[Cryptography] Digital currencies

[Jeff Burdges]

On Sat, 2016-06-18 at 00:42 +0200, mok-kong shen wrote:
> How far advanced are the developments in digital currencies?
> Would they ever be able to replace the classical currencies?

If you mean blockchains, then one big issue is the need to many crypto
currencies to waste more resources than traverse the system to protect
the system.  These proof-of-wasteful-work schemes like bitcoin wont
scale.  

We could replace them by proof-of-social-good, like filecoin's
proof-of-possession idea.  And Lief Ryge's proof-of-storage and
proof-of-onion-routing ideas inspired by filecoin.  Also,
proof-of-science-work schemes will fail eventually too because the
science work is too fickle.

In general, a proof-of-social-good appears to only magnify the value of
a more pure proof-of-work system, so they might still encounter scaling
problems if used too naively.  I suspect you want a proof-of-burn type
system coupled with a proof-of-social-good system to really eliminate
all proof-of-useless-work. 

Imho, it's actually pretty great that providing free onion routing and
free file storage or file sharing appear to be the only realistic ways
to make something like bitcoin really scale up, as that could help an
onion routing system like Tor or a free file distribution system scale
up along the way.

Jeff

p.s.  We've mentioned it here recently but you should probably check out
taler.net, which gives classical currencies many advantages over pure
blockchain based currencies.  You can use Taler with a bank that
operates in a blockchain based currency too though, so it's no real
advantage for classical currencies, but it closes the gap somewhat.



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