(image from Bitcoinmagazine)
No. This is not really a full primer on Primecoin. I still have yet to completely understand the dynamics of it. I just wanted to use that title.
The cryptocurrency field is becoming really interesting. Although Litecoin is the second largest one, I always thought PPCoin was the most innovative one. It had 2 things that stood out from Bitcoin, proof-of-stake (vs proof-of-work) to generate consensus, and its minting process was more akin to gold. The higher the difficulty the fewer coins are being generated. It it thus naturally inflationary in the beginning, but over time decreases until very few coins are being generated per block.
The same creator, Sunny King, recently introduced Primecoin, a new altcoin. It once again shows the genius behind the concept of cryptocurrencies. One of the critiques of Bitcoin is that all the mining and electricity expenditure to perform the proof-of-work (which is essentially just brute-forcing random numbers) goes to waste. The actual verification of the blockchain is quick.
Primecoin introduces a new idea. The proof-of-work is done through the generation of primes. So although it is still more resource heavy than proof-of-stake altcoins, it is going towards a collective benefit. The resources are anyway being spent for nothing, so why not spend it on something useful? Luis von Ahn (creator or recaptcha and duolingo) will be proud. It’s realigning the incentives. Think SETI@Home meets Bitcoin.
I still have to read up more on how it works. With some initial reading, it seems it is generating prime chains. These chains are then used as a replacement for the hashes (as in the case of other altcoins). Bitcoinmagazine has a write-up of Primecoin’s inner workings.
What is amazing though, is the potential now exists for these proof-of-work mechanisms to be useful on its own. Bitcoin’s distributed network is the “largest” (note the quotation marks) supercomputer that exists in the world. We can now both run a math-based currency AND use it for the benefit of humanity.
It begs the question. What if we can realign the proof-of-work even further? What if anyone can use a supercomputer to do some number-crunching and then let it act as a proof-of-work? A free API to a supercomputer.
The cryptocurrency revolution is here and it is changing the world.