‘Holy grail’: Researchers create physics-based cryptocurrency

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Joe Sison/Staff
Maxwell Murialdo, research co-author from the Lawrence Livermore National Laboratory, developed electricity-based stablecoin, or E-Stablecoin, to offer a decentralized, value-stable cryptocurrency that allows for remote, wireless transfer of electricity across the globe.

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Researchers at the Lawrence Livermore National Laboratory devised a physics-based cryptocurrency called Electricity Stablecoin, or E-Stablecoin, that can mitigate the challenges facing cryptocurrencies.

According to research co-author Maxwell Murialdo, E-Stablecoin allows people to transfer electricity across the world wirelessly. He explained that electricity is not transferred in the “conventional sense,” only information is.

“This information can then be used by an anonymous party on the other side of the planet to extract heat from the ground and to convert that heat into usable electricity,” Murialdo said in an email. “When implemented we expect that this technology will help to stabilize electricity grids worldwide and help to bring renewable energy from inhospitable geographic zones to population centers where it is needed most.”

The research paper noted that E-Stablecoin would be minted through the input of one kilowatt-hour of electricity, plus a fee. However, what makes E-Stablecoin “unusual,” according to Murialdo, is its ability to allow one to reuse the coin, and therefore the energy, at any time and place.

He added that the science making this possible is “a subtle interplay” between statistical mechanics and information theory.
“A lot of ‘so called’ stablecoins are slipping their peg or looking unstable at the moment,” Murialdo said in the email. “E-Stablecoin is designed to be a direct antidote to the problems that currently available stablecoins face.”

Murialdo said existing stablecoins include ones that can be directly exchanged for an external asset through a centralized authority. Other stablecoins cannot be exchanged and have algorithms set in place for stabilization as a result. However, he said they both have limitations.

He noted that algorithms have the risk of being gamed to the “point of collapse,” while those that can be exchanged for valuables such as gold require people to trust a centralized authority to make the right decision.

“This level of required trust is antithetical to the ideals of decentralization,” Murialdo said in the email. “E-Stablecoin sidesteps both of these limitations — it has no centralization and is directly exchangeable for a useful physical asset, electricity.”

He added that E-Stablecoin is the first cryptocurrency capable of a fully decentralized exchange of physical assets. Unlike existing cryptocurrencies which experience price fluctuations that magnify risks and discourage consumer transactions, the research paper notes that the value of E-Stablecoin is more stable because it is based on the price and demand of electricity.

“Stablecoins are considered by many to be a holy grail technology for decentralized finance,” the research paper states. “These digital tokens are designed to have minimal volatility which encourages blockchain transactions, confidence, usability, and long-term smart contracts.”

Murialdo said E-Stablecoin is still in its early stages of development and requires “significant engineering advancements” in order to be implemented.

He added that E-Stablecoin is proof of how much room there is to expand on current blockchain technology and ideas. “Just imagine being able to transfer energy to anywhere in the world only by sending information — moreover mediated by an anonymous, decentralized stablecoin,” Murialdo said in the email.

Dhoha Bareche and Amber X. Chen contributed to this report.

Contact Dhoha Bareche and Amber X. Chen at [email protected].