philip lelyveld The world of entertainment technology

Stanford Prof. proposes a Stronger Alternative to BitCoin

[Philip Lelyveld comment: this is why I try to say 'virtual currency' instead of 'Bitcoin.']

The system was introduced to the world in 2008 in a technical paper released under the pseudonym Satoshi Nakamoto. Its design was significant for showing a way for a pool of contributors that don’t necessarily trust each other to collectively create a system to verify transactions. But the way Bitcoin achieves this makes it slower and less secure than is ideal for a system meant to become part of the world’s financial infrastructure, Mazières says.

Mazières’s new cryptocurrency protocol, called SCP, is being adopted by a nonprofit called Stellar to replace a Bitcoin-inspired system meant to make financial services cheaper and more widely accessible in the developing world (see “Bitcoin-Inspired Digital Currency to Power Mobile Savings App”). Stellar’s original system was modeled on one developed at the startup Ripple Labs, which is using it to help banks and other financial organizations move money faster (see “50 Smartest Companies 2014: Ripple Labs”).

Bitcoin’s design rests on a process called “mining,” in which people run software that races to solve mathematical puzzles.

However, it currently takes around 10 minutes for a new transaction to be confirmed by the miners, and mining is very energy intensive (Bitcoin miners together consume as much electricity as Ireland, researchers estimated in 2014).

The new SCP system also relies on people running software that communicates over the Internet, but trust is not enforced through mining. Instead, each person running the software must identify a few other trusted participants to correctly apply the cryptographic rules used to validate transactions. Each instance of the software will recognize transactions only once a certain majority fraction of its trusted partners have also signed off. And the trust relationships are all public.

See the full story here: http://www.technologyreview.com/news/536641/a-new-competitor-for-bitcoin-aims-to-be-faster-and-safer/?utm_campaign=newsletters&utm_source=newsletter-daily-all&utm_medium=email&utm_content=20150416