Cannacoin works like pretty much every other cryptocurrency out there. We utilize decentralized blockchain technology to record transactions and ensure the security of the value therein. This is also how we mint new coins to be utilized on the network.
What sets us apart from others is that we use a "Proof of Stake" protocol for mining which is a environmentally friendly carbon offset scheme that we are taking advantage of for sustainability and scalability.
We have been Proof of Stake since December of 2014. This means that the amount of Cannacoin you hold determines your mining weight which determines your mining power which is used to verify transactions and release freshly minted coins.
You earn new coins based on the amount of coins you already hold so therein lies the incentive to hold coins.