NeuCoin: the First Secure, Cost-efficient and Decentralized Cryptocurrency

Abstract

NeuCoin is a decentralized peer-to-peer cryptocurrency derived from Sunny\nKing's Peercoin, which itself was derived from Satoshi Nakamoto's Bitcoin. As\nwith Peercoin, proof-of-stake replaces proof-of-work as NeuCoin's security\nmodel, effectively replacing the operating costs of Bitcoin miners\n(electricity, computers) with the capital costs of holding the currency.\nProof-of-stake also avoids proof-of-work's inherent tendency towards\ncentralization resulting from competition for coinbase rewards among miners\nbased on lowest cost electricity and hash power.\n NeuCoin increases security relative to Peercoin and other existing\nproof-of-stake currencies in numerous ways, including: (1) incentivizing nodes\nto continuously stake coins over time through substantially higher mining\nrewards and lower minimum stake age; (2) abandoning the use of coin age in the\nmining formula; (3) causing the stake modifier parameter to change over time\nfor each stake; and (4) utilizing a client that punishes nodes that attempt to\nmine on multiple branches with duplicate stakes.\n This paper demonstrates how NeuCoin's proof-of-stake implementation addresses\nall commonly raised "nothing at stake" objections to generic proof-of-stake\nsystems. It also reviews many of the flaws of proof-of-work designs to\nhighlight the potential for an alternate cryptocurrency that solves these\nflaws.\n