Primecoin is one of many alternative cryptocurrency projects that have been launched since the initial success of Bitcoin, that was released in 2009. The first alternative coin project (named Namecoin) was introduced in 2011. In 2013 and 2014, the alternative coins (altcoin) market grew exponentially, and many types of alternative coin projects were started.
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Alternative approaches to Bitcoin can be divided broadly into two categories, based on the primary purpose of their development. If the primary goal is to build a decentralized blockchain platform, they are called alternative chains; if the sole purpose of the alternative project is to introduce a new virtual currency; it is called an altcoin.
This article focuses on the foundations and features of altcoins and especially Primecoin, whose primary purpose is to introduce a new virtual currency (coin).
Introducing altcoin cryptocurrencies
There are thousands of altcoins on the market, and they hold some monetary value, such as Namecoin, Zcash, Litecoin, and many others. Many of these alternative projects are direct forks of Bitcoin source code, although some have been written from scratch.
Some altcoins set out to address Bitcoin limitations such as privacy. Some others offer different types of mining, changes in block times, and distribution schemes.
Altcoins must be able to attract new users, trades, and miners; otherwise, the currency will have no value. Currency gains its value, especially in the virtual currency space, due to the network effect and its acceptability by the community.
If a coin fails to attract enough users, then soon, it will be forgotten. Users can be attracted by providing an initial number of coins and can be achieved by using various methods. There is, however, a risk that if the new coin does not perform well, then their initial investment may be lost. Methods of providing an initial number of altcoins are as follows:
- Create a new blockchain: Altcoins can create a new blockchain and allocate coins to initial miners, but this approach is now unpopular due to many scam schemes, or pump and dump schemes, where initial miners made a profit with the launch of a new currency and then disappeared.
- Proof of Burn (PoB): Another approach to allocating initial funds to a new altcoin is PoB, also called a one-way peg or price ceiling. In this method, users permanently destroy a certain quantity of bitcoins in proportion to the number of altcoins to be claimed. For example, if 10 bitcoin were destroyed, then altcoins can have a value no greater than the Bitcoin that was destroyed. This means that bitcoins are being converted into altcoin by burning them.
- Proof of ownership: Instead of permanently destroying bitcoins, an alternative method is to prove that users own a certain number of bitcoins. This proof of ownership can be used to claim altcoins by tethering altcoin blocks to Bitcoin blocks. For example, this can be achieved by merged mining in which, effectively, Bitcoin miners can mine altcoin blocks while mining for bitcoins without any extra work.
- Pegged sidechains: Sidechains, as the name suggests, are blockchains separate from the Bitcoin network, but Bitcoin can be transferred to them. Altcoins can also be transferred back to the Bitcoin network. This concept is called a two-way peg.
Primecoin is the first digital currency on the market that introduced a useful PoW (proof-of-work), as opposed to Bitcoin‘s SHA256-based PoW. Primecoin uses searching prime numbers as a PoW. Not all types of prime number meet the requirements to be selected as PoW.
Three types of prime numbers (known as the Cunningham chain of the first kind, the Cunningham chain of the second kind, and bi-twin chains) meet the requirements of a PoW algorithm to be used in cryptocurrencies.
Primecoin is very interesting because it helps with prime number research. Several world records have been made so far. A list is available at PrimesZone. The difficulty is dynamically adjusted via a continuous difficulty evaluation scheme in the Primecoin Blockchain.
The efficient verification of PoW based on prime numbers is also of high importance because if verification is slow, then PoW is not suitable. Therefore, prime chains are selected as a PoW because finding prime chains gets difficult as the chain increases in length, whereas verification remains quick enough to warrant being used as an efficient PoW algorithm.
It is also important that once a PoW has been verified on a block, it must not be reused on another block. This is accomplished in Primecoin through a combination of PoW certificates and hashing it with the header of the parent block in the child block.
The PoW certificate is produced by linking the prime chain to the block header hash. It also requires that the block header’s origin be divisible by the block header hash. If it is, it is divided and after division, the quotient is used as a PoW certificate.
Another property of the adjustable difficulty of PoW algorithms is met by introducing difficulty adjustment every block instead of every 2,016, as is the case with Bitcoin. This is a smoother approach compared to Bitcoin and allows readjustment in the case of sudden increases in hash power.
Also, the total number of coins generated is community-driven, and there is no definite limit on the number of coins Primecoin can generate.
Primecoin can be traded on major virtual currency trading exchanges. The current market cap of Primecoin is US$ $1,099,646 at the time of writing (June, 2020). It is not very large but, because the currency is based on a novel idea and there is a dedicated community behind it, it continues to hold some market share:
Next, we’ll explore a quick Primecoin mining guide.
The first step is to download a wallet. Primecoin supports native mining within the wallet, just like original Bitcoin clients, but can also be mined on the cloud via various online cloud service providers.
A quick guide for Microsoft Windows is presented as follows. The Linux client is also available at here:
- The first step is to download the Primecoin wallet from http://primecoin.io/index.php. Once the wallet has been installed and synched with the network, mining can be started.
- A debug window can be opened in the Primecoin wallet by clicking on the Help menu and selecting the Debug window menu item. Additional help can be invoked through typing help in the Console window of the Debug window, which is used to enable the Primecoin mining function:
- Once the preceding commands are successfully executed, mining will start in solo mode. This may not be very fast and profitable if you have an entry-level PC with a slower CPU, but as this is a CPU-mined cryptocurrency, the miner can use PCs with powerful CPUs:
As an alternative, cloud services can be used, which host powerful server hardware. Primecoin is a novel concept and the PoW that it has introduced has great scientific significance. It is still in use with a market cap of US$ 17,034,198, but it appears that no active development is being carried out to further develop Primecoin, as is evident from its GitHub inactivity.