Note: this article is now at least two years old and may contain serious errors.
A coin for security
Here's another idea for a cryptocurrency - a coin that rewards people for the practices they use to secure their cryptocurrencies on other blockchains.
This can all be done without trust because many aspects of cryptocurrency security already depend on cryptographic proof. A brief list of things that a cryptocurrency like this might check for includes:
- N factor auth and hardware devices used for multi-sig signing.
- Fail-safe theft recovery procedures
- Password complexity and rotation checks (like revealing hash-locked inputs.)
- Cryptographically provable wallet backups.
- Use of privacy enhancing protocols.
- Use of secure exchanges to purchase coins.
- Other, e.g. provably secure constructs, possibly with trusted computing.
There are so many different ways to protect crypto-assets and I've put a lot of thought into working them all out over the years. But in spite of this the biggest problem I've faced really has nothing to do with security.
Its psychological: people don't want to waste time on something they feel might end up being pointless. It would seem that since security confers no immediate benefits to the user and tries to force them to jump through hoops its very easy to convince yourself that you can do this "tomorrow."
So what would happen if a cryptocurrency were to exist that recognized security practices? If the only way to mine said coin were to prove secure possession of existing coins then the process of mining may lead to a net improvement in asset security across blockchains... Or if you will - a blockchain that rewards users to secure other blockchains.
Proof-of-stake seems like it would be a natural fit for this. You could set things up to pay dividends to users as long as they continue to use the security procedures defined for their coins. But I'm not sure of the exact specifics of the reward function. Do you prioritize age of outputs or quantity? If age, how do you guard against Sybil attacks by splitting coins up? If quantity, then the richest miners will just win over everyone else.
There are clearly still problems left with this idea but I'm throwing it out there for now. Let me know what you think.