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Riecoin: A Cryptocurrency With a Scientific Proof of Work
An anonymous reader writes "Enter decentralized, open source mining with the first scientific proof of work. Riecoin is a decentralized (p2p), open source digital currency. Proof of work is about finding Hardy-Littlewood k-tuples. Ultimately miners are verifying the Riemann hypothesis. Unlike for Primecoin the probability of accepting a false positive goes to zero as the network grows. Primecoin uses Fermat Test which runs the risk of accepting so called Carmichael numbers. Riecoin uses a stronger test to ensure correctness."
What we're really going to need, and soon, is a program to know what all these *coin currencies are, and maybe some exchanges to change your Xcoins to Ycoins to dollars. Maybe even a consumer report on the issue: "We recommend avoiding FraudCoin as a poor value."
https://www.cryptocoincharts.i...
To be honest though FraudCoin was kind of a dead give away just by the name.
The inability to intelligently regulate the value of the currency in accordance with the economic needs of the society is a bug, not a feature.
Mod parent up, please! It's a good thing that government issued currencies are intelligently regula....oh wait...
Can we please have a cryptocurrency that doesn't very rapidly involve burning vast amounts of electricity to perform calculations that have no other purpose than creating the currency? This just seems like a grotesque waste of resources. If there's no way to make a viable cryptocurrency other than performing long calculations, at least find a way to make the calculations have actual utility - incorporate foldingathome into it or something so at least you're curing cancer while generating the currency.
"How much are they worth? In real money"
See, this is a big problem that many people don't understand: the difference between "worth" (or "value") and price. They are not the same things, and that is what has ruined Bitcoin.
Economically, the intrinsic value of something is approximately: the cost of production + the cost of distribution. Bitcoin was intended to be basically free to distribute. So the intrinsic worth should be approximately the cost of production. (Plus a tiny bit... it's not exact.)
The reason this is called the "value", is because if the price goes much higher than this, more people will start producing them because there's good profit to be had. If the price drops below that point, people will stop producing them because there's no profit to be had. Make sense?
Unfortunately, today's stock market all too often ignores value and goes by price alone. That is how bubbles form: the price of something gets outrageously inflated, completely aside from any value. When actual supply-and-demand rear their heads, and the commodity is suddenly associated with that value again, as it eventually must... everybody who bought at that inflated price lose a lot of money.
This all comes down to one basic point: the current stock market is often irrational, because it has gotten to a point where it completely ignores actual value of something and goes by price alone. This is irrational and leads to all kinds of problems.
So, keep in mind: if you invest in a cryptocurrency (or anything else, for that matter) at a price that is far above it's "intrinsic value", be careful. You might make money if you know what you're doing, but you could also become the victim of the bubble and lose your shorts at any time.
I neglected to mention one important step:
... And THAT makes the price come back down toward the "intrinsic value", because of supply and demand.
"... more people will start producing them because there's good profit to be had."
And this is only true because of Bitcoin's dual nature: it is not just a currency, like fiat dollars, but also a commodity that can be produced at home.
Which is why I say the market for Bitcoin is completely irrational. There is no economic reason for it to bounce all over the place. Investors are being stupid.
Do certain countries have piss poor systems set up that can make their money worthless, overnight? Yup, that's why folks don't invest in them.
The dollar, the euro, etc. may fluctuate, but there are as reasonable safe guards against them going flat as is currently possible that are what make the world go 'round.
Comparing major real-world currencies to "crypto" currency is like comparing a child's pretend store to Wal-mart. Sure, if you convince enough kids that the pretend stuff in your pretend store is worth enough, you can dupe them into giving you their money. You might even make a few bucks before people catch on, and if you have a large enough supply of dumb kids in your neighborhood that fall for it and believe a baggie of dirt you sell them is magic dirt that will someday turn into gold or candy.
But it ends when the real world gets involved - because the real world doesn't buy into your pretend.
Repeatedly solving equations on a computer does not actually do anything valuable. It simply controls the output. But if what is behind the output of nothing is still nothing, it's simply an age old money scam where the new folks pay to get in by "investing" so the early adopters make money, but eventually the pyramid falls when everyone realizes that it's all based on...nothing.
BitCoin "investors" try so hard to make it all "real" and will quote you academic papers and media curiousity stories and "conferences" of folks who get together to debate all this, but it's just because they want folks to keep believing that some type of alternate currency is just going to sprout up over nothing. Nothing backing it, nothing being produced but virtual money that has no true value except to speculators who depend on additional folks speculating to make their pile of nothing have the perception of being something.
