Bitcoin Gold Today: Lessons Learned about ASIC Resistance and Security
What We Can Learn From Bitcoin Gold Today
Bitcoin Gold is a coin which was produced as a result of the Bitcoin chain hard forking. It was intended to be a coin like bitcoin, but with less miner centralisation. The hope was to avoid centralisation in mining pools created by ASIC mining using an ASIC resistant algorithm. The reality was that a lack of network hashpower and a dash of over confidence lead to some major oversights. Bitcoin Gold was a target of a successful 51% attack.
That algorithm is called Equihash , and is used by other coins such as called Zencash (ZCash). This algorithm is ASIC resistant. ASIC resistance just means that at the moment, the ASIC miner cannot crack a proof of work algorithm any faster than a cheaper GPU’s could. This is usually because of restrictions, for example on memory needed that are placed by the algorithm on the miner.
An example is requiring greater memory to solve a PoW than the existing miners come prepared with. ASICs are often coin exclusive, and quite expensive to manufacture. Whilst they’re becoming more and more available, the price is still so high that it deters most hobbyists, and if your coin is using ‘NO ASICS ALLOWED’ signs on its site, why bother with the risk?
Not just this but additional memory can’t just be added to ASICs, because the memory is located on the actual chip. This is needed for the performance intensive process of mining cryptocurrencies, especially those like Scrypt.
ASIC Resistance: A Losing Battle
The problem is that as technology advances, new ways to sink these unsinkable ships will inevitably come out of the blue. This was the case for Bitcoin Gold. In May 2018, a 51% attack was launched on the network. Using hired miner power from NiceHash the hacker was able to steal around 18 million USD from various exchanges.
The context of this is that the Bitcoin blockchain was forking. Bitcoin has a hash rate that eclipses that of Bitcoin Gold, with a much higher difficulty. When these miners were instead employed to crack codes in a lower difficulty blockchain all hell reined loose. The rented hash power won out, and overwhelmed the Bitcoin Gold miner pool introducing fake transactions and double spending coins. Without the fork, and the sudden shift of miners to a more profitable chain this 51% attack would have been much tougher to pull off.
ASIC Resistance: A Good or Bad Idea for Security?
ASIC mining seems useful for the interests of the network and people who want the cryptocurrency to be used for the purpose of transactions. However for those interested in participating in the network, and those who hope to solve the block prize it is a different story. ASIC miners account for a huge amount of the network hash rate, being dedicated mining gear. Unlike your average Joe’s PC with a mining program open.
Allowing for ASICs and centralised mining brings big industry money into blockchain technologies. This in turn will attract new investors and adopters from other industries, as we have seen. Blocking them out is hindering progress in the blockchain sphere. Though mining does have its drawbacks, the centralisation of miners should not be one of them.
ASIC resistance is a noble endeavour. Protecting everyones ability to mine, and it is a decentralised vision in a sense. However it wasn’t Satoshi’s vision, of professional miners signing blocks instead of individuals. Allowing ASICs makes the network safer, faster and more stable.