Note: This is a review on the current Paycoin (XPY) source (https://github.com/PaycoinFoundation/paycoin) downloaded on 03/30/15, 13:45 Z. This is only analyzing the source code itself and not any claims, promises, statements, or other remarks about Paycoin (XPY).

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What is Paycoin?

Paycoin, Proof of Work:

The Paycoin blockchain started with block number 1 on 2014-12-12 05:10:03 with an initial reward of 12,000,000 XPY. This block can be found here: Block #1

int64 nSubsidy = 0;

if(nHeight == 1){

nSubsidy = 12000000 * COIN;

}else if(nTime <= POW_START_TIME){

nSubsidy = 0 * COIN;

}else if(nTime < POW_END_TIME – 86400){ // reward is 0 before ending PoW 1 day

nSubsidy = 49 * COIN;

The PoW phase (originally estimated to be approx. 500,000 XPY) of this coin, lasted from 2014-12-12 12:00:00PM EST through 2014-12-21 12:00:00PM EST. ~343,209 XPY were generated during this time.

Paycoin, Proof of Stake:

Paycoin (XPY) has five different PoS reward rates built into the code:

if (primeNodeRate == 0)

nRewardCoinYear = 5 * CENT;

else if (primeNodeRate == 10)

nRewardCoinYear = 10 * CENT;

else if (primeNodeRate == 20)

nRewardCoinYear = 20 * CENT;

else if (primeNodeRate == 100)

nRewardCoinYear = 100 * CENT;

else if (primeNodeRate == 350)

nRewardCoinYear = 350 * CENT;

The normal stake reward is 5%. There are four different “tiers” of what is called prime controllers built into the code. These tiers list public keys to allow a wallet (not address) to stake at it’s specifically given rate. There are thirty five (35) prime350 codes, ten (10) prime100 codes, two (2) prime20 codes, and three (3) prime10 codes. This makes it possible to have up to fifty (50) wallets staking at a higher percentage than a non-prime account. Furthermore, there is a minimum quantity of 125,000 XPY per prime controller, as found in main.h.

Based on the code, the following stake rates would apply:

33 / ( 365 * 33 + 8) = 0.00273790757487762382809259105617 Daily Rate * 350 = 0.95826765120716833983240686965901

Daily Rate * 100 = 0.27379075748776238280925910561686

Daily Rate * 20 = 0.05475815149755247656185182112337

Daily Rate * 10 = 0.02737907574877623828092591056169

Daily Rate * 5 = 0.0136895378743881191404629552808

Block # 115308 shows a prime350 code being used to generate 21,118.800796 XPY

Start Date: 2015-03-10 23:33:19

Stake Date: 2015-03-26 00:30:33 Total time: 15 days, 57 minutes, 14 seconds

Increase: 14.42% or approx. .907% per day

There is other code written about an orion controller for a wallet holding over 50 XPY. Based on a review of the code the transaction fees that would go to that controller are currently being destroyed instead of transmitted to the orion and prime controllers.

Final opinion: ZERO STARS

Based on the apparent uneven inflationary code XPY only seems to be beneficial to those who possess one of the previously mentioned prime codes. With the current inflation already adding 2,660,189 XPY (as of block # 120276) to the money supply since the end of PoW there will continue, as long as the current code remains unchanged, to be exponential inflationary based downward pressure on wallets only receiving a 5% (the “normal” wallets) stake reward. This pressure can only lead towards a ever continuing devaluing of the coin as more are generated.

Balanced inflation has the potential to deliver a gain in value for all coin holders, albeit uninhibited inflation will still ultimately lead towards this. Unbalanced inflation, as written into Paycoin (XPY), does not.

Below you will find an example of an address linked to a non-prime wallet with an approximate value of the prime address shown in block # 115308.

https://chainz.cryptoid.info/xpy/address.dws?72577.htm

With a current balance of 165,886.332555 XPY and after 16 days of accumulating coinage (weight), this wallet would be able to receive:

~.0136% * 16 days = ~.2176% increase or ~360.97 XPY

Two relatively equal wallets, one able to stake ~21,000 coins while the other can stake ~361 coins both after ~16 days.

It is my opinion that Paycoin (XPY) cannot sustain itself in its current form without an ever increasing influx of money, FIAT and/or Bitcoin, equal to the ever increasing supply of Paycoins.

My opinion does not change with any added usability of this coin, such as the current Coinstand.com beta website, as the underlying issue of excessive inflation can only be corrected, in my opinion of course, by removing that code and/or having massive and continuous infusions of capital.

Author’s Note: As this review was previously done by myself (found here) on January 4, 2015, I did not reach out for comment from GAW or the Paycoin Foundation. I did, however, use current information that further substantiates the analysis from January. If either GAW or the Paycoin Foundation reaches out with a statement in any way, the said statement(s) will be added here.