It's all rather insane, but it breeds on basic human hopes for wish fulfillment - the wish to get rich quick. I have no doubt BitCoin has made some folks very rich - but those very rich people became rich because they cash out their hauls into real dollars which can then be used in the real world. Cashing out by selling to folks who come in at the bottom of the pyramid.
I said this elsewhere and was pummeled by a bunch of believers - but you cannot pay for any of the necessities or luxuries of life with BitCoin. They retorted about debit cards and BitCoin ATMs - but missed the point, which is that they had to cash out those BitCoins into real world currency to make it useful. Once folks stop buying into the bottom of the pyramid, hoping to get rich, and the jig is up - they are worthless.
In the future, folks will look back at this as a large experiment gone wrong and marvel at how some of the smartest folks got taken in by this. Scams usually prey on the old and weak, yet you have some otherwise brilliant people who fell for this hook, line, and sinker by the lure of getting rich quick out of nothing.
That idea of value was nice, in the 19th century. While one can come up with a concept of value, that value is not the same for all actors: Value is not really cost of production, but utility. And we also have to consider marginal value: Water is extremely valuable, but we have so much, the marginal value of producing another glass of drinking water is pretty low.
Many things will never be sold for how much they cost to make, because their actual value, their utility, is far lower than the cost of production. And since values and costs of production change over time, it's not difficult to find items for sale for less than the cost of production.
Then we have stocks and bubbles. The price of a stock doesn't just reflect how much it's worth now, but how much it's expected to be worth in the future. This does cover speculation too: There is a utility in holding something if you expect to be able to resell it for more tomorrow. So I'd not say that what people call bubbles has that much to do with being far from fundamentals, but with information being propagated that shows that the current estimate of future value is very different from the current price. If a pharma company is on trials to cure a major kind of cancer, its stock will go up. If the trials are unsuccessful, it might go all the way to zero. But that doesn't mean that there was a bubble. This is especially true with stocks, where, if you really think a price is way too high, a hedge fund can make money shorting it.
So, when calling something a bubble, we have to have some very strong reasons to do so. You could claim that the Efficient Market Hypothesis doesn't hold, even at the weakest of levels, at which point you are very, very far from mainstream economics. You can instead claim that the problem is that the market is being manipulated, and that might be the case with Bitcoin, for instance. Maybe a company is committing major fraud, and most people don't know about it, but you do have insider knowledge. That'd not be much of a bubble, just plain decepcion. You could also claim that there are major amounts of risk baked into the price, so you can expect volatility. Many would argue that the financial crisis, for instance, was really all about the Fed just not making any sense, and not reacting to a sudden increase to the demand of money.
So when it comes to bitcoin, how do you explain the bubble? My favorite is a combination of price manipulation from actors that control way too much bitcoin for a market to be all that efficient, tied to a high amount of variance in possible outcomes. If through something strange, Bitcoin actually happened to become important, then its current price is very low compared to what it should be. If it is not, then the current price is way too high. So what we see is a market that is mostly known by people who are just spending a few dollars hoping to make millions, so for them, it's a lottery ticket. Buying a lottery ticket, hand having it lose, doesn't mean that there was an asset bubble with the tickets, does it? :)
Most of the proof-of-work systems out there are really demanding that you waste some amount of money, time, or both, to prevent people from just generating arbitrarily high numbers of coins (as opposed to the Hitchhiker's Guide To The Galaxy use of leaves as coins.) Bitcoin number-crunching is purely wasteful potlatching. Dogecoin is such wow, so calculation!
At least this one is doing a kind of work that's potentially valuable to the world, assuming the system collects all of it in a way that can be used to contribute to mathematical knowledge. (Yeah, yeah, this is /., and I'm commenting on the article without reading it :-) There may be other kinds of calculations that are both useful and verifiable out there. Unfortunately, protein folding and most other non-mathematical real-world applications probably aren't easily verifiable except by having N people redo the same calculation, which is a problem for currencies that need to prevent double-spending. (I ran Folding@Home for a while, as well as the GIMPS Mersenne Prime Search. For SETI@Home, which for some years was a far larger supercomputer than anything on the Top-500 list, sure, you can contend that there really aren't aliens in the chunk of sky your system was testing, but that's not the kind of verification we're looking for...)
Bill Stewart
New Fast-Compression-only CPR http://preview.tinyurl.com/dy575ks