How To Create The Next Great Cryptocurrency
Article originally written in May of 2013 on Slashgadgets. 2013 I predicted the rise of altcoins and centralized mining years ago, apparently.
Spoiler, the word “Bitcoin” will be used a lot through this piece.
Cryptocurrency, if there ever was a time where that would be the buzzword of a generation — then that time is now. Cryptocurrency, if you’re unfamiliar, is a form of online digital currency that has become quite the commodity due to the rise of the most successful of these sorts of currencies to date, Bitcoin (BTC). Essentially in Layman’s terms, it is a form of digital currency, in its current form, a Bitcoin is unit of currency that is not centralized. It is run, and generated (essentially how a Bitcoin is minted in physical monetary terminology), by a connection of peer-to-peer networks that are held onto a user’s machine.
These machines, which are connected similarly to other peer-to-peer networks such as the likes of Skype, or your even your old school Limewire, are constantly connected. Everyone has a piece of the puzzle and everyone is trying harder and harder to solve it. The faster you solve this big puzzle the more Bitcoins you can generate. But, this particularly kind of number crunching has amassed quite the following — and some very difficult mathematics is at play here.
The more Bitcoins that are “mined” through the piecing of this puzzle of microtransactions that are divided in “transactional blocks”, the harder it becomes to generate a Bitcoin. So, people are rallying together in groups called “pools” where essentially an amalgamation of your collective computational prowess is put in a big lump sum, and you are rewarded Bitcoins based on how much you helped in the processing of a single “block” of information. You can do this solo, and mine yourself, but the returns are far less great, as the difficulty of these computations and algorithms have grown exponentially since the release of the Bitcoin.
There is a maximum limit of Bitcoins that can be mined over time, however. The total number that can be mined in the lifetime of Bitcoin is 21 million. So, once all these coins are “mined” and put out there for circulation, there can be no more. No centralized bank or grand authority can issue more. It’s essentially a safety to ensure the integrity of the Bitcoin itself. However, there have been estimates made that say all the Bitcoins cannot be mined till at least the year 2040, and some estimate as far as 2140.
You may be wondering how “mining” for Bitcoins actually work, and when you run their little program what exactly it is you are doing. Well, the entire network of Bitcoin miners are really just users of the Bitcoin program. Once a user you use the computational power of your computer, a series of complex mathematical calculations later, consisting of verifying existing Bitcoins, the transfer, and creation of these coins in a log. Once a user has updated the log and solved a block and it has been approved by the Bitcoin network, they are then rewarded a fix set of the virtual currency, who’s cap is currently set at 25 Bitcoins. This has created quite the unique and competitive marketplace. Causing people to build custom Bitcoin mining computer rigs,or hijacking other people to use their computer to mine Bitcoins for their own personal gain.
Now these Bitcoins, or a portion of a Bitcoin which is referred to as “satoshis” (which I assumed named after the fame creator/creators of Bitcoin who are referred to from their pseudonym), can be then be bought or sold using the current exchange rate from your centralized currency of choice. Once in your hands they can be used for all manners of nefarious and evil deeds. But, it doesn’t have to be that way. You can choose not to use the super-secure, anonymous currency for good. You can pay for things like online gambling, Web Hosting, WordPress, and a whole other myriad of online marketplaces (or you can buy drugs on Silk Road, it’s fun for the whole family). There are apps you can use for the transfer of Bitcoins anytime, anywhere. This is a very versatile currency. You can start to see the mass appeal now.
The nice folks over at Wired did an awesome write-up on the methods of Bitcoin mining, and how they got started with their own money printing machine right in their office and then do a good job of explaining BitCoins in further detail, here.
All-in-all, Bitcoins and the use of digital currency market is here to stay. Modern home computing has made it next to impossible to eliminate the currency, as all it needs is a computer to generate it. So, you would think that these massive connections of peer-to-peer computing would be something that could assumingly be quite powerful. And, well, you would be very right.
This insane network of casual miners, ASIC miners and pools combined is quite the powerhouse. How powerful? Well, about 8 times FASTER than the top 500 Supercomputers combined in the world (GenesisBlock). Let me reiterate for the sake of your comprehension. EIGHT times more powerful than if you COMBINED the worlds top 500 Supercomputers. Now that that’s been embedded in your skulls, I’m gonna throw some numbers at you for some of the worlds top Supercomputers:
Courtesy of DigitalGenesis
Courtesy of DigitalGenesis
Taken from Gizmodo:
“According to Bitcoin Watch, the whole Bitcoin network hit a record-breaking high of 1 exaFLOPS this weekend. When you’re talking about FLOPS, you’re really talking about the number of Floating-point Operations a computer can do Per Second, or more simply, how fast it can tear through math problems. It’s a pretty common standard for measuring computer power. An exaFLOPS is 1018, or 1,000,000,000,000,000,000 math problems per second. The most powerful supercomputer in the world, Sequoia, can manage a mere 16 petaFLOPS, or just 1.6 percent of the power geeks around the world have brought to bear on mining Bitcoin. The world’s top 10 supercomputers can muster 5 percent of that total, and even the top 500 can only muster a mere 12.8 percent.”
