Permacoin: Repurposing Bitcoin Work for Data Preservation

Bit coin is widely regarded as the first broadly successful e-cash system. An oft-cited concern, though, is that mining Bit coins wastes computational resources. Indeed, Bit coin's underlying mining mechanism, which we call a scratch-off puzzle (SOP), involves continuously attempting to solve computational puzzles that have no intrinsic utility. We propose a modification to Bit coin that repurposes its mining resources to achieve a more broadly useful goal: distributed storage of archival data. We call our new scheme Perm coin. Unlike Bit coin and its proposed alternatives, Perm coin requires clients to invest not just computational resources, but also storage. Our scheme involves an alternative scratch-off puzzle for Bit coin based on Proofs-of-Retrievability (PORs). Successfully minting money with this SOP requires local, random access to a copy of a file. Given the competition among mining clients in Bit coin, this modified SOP gives rise to highly decentralized file storage, thus reducing the overall waste of Bit coin. Using a model of rational economic agents we show that our modified SOP preserves the essential properties of the original Bit coin puzzle. We also provide parameterizations and calculations based on realistic hardware constraints to demonstrate the practicality of Perm coin as a whole.