NeuCoin: The First Secure, Cost-Efficient and Decentralized Cryptocurrency

39 Pages Posted: 28 Mar 2015

Date Written: March 25, 2015

Abstract

NeuCoin is a decentralized peer-to-peer cryptocurrency derived from Sunny King’s Peercoin, which itself was derived from Satoshi Nakamoto’s Bitcoin. As with Peercoin, proof-of-stake replaces proof-of-work as NeuCoin’s security model, effectively replacing the operating costs of Bitcoin miners (electricity, computers) with the capital costs of holding the currency. Proof-of-stake also avoids proof-of-work’s inherent tendency towards centralization resulting from competition for coinbase rewards among miners based on lowest cost electricity and hash power.

NeuCoin increases security relative to Peercoin and other existing proof-of-stake currencies in numerous ways, including: (1) incentivizing nodes to continuously stake coins over time through substantially higher mining rewards and lower minimum stake age; (2) abandoning the use of coin age in the mining formula; (3) causing the stake modifier parameter to change over time for each stake; and (4) utilizing a client that punishes nodes that attempt to mine on multiple branches with duplicate stakes.

This paper demonstrates how NeuCoin’s proof-of-stake implementation addresses all commonly raised “nothing at stake” objections to generic proof-of-stake systems. It also reviews many of the flaws of proof-of-work designs to highlight the potential for an alternate cryptocurrency that solves these flaws.

Keywords: bitcoin, cryptocurrency, proof of stake, distributed consensus, digital currency

Suggested Citation

Davarpanah, Kourosh and Kaufman, Dan and Pubellier, Ophelie, NeuCoin: The First Secure, Cost-Efficient and Decentralized Cryptocurrency (March 25, 2015). Available at SSRN: https://ssrn.com/abstract=2585589 or http://dx.doi.org/10.2139/ssrn.2585589

Kourosh Davarpanah (Contact Author)

Independent ( email )

No Address Available

Dan Kaufman

Independent ( email )

No Address Available

Ophelie Pubellier

Independent ( email )

No Address Available

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