Peercoin uses a hybrid proof of stake and proof of work where minters gain coins in relation to their holding and where miners gain coins in relation to the hashing power pointed at the network.
As proof of stake is not very energy intensive – it doesn’t require solving of a partial hash inversion problem – Peeroin’s unique selling point has been its green credentials. With Peercoin they have designed the proof of work block reward to halve every time the difficulty increases sixteen times.
With proof of stake in peercoin the reward is allocated according to coin age – or the age the coins have been in an address and not used multiplied by the number of coins.
Only one hash per transaction output is performed each second – or a very low processing load. If the hash of a particular transaction output is lower than the difficulty target it can be used to mint a new proof of stake block and receive the block reward.
Transaction fees are set to 0.01 PPC but are actually destroyed. As the proof of work block reward tends to zero the primary coin supply is via the proof of stake 1% annual rate minus the transaction fees that are destroyed.