Microsoft Research proposes Permacoin, a Bitcoin that's actually useful

Microsoft Research has teamed up with the University of Maryland to propose Permacoin, an actually useful alternative to Bitcoin.

The virtual currency Bitcoin is minted, or rather created, by solving mathematical puzzles. These take up a huge amount of computing power and resources. Unfortunately, due to the security models involved in Bitcoin, that computational power simply goes to waste instead of creating something useful.

Now Microsoft Research, alongside the University of Maryland, has published a whitepaper describing how the resources used in mining Bitcoins could be repurposed to mine, or rather store, a new digital currency: Permacoin.

Permacoins would be generated when users store archival data downloaded from a huge data pool. Mining permacoins would rely less on computational power and more on storage space. The data stored would then be checked for availability and cohesion and the user would be awarded permacoins per his, or her contribution.

There are also extra security features added to make sure the data wouldn’t be offloaded to a cloud storage system, or compromised by someone attacking the Permacoin network.

The whole idea is that the data stored would be public archival data, useful for humanity as a whole. The hardware and storage investments would create value in the real world by securing and distributing data in a de-centralized, widely available system. The information would then be secure against all sorts of threats.

While this is still only a proposal, the idea of Permacoins also offers us a glimpse into a future where digital currency could be tied to real-world value, and users offering up their computational power and storage space to create something useful would be rewarded for their contributions.

Via: Engadget Source: Microsoft Research | Image courtesy CoinTelegraph

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I just don't see why Bitcoin can't be like Folding@Home and use the processing power / time for something that benefits the world like Microsoft Research is proposing.

According to them because of security. Ppl have tried to bake such stuff into bitcoin but they never managed to get it to work and still be as secure as bitcoin is.

Wow, this is cool. That's one thing that always kind of nagged me about Bitcoin is just how wasteful and otherwise pointless the mining process is. This is a bit better, but now instead of GPUs and single-purpose hardware eating up electricity, our homes can be turned into data centers full of spinning disks creating just as much heat.

So if you delete the data you lose your coins? What if you just sell them or trade them away first and then delete it? Disk space costs money, no one is going to keep this stuff archived long term. This seems like a silly idea and a waste of time.

Bonfire said,
So if you delete the data you lose your coins? What if you just sell them or trade them away first and then delete it? Disk space costs money, no one is going to keep this stuff archived long term. This seems like a silly idea and a waste of time.

What a stupid argument. Storage cost money and so does computational power and much more costly in the long term. I bet

nickcruz said,

What a stupid argument. Storage cost money and so does computational power and much more costly in the long term. I bet

What?

That's the point there's no intrinsic value there. It's just a way to prove your machine invested the time and resources. Permacoin would have intrinsic value by archiving data.

The bitcoin you mined is the paycheck BitCoin system pay you for running their system (verifying transactions, etc.). It's like you're working in a private minting and your employer pay you with that money you're printing for them.

CMIIW

Forget the mathematical puzzle part, the best way to think about it is being paid to help a system keep running.

Bitcoin is a network, but it requires machines to process transactions. To incentivise people to do that, coins are added to the network and over time you'll get a rough % of those coins based on how much computational power you provide. So if you have a lot of machines (And I mean a lot) and somehow account for 1% of the computational power behind the network, you'll get about 1% of the "coins" that are generated.

(It's not quite as simple as this as the coins are distributed differently).

Anyhoo, the "coins" are nothing more than a way of saying "I was part of the network at this point". They only have Value because people apply value to them.

Bitcoins are mined by providing correct hashes to the bitcoin network. Your computational power is used trying to basically solve a very huge pointless number problem. When your miner has figured out an answer, it'll ask the network if its a correct answer nobody else has, and if so its added to the ledger/network as currency you are in possession of. When its an answer someone else has, you validate the network basically which keeps it functional.

As time increases new hashes are thrown into the mix that are increasingly more intensive to solve, thus slowing the release of bitcoins in the market, until everythings solved. I'm thinking permacoin would work as an extention of bitcoins once all the hash blocks are released.

There are rules of course, all outlined https://en.bitcoin.it/wiki/Mining

Sigh. Most articles get this wrong and Vlad, you aren't helping. They aren't just cute puzzles proving someone did some work, the mining is cryptographically signing the bitcoin public ledger. It's what protects the ledger from being forged and gives people the confidence in the currency. Read the original bitcoin whitepaper, it's a nice piece of work.