Bitcoin is among today’s most discussed and controversial topics. Ever since Satoshi’s seminal paper [9] in 2008, Bitcoin has evolved from a technological experiment embraced by a small group of computer enthusiasts to what some todayconsider to be the most important innovation since Internet. Most recently, there are new variants of Bitcoin, called altcoins, created everyday and a whole new industry of altcoin trading exchanges, mining pools, gaming websites emerged. Few topics today are more polarising than cryptocurrency. Some merits of cryptocurrency touted by technologists are considered sins by economists. Cryptocurrency is considered a movement by believers and a fad by disbelievers. Instead of an open and honest discussion involving all sides, what we have witnessed is a dialogue of the deaf, in which each camp justifies its own intellectual laziness by pointing to the intellectual laziness of the other camps.
This is one of the main obstacles that prevent cryptocurrency from being accepted by the general public.What do we really know about this evolution? Is cryptocurrency just a technological breakthrough or also an economic one [7]? Is mining cryptocurrency a progress or retrogression [6]? Is cryptocurrency meant to replace government and financial institutions or complement them? Is cryptocurrency designed for hoarding or spending? And, the most
fundamental question of all: is cryptocurrency real currency or just virtual property for speculation [13]? So far innovation in the cryptocurrency world has been almost exclusively technical. Technologists have proposed improvement on various aspects of Bitcoin, such as new hash functions [11] to replace SHA256 and new mechanism [4] to replace Proof-of-Work. There have been very few cryptocurrencies designed to address the economic and social aspects
of being a real currency. Reddcoin, at the time of writing, seems to be only one.
fundamental question of all: is cryptocurrency real currency or just virtual property for speculation [13]? So far innovation in the cryptocurrency world has been almost exclusively technical. Technologists have proposed improvement on various aspects of Bitcoin, such as new hash functions [11] to replace SHA256 and new mechanism [4] to replace Proof-of-Work. There have been very few cryptocurrencies designed to address the economic and social aspects
of being a real currency. Reddcoin, at the time of writing, seems to be only one.
We write this paper with three goals in mind: 1) to give a broad overview of the current issues around cryptocurrency, both technological and economic, which might not have been foreseen by the original designers. 2) to address these issues with proposals which require coordinated changes in both low-level network protocol and high-level economic and social ecosystem. 3) to encourage a more open and objective discussion of cryptocurrency by the general public and promote a more complete thinking for future innovation in cryptocurrency world.
The rest of the paper is organized as follows. Section 2 describes in detail the merits and drawbacks of Proof-of-Work (PoW) and Proof-of-Stake (PoS) from both technological and economic points of view. PoSV is then proposed to address those drawbacks in the specific context of a digital social currency. The technological design choices of PoSV are given in broad strokes. More detailed technical analyses will be presented in a companion paper [12]. Section 3 addresses the most common criticisms by economists on cryptocurrency and shows how Reddcoin and PoSV together provide new answers and new opportunities for social research in general. Section 4 emphasis the main differences between Reddcoin, a digital social currency which focuses on integration with human social interactions and aims to concretise and quantify people’s intangible asset of social influence, and the much more common digital commercial currencies which aim to facilitate transactions of goods and services and offer protection from hyperinflation.
1 The lead developer of Reddcoin, a.k.a. “laudney” PGP Public Key
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