Michael J. Casey is chairman of CoinDesk’s planning board and a senior advisor of blockchain research at MIT’s Digital Currency Initiative.
The following article originally appeared in CoinDesk Weekly, a custom-curated newsletter delivered every Sunday exclusively to our subscribers.
casey, behavior therapy
Cryptocurrency advocates are constantly trying to convince non-experts of the benefits of permissionless blockchains, typically by explaining how a decentralized system of consensus-based record-keeping produces an immutable, censorship-resistant ledger.
But this doesn’t exactly square with reality.
There’s a robust argument that first bitcoin, and now other permissionless cryptocurrencies, became less decentralized over time, whilst their value has grown.
The culprits, many believe, are application-specific integrated circuits – the expensive, super-fast hashing chips referred to as ASICs, the engines driving the rigs in giant mining farms. they need so affected the market structure of blockchain networks that they're now the source of much division within their communities, stirring debates over potential forks within the code and exposing the necessity for blockchains to resolve one among their other core challenges: governance.
The reason many crypto purists have a drag with ASICs is that individuals such as you and that i , using comparatively sluggish PCs or maybe more powerful graphics cards, can’t compete with the ruthless efficiency with which the ASIC mining farms perform the proof–of-work consensus test and win bitcoin rewards. If the small guy can’t participate, they argue, the result's re-centralization.
What’s more, there’s a dependency on a dominant chip manufacturer, Bitmain, creating a sort of vulnerable, trusted third-party relationship.
Not everyone sees ASICs as a negative. There’s a security argument, for instance , that each one that expensive, efficient hashing power makes for a more formidable expenditure barrier for a possible “51-percent attacker” to beat .
But the sense that ASICs are a danger to the decentralized dream of cryptocurrencies is widespread, which is why creators of various altcoins have made various engineering efforts to debar the perceived threat.
They’ve designed “ASIC-resistant” proof-of-work algorithms, altering them to need extra memory-based computing tasks beyond the essential hashing function. the thought is that this more complicated, multi-faceted workload depletes the singular advantage of ASICs – which are really just in no time one-trick ponies – and renders it worthless for chipmakers to expend capital developing them.
But in many cases, this is often now looking sort of a temporary fix, as chipmakers seem to be increasingly designing ASICs which will perform all the tasks assigned by these “memory-hard” algorithms.
These developments are sowing divisions within blockchain communities. Miners working with pre-ASIC devices – mostly graphic processing units, or GPUs – are supporting hard fork measures that might make new ASICs worthless again. But anyone who has invested within the new products is against these anti-ASIC measures. Developers seem split between those that hold an ideological aversion to ASICs et al. who support an expansion in network hashing power and efficiency.
This brings us to governance.
It would seem the perfect time for a specific cryptocurrency community to line up its plans for handling ASICs – which just about certainly means planning for a tough fork – occurs well before even the prospect of 1 of the fast chips being created for his or her particular coin.
In bitcoin’s case, it’s far too late to try to to anything with the Core code. albeit one a part of the community is so hooked in to decentralization that they fought a block-size increase on those grounds, there are such entrenched stakes in ASIC mining that it might be impossible to launch an ASIC-resistant code upgrade.
But even with less-established communities, like zcash and ethereum, the mere prospect of forthcoming ASICs is prompting divided views, as Rachel Rose O’Leary’s reporting in CoinDesk shows.
What could also be needed are some things along the lines of what vertcoin has achieved.
Not content to easily build a proof-of-work algorithm that has tasks favoring GPUs over ASICs, the vertcoin community has also informally prescribed a sort of pact to fork the code if and when a vertcoin ASIC appears.
So far, the system has worked, perhaps because the mere threat of action by the vertcoin miners is enough to daunt would-be ASIC developers. That threat is backed by the very fact that vertcoin has already smoothly forked twice to deal with issues break away the ASIC threat.
What i prefer about the vertcoin solution is that it recognizes effective governance isn't just technical. It’s not something you only embed in lines of code. you would like that human component.
Until now, this has kept the vertcoin mining community more or less solely using GPUs, which as lead developer James Lovejoy explained during a debate about ASICs at MIT with sia lead developer David Vorick, may be a great equalizer.
This is thanks to the very fact that GPUs are relatively inexpensive and have uses beyond monolithic cryptocurrency mining. Whether to run a gaming solution or to mine a special coin, GPUs have a life after crypto, which mitigates the value of cost for all.
But Vorick countered that this solution is way from perfect. Eventually, he argued, the economics of GPU mining could become so profitable that it might attract a dominant player, reintroducing third-party risks.
What’s needed is what Lovejoy terms “generalized commodity hardware,” a greater degree of availability for a sort of GPU mining equipment anyone can use.
But how do i achieve that goal if the tendency is toward monopoly powers and dependence on one company, whether it’s a GPU producer like Nvidia or an ASIC maker like Bitmain?
This, too, is where human governance matters.
At the acute end would be government intervention, like anti-trust regulations. But that sort of defeats the aim of cryptocurrencies. a far better approach would be for communities to develop self-organized models of internal regulation and market structuring.
Drawing again from the vertcoin example, miners and users could, say, comply with steer funds into mining equipment built on open-source standards or committed to commodity-like status.
Whatever the solution to achieving decentralized mining, it appears to dwell combining on-chain software rules with another set of rules based in off-chain agreements.
In other words, combining the protocol layer with the human layer.