No one really knows what to do with Bitcoins yet, and even as investors begin to address the market, different government bodies are trying to seize or regulate the world's geekiest currency. But one thing that's easily overlooked is the actual process of mining a Bitcoin...it's purposefully a compute-intensive task that usually works best when you're running the mining code on a high-end PC merrily burning the energy surging through the electricity supply.
Bitcoins "cost" miners to mine them as part of the very definition of worth--a coin is in fact worthless without proof that the miner worked hard to create it. The work is to avoid the value conundrum elegantly teased by Douglas Adams in The Hitchhiker's Guide To The Galaxy, at the point in the story where shipwrecked aliens adopt the leaf as currency: "We have, of course, all become immensely rich...But we have also run into a small inflation problem on account of the high level of leaf availability, which means that, I gather, the current going rate has something like three deciduous forests buying one ship’s peanut." Work in Bitcoin senses is also a process that's designed to make pretending to mine many many Bitcoins an impossibly expensive process--it's a fraud prevention scheme that's built into the architecture of the currency itself.
The thing is, the calculations required to demonstrate "work" in a Bitcoin are Secure Hash Algorithm calculations, using 32-bit words. These may be considered secure, fairly well known cryptographic tricks that are resistant to cryptanalytic attacks (so one can't "fake" a Bitcoin or steal one from someone else). But they're also pointless. Compared to crowd-processing schemes like SETI@home or Folding@home, which use distributed compute systems to look for radio signals in space or to calculate the construction of proteins that may be of medical use, Bitcoins just burn compute cycles. The difference is that in their current architectures you can't make SETI or Folding compute efforts secure... so there's no inherent "proof of work" nor resistance to crypto-based hacking.
But Primecoin, Bitcoinmagazine.com points out, is perfectly placed to solve this issue. It is the first crytpocurrency. Instead of SHA256 hashes to prove work, in Primecoin the compute burden is to find long strings of prime numbers, specifically chains of primes that are called Cunningham chains. And before you dismiss that notion as equally frivolous from a numerical point of view, there's great interest in the mathematical world for finding high prime numbers--and the EFF has long offered prizes of over half a million dollars for the first discovery of a prime that is over 100 million and 1 billion digits long. Prime numbers can also lead to other benefits in number theory and, interestingly enough, for cryptographical needs.
Primecoin is just a start, of course--although it may have a bright future if it takes off in the same way Bitcoin has. And if a distributed computing project like Folding@home can be interwoven with similar fraud-proof mathematics to Bitcoin or Primecoin, we may all be a little more relaxed about the implications of digital cryptocurrencies. If these future currencies have some sort of tangible upshot, then maybe even regulatory bodies will embrace them more warmly than they have Bitcoin.
[Image: Flickr user Dennis van Zuijlekom]