Microsoft Research’s Bitcoin Alternative Permacoins Wants To Repurposes Its Mining Resources

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Microsoft Bitcoin permacoin

Microsoft and the University of Maryland have developed a Bitcoin alternative called “Permacoins”. Bitcoin have become the successful e-cash system in the recent years, but mining Bitcoins wastes computational resources. Bitcoin’s underlying mining mechanism, attempting to solve computational puzzles that have no intrinsic utility. So, Premacoins re-purposes its mining resources to achieve a more broadly useful goal like distributed storage of archival data. For example, you could store some 100GB of government data on your system to earn premacoins.

Unlike Bitcoin and its proposed alternatives, Permacoin requires clients to invest not just computational resources, but also storage. Our scheme involves an alternative scratch-off puzzle for Bitcoin based on Proofs-of-Retrievability (PORs). Successfully minting money with this SOP requires local, random access to a copy of a file.

Given the competition among mining clients in Bitcoin, this modified SOP gives rise to highly decentralized file storage, thus reducing the overall waste of Bitcoin. Using a model of rational economic agents we show that our modified SOP preserves the essential properties of the original Bitcoin puzzle. We also provide parameterizations and calculations based on realistic hardware constraints to demonstrate the practicality of Permacoin as a whole.

Read more from the links below.

Source: UMD, Microsoft Research

About Author

Pradeep, a Computer Science & Engineering graduate.

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  • Alfred Soyemi

    What I am still missing is what all these funny medium of exchange represents value proposition wise.
    Scenario:
    As a farmer, I have planted and harvested 1 ton of potatoes, Now I want to exchange it for say common and or a good medium of exchange.
    I can understand the work and or labor that yielded someone with gold or silver to trade with plus not excluding the fact that these precious metals I get back in return would not rust and become dust for me use in the future or later on, plus the added benefit that almost everyone on planet earth will accept that precious metal from me when ever I am ready to use it for trade.
    Now comes the bitcoin and or permacoin guy who wants to trade with me for my hard earned 1 ton of potato, these guys make their own digital gold that is not naturally occurring for my 1 ton of potato, not backed by any nation as form of that countries unit of wealth measurement that binds that nation(s) and its people to accept it as medium of exchange.
    You buy a computer, aggressively use it computational wise to solve some kind of puzzles that has no value to anyone and because you solved that dinky puzzle you have created wealth that I should exchange my hard earned, toiled for 1 ton of potato for.
    What the heck am I missing?
    Can some simplify these bitcoin crap for me please?

    • Benjamins

      You should look at bitcoin (btc) as a ledger not a currency. When you hold btc it is really a note in a public ledger that you have x number of “points” aka btc. But what is the value of btc or any currency? It is the amount of value people put into it. The about 12 million btc was worth 7 million USD, and that amount of value changes like any currency. The really value of a currency is what the people believe/put into it. If you probuced 1 ton of potatos and sold them for 1000 usd. You just declared to yourself that 1000 USD is worth 1 ton of potato’s. So if you think eating a burger is worth .01 tons of potato’s that means it also worth 10 USD in your eyes. So when you go to a restaurant you are willing to give them 10 USD for the burger. They will ask for there prosived value of the burger in USD. If its 10 or less you wouldn’t mind buying it. That’s how currency works. The medium is pointless. Also the government can’t back the value of the USD in gold anymore. The total value of a currency is the total amount of value put into it, so if people stopped using it as a medium of extange it becomes worthless. That goes for USD, BTC, YEN, Euros, etc.

      • Alfred Soyemi

        I appreciate your explanation which I believe, I am already aware of, what I am not getting is what work and or services were performed to earn bitcoin? From what I have learnt about bitcoin, people buy computer hardware to solved some kind of complex math equation to print it. So I should be able to print USD at home by solving some math algorithm on my PC and not by planting potatoes or providing services like cleaning someone’s house, mowing the lawn etc?

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