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Ask HN: Cryptocurrency without mining?

1 points by sfilargi ↗ HN
I can't say I am not intrigued by the popularity of cryptocurrencies and Bitcoin boom. However I would never buy Bitcoins as I consider the mining idea a very weak link of the Bitcoin.

Overall however I think cryptocurrencies can only be good for society, so I was trying to thing of an alternative. How can we have a cryptocurrency that doesn't generate coins out of thin air(or lot's of pointless calculations)?

The answer I came up with is by providing a service that people would find useful. One such service could be international money transfers.

So the idea I have is something along the lines of distributed ledger for facilitating international money transfers. If user A in US wants to transfer money to user B in Germany, they could find their local US exchange and buy $100 worth of FXCoins and send them to user B. User B then would go to his local Germany exchange and trade back the FXCoins for Euros.

That way the market would truly take care of pricing the FXCoin correctly and would not become a bubble. Also it will be more like a currency, a medium to transfer wealth, rather than an speculative investment.

However I have very little knowledge about the blockchain technology and wanted to ask HN folks if they see any technical difficulties in doing something like this?

For example, I was wondering if the blockchain can work without mining. Any feedback/problems/suggest solutions or alternatives would be appreciated.

4 comments

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aey
Mining is what gives it intrinsic value. It’s a data structure that took a large amount of electricity to generate. Think of it as a giant work of art.

All the other approaches suffer from weak subjectivity. But that doesn’t mean they have no value.

What you are suggesting is basically a western union. How will wrapping it in a crypto currency make it better? I can square/Venmo/PayPal money around already.

SeanAppleby
Yep, like hellojebus said, what you are describing sounds a lot like ripple. They use their own type of consensus algorithm described below.

https://ripple.com/files/ripple_consensus_whitepaper.pdf

There are also other coins without mining though.

In an abstract sense, mining is just a general term for weighting votes for what are and aren't valid transactions based on 'proof of work'. The required investment of processing power discourages attempts to validate invalidate transactions, since investing work on the wrong version of the chain will inevitably lead to you not getting a block reward unless 51% of the network is controlled by you or somehow decides to follow along in your fraud.

https://en.wikipedia.org/wiki/Proof-of-work_system

There are other mechanisms for reaching consensus though. One of the most established is proof of stake, in which validations are weighted based on the coins you own. Notably, Ethereum is working to implement this with Casper by requiring auditable byzantine fault tolerance (detection of both when bad actors are acting as well as who is responsible) and security deposits for each 'vote' to alleviate the 'nothing at stake' problem, punishing bad actors. With this system there will be no unnecessary computations/energy usage, and there's actually more resistance to 51% attacks, since an attackers coins can be burned when they try to attack, leading to an undefined amount of capital required to get 51% of the vote, whereas with proof of work there is a set amount of processing power you could by to take control of the network indefinitely.

https://en.wikipedia.org/wiki/Proof-of-stake

There are also other systems like DAG distributed ledgers which combine small amounts of proof of work for spam resistance into the transaction process, eliminating the concept of mining and transaction fees all together. DAG ledgers aren't really blockchains at all, but a superset of blockchains, instead of just being a linked list they use an interwoven directed acyclic graph of transactions. Notable cryptocurrencies that use this type of ledger are Iota, RaiBlocks and Byteball Bytes.