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In a Proof-of-Work blockchain, new blocks are created by mining, but in Peercoin’s Proof-of-Stake, new blocks are created by staking.

In a Proof-of-Work blockchain, the act of mining involves using computer processing power to solve blocks. The miner who solves the block first has the privilege of adding that block of transactions to the blockchain, earning them new coins as a reward for their service to the network.

Ultimately, miners are responsible for validating and processing transactions on a blockchain network, and electricity is the scarce resource they use to do this work.

Naturally, miners will attempt to solve and produce blocks faster than their competitors in an effort to earn more rewards for themselves. Becoming faster than the competition requires more processing power, which inevitably requires more electricity to be burned, an incredibly wasteful process.

This process works to secure a blockchain, however it ends up centralizing power over the network with pool operators, as most miners will lend their hash power to a few large mining pools in an effort to continue earning rewards.

Economies of scale also play a factor in centralizing Proof-of-Work blockchains, with miners who manage to grow so large that they are able to get better deals on hardware and negotiate better energy prices. They will always outcompete the small home users and drive them out of profitability.

In Peercoin’s Proof-of-Stake system, the scarce resource used to secure the blockchain is not electricity, but time. Basically, the older your coins are, the more time they’ve accumulated sitting in your wallet. Coins with a higher time accumulation have more power to participate in producing blocks and securing the network.

Let’s say you own 100 peercoins, and you want to start minting new blocks. After sitting in your wallet for 30 days, you will have accumulated 3000 “coin days”, because each of those 100 coins is 30 days old. These coin days are the actual minting power of your coins. You can think of your coin days as being similar to your hash rate from traditional mining. Accumulating more coin days means you’re more likely to produce a new block on the chain.

There are a number of rules in place to make this a fair system. 30 days is the minimum time you need to hold your peercoins in your wallet before they can become eligible to start minting. If you transact with your coins, that timer will reset.

Every time you produce a block, you will earn new peercoins as a reward (about 3-5% annually) and the age of the participating coins will reset to zero. After 90 days, peercoins will hit their maximum minting power. These time limits are all security features designed to decentralize minting power and keep the process fair.

Using time as an integral part of Peercoin's security means that blockchain security becomes inexpensive. It no longer becomes necessary to consume some scarce resource (like burning electricity), which could be used in a more beneficial way.

Why waste electricity at all when a green alternative exists that can perform the same function? Time is also a scarce resource. It is limited. You can't create more of it, and you can't manipulate it, or speed it up to benefit yourself. All you can do is wait, and waiting doesn’t cost anything except your patience.

The main costs for staking in Peercoin are an investment in the coins and time necessary to participate in the staking process. As a result, Peercoin staking is energy efficient, sustainable, and can even be done on low powered devices like the Raspberry Pi.

Peercoin has proven over the past decade of continuous operation that the energy wasted to secure Proof-of-Work blockchains is completely unnecessary.

Staking, or ‘minting” as we call it in Peercoin, is a fundamental concept that plays a key role in securing the network. This is the original Proof-of-Stake mechanism, and arguably the only true Proof-of-Stake mechanism to this day.

When you hold peercoins in your wallet, they begin to accumulate "coin age." Coin age is a measure of the amount of time your coins have been held in your wallet and not used for transactions.

When your coins meet an age of at least 30 days, your wallet is eligible to participate in the staking process. Your wallet competes with others for the opportunity to mint a new block. If your wallet is selected by the protocol, you create a new block, validate transactions, and earn the block reward associated with this new block.

Minting benefits users by allowing them to 1) directly maintain and secure the blockchain by finding new blocks, 2) earn block rewards and 3) directly participate in the consensus and governance process.

Peercoin actually uses both Proof-of-Stake and Proof-of-Work. Proof-of-Stake is used for security of the network, while Proof-of-Work is only used as a mechanism for continuous distribution of new coins. This continued distribution helps increase decentralization by ensuring that newly created coins end up on the market where outsiders can buy them.

Essentially, the role of PoW in Peercoin is to create new holders that will mint, rather than placing new inflation only in the hands of existing holders. The PoW in Peercoin is modified from Bitcoin because the block reward automatically decreases as the mining hashrate increases, leading to less inflation over time.

The USA has strict legislation about crypto. Under the laws of the USA - Peercoin is perfectly legal as it had no ICO, no presale, no allocation to team members or founders and no "dev tax" of any sort. Peercoin (just like Bitcoin) distributed its entire supply automatically as block rewards through its consensus protocol (Proof-of-Stake and Proof-of-Work). As a result, Peercoin is NOT a crypto security.

The vast majority of crypto assets however are unregistered securities due to one or a number of the above listed items that cause them to pass the howey test. The law is very clear on this topic. Given that unregistered securities are at higher risk of being targeted by law enforcement, Peercoin's legal status offers both users and exchanges a sense of safety and peace of mind. It is also an excellent indicator of long-term viability.