Bitcoin was off to a rough start in 2014. The once biggest Bitcoin exchange, Mt.Gox, finally collapsed in February after struggling for months. Even worse, Bitcoin had to face adverse scenarios in multiple countries, as central banks and governments clamped down on the digital currency. This included the People’s Bank of China restricting third party payment processors from working with exchanges, and the Internal Revenue Service declaring Bitcoin a property instead of a currency. The latter transforms using Bitcoin into a complicated bookkeeping game. And it could still get worse. Just last week, Bitcoin’s ultimate doomsday scenario of a 51 percent attack showed its ugly face again when GHash.io briefly touched the feared mark. But the news has not been all that bad recently, as recent weeks featured many positive headlines as well.
More positive headlines
For a start, Dish Network started accepting Bitcoin payments. With 14 million users, it instantly became the largest company to accept Bitcoin, Expedia, one of the world’s largest travel agents, soon followed. Digital River, a company that processed $30 billion in online transactions last year, was one of the latest companies to partner with Bitcoin merchant processor Coinbase. Apple did not fully endorse Bitcoin yet, but its most recent addition to its developer guidelines could be seen as a step in that direction. The concerned guideline states: “Apps may facilitate transmission of approved virtual currencies provided that they do so in compliance with all state and federal laws for the territories in which the app functions.”
Facebook also officially approved two cryptocurrency tipping apps, the Doge Tipping App and the Multicoin Tipping App, and reveals a more friendly stance towards cryptocurrencies. Last but not least, the Winklevoss’ Bitcoin price index (or WinkDex) has made its debut on Bloomberg. Users can now track prices and relevant news, although trading Bitcoin is not available yet. The WinkDex can be seen as a component of the Winklevoss Bitcoin Trust, a Bitcoin exchange-traded fund (ETF). The Winklevoss twins are still awaiting regulatory approval for this, but it should be clear that Bitcoin is also slowly moving towards Wall Street. Alltogether, despite several hiccups, the tide definitely seems to be turning for the digital currency.
The computation power of the Bitcoin and similar cryptocurrency networks is solely used to maintain the currency’s integrity by ensuring that the new block creation is always a difficult task through proof-of-work ( Box 2 ). The proof-of-work schemes within Bitcoin and other cryptocurrencies are effective solutions for the security and financial integrity of the cryptocurrency systems, yet serve no other practical purpose. In fact, according to estimates, the Bitcoin network consumes more electricity than Denmark as of December 2017 ( Digiconomist 2017 ). Although replacing wasteful computation with ecofriendly alternatives is an ongoing research area, most of them focus on the integrity aspect of proof-of-work in which the alternative solution must satisfy all the requirements that are provided by proof-of-work. On the other hand, mining is an incentivization scheme in which the miners only care about receiving the final reward in cryptocurrency form. Therefore, it may be possible to offer another reward mechanism that utilizes compute-heavy tasks in omics. Below, we outline some of the current attempts that try to accomplish this using different approaches, including token distribution and proof-of-stake ( Box 2 ).
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