Note: There is some seemingly defunct betting site (yawn) called 'paracoin.com'. 'paracoin.org' ain't related.
Also: 'paracoin' does not exist at this time. It's just an idea to be explored. ~tvbcof 5/1/2013
From Ancient Greek παρά (para, “beside; next to, near, from; against, contrary to”). From Sanskrit word par meaning beyond.
The name of this 'alternate crypto-currency' actually sprung from my mind as 'parasitic coin', but that word is related to the etymology outlined above.
Note that a 'paracoin' is just a standard 'bitcoin' which also happens to have a representation in an alternate block-chain.
There would be little disadvantages to making one's BTCs into PCNs, particularly if they are used as a 'reserve' store of value. 'paracoins' may fall out of the 'paracoin' system for various reasons, but they are always perfectly valid 'bitcoins'.
The above mentioned means that:
So-called 'alternate crypto-currencies' have some trouble boot-strapping. Part of this is due to problem that (with some exceptions(1)) people are not very original and assume that block-chain hashing proof-of-work as pioneered by Bitcoin is the only way to go. Trouble is that 'Bitcoin' has monopolized most of the hashing power. Some particularly narrow-minded people will divert hashing power away from Bitcoin simply to attack alternatives. Also, who wants to sink money into one of about 10,000 alternate solutions?
Relatedly, most 'alterate crypto-currencies' need to develop something of a 'critical mass' in order to become effective. This can be a challenge with a lot of contenders in the game. 'paracoin' steps around this issue.
Yet another issue are that many 'alternate crypto-currencies' have been scams or schemes designed to make early adopters rich. 'paracoin' is clearly not in this category.
Observation: Bitcoin is bending over backward to share the hashing power and many people are taking advantage of it to utilize as a low cost, high reliability messaging system. Being prone to conspiracy theories (...and having worked in the tech sector...) my personal feeling is that it might be hoped by some that the solution can be absorbed by large organizations in order to harvest business (and other) intelligence information which could have a high value. Who knows? But hey, "Don't stare a gift horse in the mouth" so the saying goes. Let's utilize this generously provided resource!
I (tvbcof) am specifically interested in what I refer to as a 'reserve currency'(2). That is, a long-term store of wealth and a vehicle for periodically balancing values between entities. This is critical because in a lot of ways the needs of a 'reserve' currency and and 'exchange' currency (for buying Skittles or selling goat-cheese) are entirely different.
A 'reserve currency' has:
The goal of 'paracoin' is simply to provide a viable solution waiting in the wings in case Bitcoin fails. I have a pretty strong position in BTC and mainly just wish to protect my investment Many of the things which make me nervous about Bitcoin are a direct result of attempts to make it a powerful 'exchange' currency. These include:
Q: Do you want to destroy or damage Bitcoin?
A: Hell no! PCN holders are by definition BTC holders.
Q: Will it help Bitcoin?
A: Possibly. Some people may be uncomfortable by theoretical weaknesses in Bitcoin and be glad to have a fall-back.
Q: How do I get PCN?
A: vanitygen + BTC
Q: How much are they worth?
A: Same as BTC. In fact, 'paracoin' IS 'bitcoin'!
Q: How do I use PCN?
A: A special client.
(Note: 'paracoin' strongly encourages and almost demands that users are 'peers'. This contrast sharply with Bitcoin where it is actively discouraged by at least some of the core developers.)
The solution exists in two phases.
A very simple transaction. 'paracoin' does not support all this multi-sig horseshit. The 'para-client' does not perform such operations and in 'parasitic phase' one of the miner's jobs is to enforce this.
If/when the system has enough hashing power to stand one it's own, it may switch to adult phase. This will look very much like early Bitcoin but without a lot of baggage. The goal would be to have the system be able to undergo 'metamorphosis' into adulthood rapidly and reliably though if needed.
Enthusiasts and people who want to see the solution developed. Also people who would like to enjoy some of the 'side benefits' such as anonymity. The system need not be used in the real world while Bitcoin is functional. It can be used as a test-bed where inter-network communication techniques and the like can be worked out. I envision a transparent account where any fees levied go in, and any expenses incurred are payed out of. In 'parasitic phase' only of course. In 'adult phase' it works much like Bitcoin does today (where at the time of this writing Bitcoin has not been significantly subsumed by large corporations.)
In 'parasitic phase' there is no mining reward or transaction fees (or maybe there is...I dunno...it's possible.) A PCN balance can grow in two ways:
This means that to convert non-PCN/BTC to PCN/BTC, one generates a new '1para1' address than transfers BTC to in one batch. From thence the balance can be transferred to a different '1para1' address and the 'initial loading' address can be trashed.
I had bad luck generating my first '1para1' address using an old build of vanitygen built against OpenSSL 0.9.8. A 4G i5 machine took a few days initially. The next less than 12 hours. A good move for a 'paracoin' user would be to generated '1para1' vanity addresses in the background for future use. (I don't expect that initial Paracoin users would be silly enough to get '1para1' addresses from others vs. generating them themselves, though of course someone could convert actual values pretty safely if they had hashing power (or foresight) to generate 'para-addys' quickly.)
 Another similar idea: bitcoin-legacy.org