Today in the news, you can find countless articles which tell us that China has just banned ICO’s (an ICO, an initial coin offering, is the way that many people fund new cryptocurrency endeavors. In an ICO, investors buy new cryptocurrency tokens since they believe that the upcoming cryptocurrency will eventually become valuable). As a result on this ban on ICOs, the total market cap for all cryptocurrencies has fallen from an all-time high of 180 billion USD (on September 2, 2:00 UTC) to 138 billion USD at the time of writing. The price of a bitcoin was almost 5000 USD but now after the dip, a bitcoin now costs 4100 USD.
One government action has the power to sway the value of cryptocurrencies so that they lose 20-25 percent of their value overnight. It is therefore necessary for those who value cryptocurrencies to make a great effort to improve the reputation of cryptocurrencies so that the world’s governments accept these cryptocurrencies. Not only are governments able to harm cryptocurrencies by passing laws against them, but these governments also have the power to launch attacks against cryptocurrencies and thus break the security of these cryptocurrencies and likely destroy these cryptocurrencies.
Cryptocurrencies currently have a mixed reputation. Since it is possible for cryptocurrencies to disrupt global economies, replace any national currency, and cause other changes that people will not want to accept, governments may want to place restrictions and regulations upon cryptocurrencies to keep them under control. Today, cryptocurrencies are not backed by gold or any other precious metals, and the process of mining new coins does not provide any product or service of value outside the cryptocurrency except for pollution. Since cryptocurrencies are not produced by providing useful products or useful services and cannot be traded for precious metals, cryptocurrencies do not have nearly as many advantages over fiat currencies as they could have, but they could improve their reputation simply by making mining useful. It is therefore necessary for cryptocurrencies to employ useful proof-of-work problems which provide benefits outside the cryptocurrency.
My solution in my upcoming cryptocurrency Nebula is to use a proof-of-work problem R5 so that in order to efficiently solve R5, one will need to construct a reversible computer and advance computational technology.
The proof-of-work R5 is nearly as efficient as a cryptographic hash function, so R5 does not suffer from negative characteristics which are present in other so-called useful proof-of-work problems. R5 is also much more useful than all other proof-of-work problems proposed so far since one cannot question the future value of reversible computation. Since Nebula will advance technology, the people and hence the governments will view cryptocurrencies more favorably (at least Nebula anyways). As a consequence, governments will be less willing to place restrictions on cryptocurrencies if some of those cryptocurrencies advance science in positive ways. The only way for cryptocurrencies to last among a skeptical population is if people only use a cryptocurrency which employs a good useful proof-of-work problem. If we keep on using the same cryptocurrencies with the same proof-of-work problems, then people will rightfully see these cryptocurrencies as useless and wasteful. I have hope that eventually, people will only use the cryptocurrencies with useful proof-of-work problems since people will rightfully perceive these new cryptocurrencies as being much more valuable than our current cryptocurrencies.
Unfortunately, it is too late for Bitcoin to start using a useful proof-of-work problem since most bitcoins have already been mined and switching a proof-of-work will require a destructive hard-fork, so one will need to start using new altcoins instead. Fortunately, in recent months, altcoins have come to dominate over half of the total market cap of all cryptocurrencies, and new altcoins are constantly being created. In a few years, the dominant cryptocurrencies will likely be ones which have not been launched yet but which will employ new innovations. Nebula is one of these cryptocurrencies with a new innovation that challenges the status quo in the cryptocurrency community.
A message to the skeptics
There have been many people in the pure mathematics community who have denied the possibility that reversible computing may be more energy efficient than conventional (by conventional I mean irreversible) computing. I hope you know that if conventional computing can potentially be infinitely efficient, then one could construct a computer that could decrease entropy within a closed system. You are denying the second law of thermodynamics. You are denying everything that people know about statistical mechanics. Stop denying science.
There are also other skeptics who have denied the value of cryptocurrencies altogether. To those of you I will say that you need to read and understand the original paper Bitcoin by Satoshi Nakamoto.