That's quite cool, I like that idea a lot more. I think I'd still rather a currency that didn't rely on burning power as fast as possible, but using that power for good is, well, good :)
The current system for USD is pretty close to ideal. Short term money is creating through lending, long term money through bonds.
It's a great mechanism and could be readily adapted to digital currencies. Have a group of banks that may issue loans in the currency and have a central authority that will issue bonds and pay interest on them in the currency. Set the lending rate to under the bond rate to "bootstrap" the initial currency flow, then manage it from there.
Management could be automated by computers to constantly find the optimal rates for loans and bonds.
Well, there needs to be some proof of work, something that is hard to do at scale but easy for individuals.
To that degree, Bitcoin has failed, because massive SHA256 crunching is now easy to do at scale and hard for individuals.
More varied challenges, like BOINC, or PoW that is bandwidth, connectivity, latency, or disk-space based, will provide a lot more value to the community and make it easier for individuals to contribute. I eagerly await the day that one of these alternatives becomes mainstream.
Alternatives are good but.... well, disk-space based would push up the price of hard drives. Bandwidth connectivity and latency could again be owned by big players...
I don't know. What I do know is that in a centralised crypto-currency system you don't need any of this as the issuing authority merely signs the transactions and we're away. I hope that some bright spark comes up with a way to make a decentralised one almost as simple...
