money. In fact, I talk about that further down in my post.
Anyway, one of my old HCU members (Sam) contacted me on Facebook about what my involvement with Peercoin is, since I had made several posts about it. I decided to respond to him and explain my entire story so far and felt it was good enough to post here to let people know what I've been up to since the Headcrab Union closed. I also tell you toward the end where you can find me hanging out in case you wanted to swing by. So the following is my response to Sam...
Hey Sam, I'll detail my entire story here for you. Firstly, do you understand what Bitcoin is? If not, let me explain. Bitcoin is a peer to peer digital currency (or cryptocurrency) that can be sent anywhere in the world 24/7 without the large fees you have to pay when using credit/debit cards or wiring money. It's also a decentralized currency, meaning no one person, institution or government has control of the money, for example the Federal Reserve System which controls the US dollar. This prevents the currency from being devalued through inflation of the money supply, since nobody can counterfeit Bitcoins. It's a property of Bitcoin that's hard coded into the system.
Now if you already know about it, you'll probably know about the crazy price increases. From 2009 to the end of 2012 it saw a steady rise to about $13. Over the last year its value has exploded to over $1,000. A lot of this is due to speculation over its price, but because of the mainstream exposure, many businesses are now starting to adopt it as a means of exchange. Only a very small percentage of people in the world own Bitcoins at this moment, so it has MASSIVE room to grow. Its dollar value will only increase as more people and businesses start to adopt it as a medium of exchange.
Back in March/April there was this huge Bitcoin bubble where the price went from around $35 to $266 and then crashed back to Earth for the next couple months until it started to rise again. I knew about Bitcoin from hanging around Libertarian forums during Ron Paul's presidential campaigns, but never really researched it. During this large bubble I took notice and finally started to research what it was all about.
Besides learning about Bitcoin, I learned that there were other cryptocurrencies called alt-coins which were based on Bitcoin, but provided some kind of change or improvement. The second most popular cryptocurrency was called Litecoin and at the height of the Bitcoin bubble Litecoin was about $5-6. As soon as Bitcoin crashed, Litecoin went along with it down to $1 each. At that point after the crash I bought 5,000 Litecoins. My thinking was that Bitcoin was too expensive at that point to buy. If Bitcoin became a mainstream currency though, there were going to be competitors that would also rise in price with it. So I bought Litecoin without really doing that much research on it, mainly because I hadn't been in it that long and hadn't had the time to read more about it. I saw an opportunity when the price crashed and took it.
After I made that purchase, I had a long time to do research. What I found was that most of the alt-coins were copycat clones of Bitcoin with only slight changes. Most of the coins didn't have enough differences to warrant their creation in the first place. These coins were created by scammers who would amass a large amount for themselves and then release to the public, hoping that their coin's value would rise along with Bitcoin and they'd get rich. Out of all the junk/scam coins I knew there had to be someone in the cryptocurrency community that offered a coin with real improvements over Bitcoin. I just had to keep looking.
And that's when I found out about Peercoin. The developer of Peercoin immediately stuck out to me as somebody who knew exactly what he was doing. His name is Sunny King and likes to remain anonymous, similar to Bitcoin's creator Satoshi Nakamoto. He's somebody with a clear long-term vision for his creation and it reflects in the design of his coin.
I'm not an expert on how Bitcoin works yet, but I understand some of the basics. New coins are created through a process called mining using a proof-of-work based system. Mining is carried out by people running the Bitcoin client on their computers. In order to mine for Bitcoins, the client has to solve complicated math problems. The first computer to solve the problem gets rewarded with the newly created Bitcoins. During this process, the client also works to secure the Bitcoin network and I believe it helps to process transactions for other people around the world.
So Bitcoin needs these people to run these processes in order for the whole system to function. The monetary reward is what motivates people to do it. This has created an arms race between people trying to capture the rewards of Bitcoin mining. First people mined with CPU's, then GPU's and now more recently asic miners, which are specialized processors designed specifically to mine Bitcoin.
The Bitcoin network is most secure from attack when it's decentralized, but that's not what's happening. Bitcoin is becoming increasingly centralized by the day. The reason for this is because normal people with CPU's and GPU's can't afford to mine Bitcoin anymore, so they don't. This puts control of the entire network into the hands of a dwindling number of people that can afford to mine. These people have entire rooms filled with processing equipment. This is dangerous because the more centralized Bitcoin becomes, the more unsecure and open to attack it becomes. Today the process of mining requires a massive amount of energy to be expended in order to secure the Bitcoin network.
This is why Peercoin was created. The developer Sunny King realized early on where Bitcoin was headed, so he designed a cryptocurrency to prevent this from happening. Rather than relying solely on a proof-of-work based system to mine coins, he developed a new system called proof-of-stake, stake meaning the amount of coins a person claims ownership to. Proof-of-Stake goes about mining a completely different way which prevents the hardware arms race created by proof-of-work based systems like Bitcoin. This mean Peercoin is an energy efficient coin, requiring much less resources to secure its network. Using this new method it also provides a higher degree of security by maintaining network decentralization. It also provides owners of the currency 1% interest on their holdings as a reward for proof-of-stake mining. Another difference is that where Bitcoin has a hard cap of 21 million Bitcoins that can ever be created, Peercoin has no hard cap and is designed to simulate gold, an ever expanding money supply, but a low inflation rate of 1% a year.
So after a lot of research, I realized that Peercoin was the real deal. Unlike a lot of the other copycats and clones, Peercoin offered many improvements and innovations in its design which completely separated it from Bitcoin. After reading a lot of replies and interviews from its developer, I've concluded that Sunny King is a genius and knows exactly what he's doing, so I sold all of my Litecoins and bought Peercoin when it was still only around .15 cents a coin. After bills, every paycheck I've gotten this year has gone almost completely into Peercoin. I've now amassed a grand total of around 30,000 Peercoins.
And as I predicted, now that Bitcoin is starting to become more mainstream, people are starting to look into the alternate coins. Peercoin is now the 3rd largest cryptocurrency under Litecoin and Bitcoin and growing in value by the day. Earlier in the week it hit around $8.50, which is a profit of around $250,000 for me. I'm somebody that's used to not having any money, so this is absolutely insane! The best part is that it can only keep growing in value as more people find out about Peercoin and its improvements over Bitcoin. It's entirely possible that Peercoin could be the Facebook of cryptocurrency, where Bitcoin was the MySpace. One introduced it where the other improved on it.
Obviously I don't know what's going to happen in the future. For all I know everything could crash and go back to zero and I'd lose everything, but I don't think it will. I believe cryptocurrencies are here to stay and I'm going to hold my Peercoins for years before I ever think of selling them.
Now, let me answer your question about my involvement in Peercoin besides just buying them. I got involved in the Peercoin community when it was still very young and my role in that community has been expanding ever since. The first major thing I did was to organize a design contest to create Peercoin's logo, which turned out amazing and has already been featured in several mainstream media programs and newspapers. Having the logo created was my biggest contribution to the community I think. Since then I've taken on the role of managing the Peercoin Facebook page. I also help out with promotion on Reddit and am involved with building the community and helping out with developing the main website. I pretty much try to help out wherever I feel I have something to offer.
Now if you'd like to learn more, I'm going to give you a bunch of links, the most important of which are our main website and the forum. They're both listed first. If you'd like to research Peercoin then please use these resources. If you have any technical questions, rather than asking me (Because I'm not a complete expert) head on over to the forum and ask them. I post there all the time, so you'll see me there and in chat. If you decide to get into this, please remember to be responsible with your money and know that nothing is guaranteed.