The best-known cryptocurrency is Bitcoin, developed in 2009 by Japanese developer Satoshi Nakamoto. Bitcoin can be obtained by either buying them on an exchange, accepting them in return for goods or services, or mining new ones.
The mining process involves using a computer to solve complex mathematical problems in return for bitcoins. More than 13 million bitcoins have been mined so far, according to mining data provider Blockchain.
Nakamoto set a limit on the number of bitcoins that can be mined – 21 million – and designed it so they becomes progressively harder to mine. It therefore requires specialized hardware and software to “do the sums” and significant energy consumption.
How does CureCoin work?
CureCoin works in a similar way to Bitcoin, but instead of solving complex mathematical problems, miners have to engage in protein folding. Proteins start out in the body as unbroken chains of amino acids, which then coil and fold into a specific 3D shape to carry out important biological functions.
Scientists believe a greater understanding of how protein folding works can enable them to solve debilitating diseases, such as cancer, Alzheimer’s and Huntington’s.
The difference between Bitcoin and CureCoin is that anyone can mine cureCoins using an ordinary computer in the comfort of their own home, by downloading Stanford University’s Folding@home program, the brainchild of professor Vijay Pande. The program simulates protein behaviour on users’ computers and sends data to Stanford University.
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| Joshua Smith, lead developer at CureCoin |
The Folding@home program is reminiscent of SETI@home, the University of Berkeley’s Search for Extraterrestrial Intelligence long-standing experiment that allows home-users to participate in, by running a free program that downloads and analyzes radio telescope data. Joshua Smith, lead developer at CureCoin, says it offers an interesting incentive for people who either want to mine cryptic coins or who already participate in protein-folding programmes.
“We have done some calculations,” he says. “If enough people jump on board, we could do 14 years of research in a couple of days. It is now possible to make a profit from Folding@home and help science.”
CureCoins are traded on an open market on sites such as Eobot, and have swapped hands for anything from 4 cents to 50 cents.
Alternative currencies boom
The rise of popular alternative currencies such as Bitcoin has ignited a debate as to whether they should be regulated. They are not government-backed and therefore do not offer investors a safety net, as was the case when Bitcoin exchange Mt Gox filed for bankruptcy this year.
Mt Gox was the largest Bitcoin exchange, but it was revealed earlier this year it had lost 650,000 bitcoins to hackers.
Regulators become concerned when something is used so widely it mimics money, says Anita Ramasastry, professor of law at the University of Washington.
“People want to pay taxes and bills in Bitcoin; larger merchants are accepting it,” she says. “The failure of Mt Gox affected a large number of citizens in different jurisdictions who lost money.
“But the flow of Bitcoin for illicit purposes is growing, and when regulators see a black-market economy, they are concerned for both tax and law-enforcement reasons.”
Before Bitcoin, the advent of organizations such as Western Union and PayPal that hold large amount of money on behalf of others raised similar regulatory debates, and such organizations are subject to prudential regulation, says Ramasastry.
Indeed, the New York Department of Financial Services published a proposal last month for a BitLicense, detailing how Bitcoin businesses ought to be regulated.
Earlier this month, UK chancellor George Osborne announced the government is exploring whether alternative currencies such as Bitcoin need to be regulated. Meanwhile, Russia is set to pass a law to ban Bitcoin altogether.
Bitcoin is subject to heated debate, but up-and-coming currencies such as CureCoin are not yet on regulators’ radar. Smith has high hopes for the currency, and believes it could even be used in the US to pay for healthcare.
“People could use their computers to aid medical research and then use cureCoins to pay for medical bills,” he says. “This project opens up a whole world of possibilities.”
It’s early days, but Smith is positive. “Bitcoin went for two years before it had even 1% of its value attached to a single Bitcoin,” he says. “We already have 4 cents for a cureCoin and it has only been going for three months.”
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