Mineable Tokens + Merged Mining are the Future of PoW Cryptocurrencies

by blazehuntley, mikers and lodge

The current outlook for cryptocurrency mining is grim. As large mining farms continue to gain a greater share of overall hashrates by utilizing ASICs and FPGAs, small miners running average rigs or even mining with a single graphics card, are finding it exceedingly difficult to make a profit. It is also becoming more and more difficult for smaller coins to be safely secured from various attacks. Financially motivated hackers have been renting commercial mining farms and sustaining long 51% attacks on fairly high market cap coins including Ethereum Classic and Bitcoin Gold.

Even established PoW (Proof of Work) projects, likes the ones mentioned above, are having issues combating such attacks. The idea of establishing a new cryptocurrency with its own blockchain is almost impossible without finding creative ways to thwart these attacks.

So, what can be done about this? With the introduction of EIP-918, which was adopted into the main Ethereum library as a token standard, individuals/projects now have the ability to create a mineable ERC20 token that is resistant to 51% attacks at inception. This is possible because mineable ERC20 tokens don’t need to rely on their own blockchain — they piggyback on Ethereum’s blockchain. This also means that as Ethereum upgrades, mineable tokens will also reap the benefits of these upgrades (quicker, cheaper transactions).

They are also programmable, which means there are countless applications and use-cases that make them even more attractive to start-up projects. These tokens will unlock access to the Ethereum ecosystem of financial liquidity and exchange with other Ethereum assets, Ethereum’s ecosystem of interfaces with friendly web browser extensions, mobile apps, NFTs (cryptokitties), as well as off-chain and second-layer wallets.

Not only can the tokens be programmable, their PoW mining methods are also programmable because of a new type of mining called merged mining. Unlike dual mining, which other cryptocurrency projects have promoted, merged mining allows a miner to mine several (even dozens) of tokens without losing any hashing power. This would make mining extremely profitable for small miners who currently can’t compete with large farms. At this time, 0xBitcoin (SHA3/keccak) can be merge-mined with SEDO and 0xLTC (a proof of concept token to test merge-mining).

The mathematical soundness of PoW, combined with existing distributed ledger and consensus frameworks, provides a rich environment for developers to build second-layer scaling solutions directly on top of 0xBitcoin. There are currently scaling initiatives that inexpensively address both off-chain payments and a blockchain virtual machine, which broaden the reach and applicability of 0xBitcoin and other ERC918 tokens.

Over the last couple of years, PoW has become synonymous with not being eco-friendly. PoW projects, like Bitcoin, that rely on mining to secure its blockchain will need that hashing power to continue even after every Bitcoin is mined. This is not only an issue because it’s not eco-friendly, but it’s also an issue because at this time, experts aren’t certain that it will be profitable for miners to continue securing the network and relying solely on funds from on-chain transactions to make it profitable for them. Mineable tokens solve this problem because once every token is mined, there will no longer be a need for hashing power to secure the blockchain.

We also know that the ICO/airdrop model for token distribution is broken. It allows for projects to raise an unjustified amount of funding without being held accountable to actually develop or even finish a project. The majority of projects that have used the ICO/airdrop model have failed, run out of funds or exit scammed investors.

There are currently a handful of mineable tokens in circulation, including 0xBitcoin. And it’s really easy to create your own mineable token. One of the developers who created 0xBitcoin has created a Mineables Network that instructs users/teams on how to easily create a mineable token.

Mineable tokens not only solve every issue that’s currently plaguing the PoW community, but they also provide a host of benefits discussed above. If we want PoW to be a viable model going into the future, mineable tokens are the answer.

If you’re interested in learning more about mineable tokens, merged mining or 0xBitcoin please check out its website, its Foundation website, Discord, GitHub, whitepaper or subreddit.