One of the things that has generated the most buzz around cryptocurrencies in the tech community is their potential alternate uses. A distributed verification system is certainly a revolutionary way to manage money, but these types of networks have the potential to do much more than enable transactions. Primecoin offers one such alternate application: A cryptocurrency that, in addition to functioning as a form of money, uses the processing power of its users to conduct mathematical research. Since Primecoin is a fairly novel currency, its retail acceptance is very low, but using it could grant significant benefits to the scientific community.
Like many cryptocurrencies, Primecoin uses a proof-of-work system. In order to win the right to verify the next block of transactions, users are constantly competing to solve incredibly difficult math problems first. Whichever computer is able to crack the code first gets a few coins as a reward and then writes the next few lines of the public ledger. Where Primecoin differs is in the specific math problems it asks users to solve. Instead of using an arbitrarily difficult cryptography problem, Primecoin asks users to find special prime number chains called Cunningham chains, which are of particular interest to the scientific and mathematical community. These chains are very difficult to discover and would normally require researchers to buy time on a costly dedicated server in order to generate. Finding these chains can have far-reaching implications for physics and other disciplines.
Since Primecoin's proof-of-work problems are actually serving a constructive purpose, this cryptocurrency is considered to be more energy-efficient than some of its competitors. Primecoin uses electricity at the same rate as other proof-of-work currencies, but it uses that energy to accomplish two tasks at once instead of just one. This is encouraging to theorists who worry about the incredible energy cost of traditional cryptocurrencies. Some other currencies have attempted to appropriate users' computing power for other altruistic tasks, but none have been quite as successful as Primecoin.
While Primecoin's purpose is noble, however, its monetary value is low. Right now the currency is valued at a little under $.04 cents a coin, and the price has been steadily dropping over the past year. It is likely that the novelty of this innovative currency has worn off for most investors, and this, coupled with the recent loss of consumer confidence in cryptocurrencies in general, does not bode well for Primecoin's future.
Primecoin's guiding principle is an exciting one, but it seems as if its low value and lack of retail acceptance make it a risky financial proposition. As an altruistic endeavor, however, a small stake in the Primecoin network could be a big help to the advancement of scientific knowledge.