Microsoft and University of Maryland researchers introduce Permacoin, a better alternative to Bitcoin
Bitcoin is a digital currency and peer-to-peer payment system which was introduced by Satoshi Nakamoto in 2009. With Bitcoin, you can perform transactions without the need for a central bank. To earn, miners use special applications to solve math problems. Some call it a waste of energy, computing power, and time. There was no good alternative to Bitcoin that would reward you for actually doing something useful. The developers over at Microsoft and the University of Maryland have developed “Permacoins,” a better alternative to Bitcoins, which rewards you for archiving data instead of solving math problems.
“We propose a modiﬁcation to Bitcoin that repurposes its mining resources to achieve a more broadly useful goal: distributed storage of archival data. We call our new scheme Permacoin. 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 Bitcon, this modified SOP gives rise to highly decentralized file storage, thus reducing the overall waste of Bitcoin,” researchers wrote.
Unlike Bitcoins, mining process with Permacoins would rely a on storage space. And no, you can’t use an online storage service like Dropbox or Google Drive. There’s an encrypted key and “proof of reliability” check. Microsoft is aiming to provide a safe and distributed backup with Permacoins, making sure the data is available even during outages.
For now, Permacoins is still in prototype module and researchers over at Microsoft and the University of Maryland will continue to develop the system.Further reading: Bitcoin, Microsoft, Permacoin