And that 1 exaFLOPS number is probably a little low. Because Bitcoin miners actually do a simpler kind of math (integer operations), you have to do a little (messy) conversion to get to FLOPS. And because the new ASIC miners — machines that are built from scratch to do nothing but mine Bitcoin — can’t even do other kinds of operations — they’re left out of the equation entirely. So what we’ve got here is a representation of the total power spent on Bitcoin mining that could theoretically be spent on something else, like real problems that exist naturally.
You see, Bitcoin is a self regulating entity. The more coins that are mined as people are creating better, innovative techniques that get it done faster, the harder it becomes. This is again to ensure that the market does not become flooded and the BTC itself devalued.
If you’ve ever owned a PlayStation 3, or just like to keep up to date with computing trends, you may have heard of Folding@Home. Folding@Home is essentially a similar concept where the collective computing power of others is being used to solve real world problems. Like modeling proteins and searching for extra-terrestrial life (Seti@Home). These mass computing models are actually doing something other than lining the pockets of computer savvy geeks. What if we took all of these computers and amassed them to do good, but at the same time allow you to generate something of monetary value. Thus, bringing us to my main point:
“The creation of a worldwide Cryptocurrency for the greater good of mankind.”
Introducing my idea for v1.0 for something I’m calling: “HumanaCoin”.
HumanaCoin in its simplest form would be a digital Crytopcurrency with the same grassroots as Bitcoin, Litecoin, etc. Backed by the same concept of digital receipts and transactions, that can be utilized in many ways. Ensured by a level of super encryption that would put Bitcoin to shame, HumanaCoin would be the end of all digital currencies, and the crowned King. The reason being the HumanaCoin isn’t back by just human greed, but also human compassion.
It will essentially be a massive project, at a global scale. It would allow people to “mine” for HumanaCoins, or “HMC”. These coins are created by the use of mining data, or by putting your computer power towards a more compassionate goal, the evolution of human biological sciences, and mathematical calculations for space exploration, etc.
Once a part of the HumanaCoin system a user can enter a certain group or pool of individuals working on a specific scientific project. Say for instance mapping a genome, or searching for habitable planets throughout the galaxy. Scaling would be easy because anyone can join in on the cause. There are currently 7 billion people on earth, and everyone needs money — the market for people willing to join this effort in regulating this currency and keeping the value up would be based solely on how the global market sees fit.
Bitcoin itself has some flaws. First all, not many people even know what it is. The media makes it seem like such a complicated and unique beast, but once you’re familiar with the terminology and can use a computer, it gets easy. The marketing behind HumanaCoin would surely create itself as it gains popularity due to it’s versatility and ease of use; this is the most important aspect. The programs required to join a mining pool for a specific kind of scientific research would be seamless. With a bunch of different sub sections and categories you can choose from. Over time the normal means of mining would become so complex that only privately run facilities or massively run pools would be able to actual profit from the venture, and more focus would be on the rewards gained from doing computations for the betterment of mankind. But, that would be extremely far into the future. We could finally have a currency that is not only securely backed and non-centralized, but could evolve as mankind gains more and more computational power. Could you imagine a quantum computer doing floating point calculations to mine HMC? A collaborative effort such as Bitcoin is a prime example as to if there is money to be made, people will work together. But, if there was money to be made, and scientific gain/anything that would benefit all the people of Earth, then HumanaCoin would prosper forever. It would be a currency that could evolve with the human race, seeing as computers aren’t going anywhere anytime soon, or ever.
The next great digital cryptocurrency would have more mass appeal, ease of use, become standardized and have extremely limited government control. The less centralized currency is involved, the better. But, it will also have to have a long term goal in mind. Something more than just getting rich quick. It has to be beneficial in someway to mankind for it become a household name. Bitcoin is just the starting block, just as Myspace was the first social network, and Facebook came in and made it better (that could be argued however, I miss editing my profile). Bitcoin is just the beginning, for the true heir to the digital currency throne has yet to be decided. Now is just a matter of who plans to be the most innovative. I can only hope that I was some sort of inspiration to the tech masses.
