i posted this in a different thread, but it fits better here.

Since the bitcoin network is considered secure by the userbase right now (and was considered secure a year ago, too), is there a security need to constantly increase the difficulty? Is the increasing difficulty superfluous from a SECURITY standpoint?

Because if it is, could the bitcoin client not be forced to work out a certain number of scientific (or otherwise useful) calculations for every block generated? I'm not a computer scientist, but here's my rough idea: Basically, the server would only accept blocks if your client sends them with a certain numbers of valid keys. Those keys would be distributed to your client by a server upon the completion of a set number of completed tasks from a "useful" project like seti or protein folding by your client.

This way, the difficulty of actually creating bitcoins could be constant, and the architecture for that would not have to be seriously modified. As time went on, and more people set up mining rigs, the number of required keys would adjust, raising the ratio of GPU time spent on scientific calculations to bitcoin calculations and effectively raising the difficulty.

I feel this would be great from a scientific standpoint- but also from a PR standpoint. Bitcoin would have few detractors if it were everything it is AS WELL AS the largest source of computer power available for scientific calculations.

The transaction fees that will exist in the future could even be avoided if laboratories were charged a small fee (much smaller than what they would otherwise pay) for use of the computing time.

Haha sorry- I didn't mean to turn this into another thread of this type. I do understand the security concerns, and I don't know of a way this could be technically implemented. Thanks for the detailed responses, though. I'm a newbie, and theres a lot of think about here.

My point really was just that, if a large portion of the world's scientific research (or something else equally important) were carried out on the quasi super computer that is the bitcoin network, bitcoin would have few enemies.


Againey, I do find your idea interesting.  I have no idea if the bitcoin infrastructure could ever be modified to this extent even if this were deemed to be a practical way of doing things.

My instinct- and this is still vaque, so pardon me if this is totally unreasonable- would be to keep the difficulty at a fixed level that the community considers totally secure, and require GPUs to perform an increasing ratio of calculations for some outside application (be it figuring out how proteins fold or looking for earth-like planets) to each random block generated. Thus, as more and more people mine, each miner carries out more calculations for the application and does less mining, but the mining difficulty hasn't changed.

Its too bad the system wasn't designed to carry out useful calculations. I know people have talked about the security cons/ logistics/ ethics of this- but I think just from a publicity standpoint, this would give bitcoins so much attention, and would make gov'ts less likely to target the digital currency.

I could see how this would work, as the US gov't would not have a reason to hate bitcoin, if it saw it as principally the currency of foreign economy.

But the country couldn't be something like Sealand- it would have to be a country with a real economy, and frankly, IMO it would be very hard to find a small country that even has the technological resources to build up a bitcoin economy.

Actually I don't think this is true. In a recession, btc could easily go up in nominal or even real value. If they are simply treated as an investment, and not a currency, then you could have people selling off bitcoins in a recession because they feel its a risky investment, and their confidence is down. This would drive down the value of bitcoins.
But, if bitcoin acts as a true currency, we could easily see the opposite effect in a recession. Particularly in the case of a US default, which would cause massive capital flight and tank the value of US currency, and raise the value of all other currencies. Particularly if the bitcoin is seen as a safe currency, it could substantially rise in value in the case of a recession. It could go either way.

I'm new here, and don't claim to be a bitcoin expert... but for what it's worth, I do think this idea has potential. Loans are what drive economies, and without the ability to get a loan in BTC, it would be hard to have a large number of organic, bitcoin through-and-through firms.

But yes, it is hard to manage a lending institution in a highly volatile currency. The fisher equation simply states that banks should set their interest rates at
nominal interest rate=desired interest rate + expected inflation
In bitcoins, the inflation (or, in this case, deflation), is ridiculously hard to predict, so this lending is basically a highly risky betting game.

The advantage of bitcoin is that people expect unexpected things to happen to the exchange rate, so I would argue that a lot of people would be OK if all interest rates were variable.

A bank chooses an indication of inflation (for now, exchange rate relative to some currency might work), and sets a real interest rate. All loans are variable interest rate, found by the fisher equation.

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Edit: Note on logos.