This update provides users the ability to earn staking rewards of their zPIV, by staking zPIV through another crypto-first initiative dubbed zPoS – Zerocoin-protocol-enabled Proof of Stake.
No other privacy-focused cryptocurrency has yet to accomplish this difficult technical feat. To date, other privacy coins in the market have only managed to offer private transactions through proof-of-work mining algorithms. This means PIVX now provides both total anonymity and PoS mining.
To many, proof-of-stake mining (PoS) presents an exciting and potentially lucrative alternative to proof-of-work mining. In many ways, PoS is a lot like earning interest in a bank account or earning dividends from the stock market. By participating in the network, you earn rewards just like with mining.
Understanding zPIV: Casino chip-like privacy features
PIVX uses a sort of sub-currency called zPIV, which uses the Zerocoin protocol to achieve complete anonymity within the blockchain. In the wallet, users can choose to create or “mint” units of zPIV. zPIV comes in specific denominations only, like 1, 5, 10, and so on. This is similar to how paper money works.
When a user sends zPIV, the receiver gets regular PIV, but without being able to tell where it came from (#anonymity). zPIV units only exist within a single PIVX wallet and cannot be directly bought or traded on an exchange. Their value is also permanently equal to PIV at a 1-to-1 rate. Basically speaking, zPIV is not its own currency but is more like a casino chip that can be anonymously exchanged for its face value.
Think of it this way: Sending Bitcoin is like sending a bank transfer to someone else’s bank account. The bank has a record of what happened, and they can refer to it at any time. Using zPIV is like withdrawing cash from an ATM, giving it to someone, and then having them deposit the cash in their own bank account.
Privacy and PoS, together with zPoS
As a major feature in the latest version of the PIVX wallet, version 3.1 rolled out in early-May 2018, users can now stake their zPIV and earn regular returns on it. In a recent press release, PIVX Community Leader Bryan Doreian said:
“zPoS is a major step forward for decentralized cryptocurrency technology at large because it allows for the freedom to maintain one’s own private crypto balances (with zPIV), and to earn rewards privately and securely. It’s akin to having your own personal growth account, outside the prying eyes of hackers, scammers, and other entities that would otherwise spy on your data and use it for their purposes.”
In addition to the new privacy features, those who stake zPIV (instead of regular PIV) will earn a larger share of the block reward for doing so.
Why increase the reward? The more people on the network that use zPIV, the higher the anonymity and security of the network as a whole.
Secondly, converting PIVX into zPIV does incur a small minting fee which is comparable to a standard PIVX transaction fee. Increasing the block reward for staking zPIV helps to offset and even fully cover this minting cost.
Lastly as using zPIV does require some additional effort on the part of the user, the PIVX team feels that users who do get involved with zPIV should be rewarded for doing so.
zPoS is not just a cool trick. It is instead a major step forward for decentralized cryptocurrency technology at large – and PIVX is leading the way.