Hacash Mining Mechanism: Pioneering Long-Term Fairness in PoW Blockchain
“We should have a gentleman’s agreement to postpone the GPU arms race as long as we can for the good of the network.”
— Satoshi Nakamoto, BitcoinTalk, Dec. 12, 2009
Satoshi Nakamoto once stated on the forum ‘BitcoinTalk’ that specialized hardware would eventually emerge and threaten the fair competition of mining. He was correct. His goal was to build a stable, fair, and decentralized network system. Over the past decades, Bitcoin (BTC) and its signature Proof-of-Work (PoW) algorithm has laid the foundation for blockchain’s impact, but the significant issue has been exposed — ‘unfair mining competition.’ Many PoW blockchains have tried to address this issue, but often in ways that deviate from Satoshi’s original intent.
Hacash emerged in this context. Hacash’s vision and prospective mechanism design not only address this core problem of Bitcoin but aim to build a global financial system that prioritizes decentralization and fairness. At the heart of this effort is the unique Hacash mining mechanism, which combines the technical Hacash X16RS algorithm with a special reward distribution mechanism. It provides a solid foundation for mining HAC (Hacash coins) and HACD (Hacash diamonds), ensuring the fair, decentralized, and long-term distribution of these digital assets, thereby fulfilling Satoshi Nakamoto’s vision.
Next, we will provide a detailed explanation of the Hacash mining mechanism. Understanding this mechanism will highlight why the Hacash community has huge potential and is the future of PoW blockchains.
Hacash Mining Mechanism
The Hacash mining mechanism has a primary design goal: to ensure mining fairness and maintain an open and competitive environment for all participants in the long term. It prevents centralized mining institutions from monopolizing profits in all stages, especially the early stage. Historically, the initial phase of mining and distribution has been crucial in determining the success and growth of many blockchain projects. The core of the mechanism is to allow everyone to contribute and benefit equally. Here are the two main components of this mechanism:
X16RS
The core of Hacash’s mining mechanism is the Hacash X16RS algorithm. Initially, there was X16R, a PoW hashing algorithm introduced by Ravencoin that was based on Bitcoin’s algorithm. Bitcoin solves its cryptographic puzzles by repeatedly hashing the block header using only the SHA-256 algorithm to find a ‘hash’ that meets a target difficulty. In contrast, X16R’s hashing process involves a sequence of 16 different algorithms predetermined before solving the puzzle. X16R aimed at resisting ASIC miners but ultimately failed to achieve that goal.
Subsequently, the X16S algorithm was developed, which randomized the order of the 16 algorithms rather than using a predetermined sequence, with each algorithm used only once. However, given enough time and resources, specialized ASIC hardware could still be created to crack the randomized sequence.
To address this, Hacash introduced the X16RS algorithm. This PoW algorithm builds on X16S, with multiple advanced features to ensure long-term fairness. Below, we will explore its technical implementation with a workflow chart illustrating the X16RS mining algorithm in a miner node.
Technical Features:
The workflow diagram illustrates the complete mining process of the X16RS algorithm. The mining node first receives key data for mining such as the previous block header, transaction data, and the target difficulty. Using this information, it constructs the new block header. The mining process then begins with the repetitive hashing process, starting with the SHA-256 algorithm to compute the initial hash. Subsequently, the X16RS algorithm applies a series of selected cryptographic algorithms in a specified sequence and number of rounds.
To be noted, X16RS integrates randomness in different features to increase the difficulty of the calculation work, both in terms of cryptographic complexity and constant upgrades¹.
- The number of X16RS hashing rounds is determined by the block height. It starts with one round, adding one round every 50,000 blocks (approximately half a year) until it remains at 16 rounds. As the block height changes dynamically, it introduces significant randomness to the amount of hashing computation required.
- The algorithm runs each X16RS hashing round in a randomized order rather than a predetermined one. For each round, the last 4 bits of the current hash are taken, and modulo 16 is applied to determine which algorithm to use next from the list of 16 algorithms. This creates a highly unpredictable sequence with 16¹⁶ possible paths.
- Hacash’s mechanism handles the time of nonce space exhaustion for its great cryptographic calculation difficulty. If all nonces are used for the hashing process, Hacash introduces an innovative method of adjusting the Merkle Root to reconstruct the Block Header. This allows miners to gain a new large nonce space and restart the process.
The randomized design of the cryptographic hashing process makes it challenging for ASIC producers, and the increasing X16RS hashing rounds ensures that it is extremely challenging and costly for these producers to find a lasting solution for the first eight years (until the rounds reach 16). However, no mining algorithm can be ASIC-resistant indefinitely (this will be explained later). To prevent centralized players from dominating the hash mining ecosystem in the early stages, another powerful component is necessary, which we will introduce next.
Fair Mining Reward Distribution
Hacash implements a fair mining reward distribution mechanism for both HAC and HACD.
HAC:
Unlike the decreasing reward distribution typical of other PoW blockchains, Hacash aligns its fundamental block reward system with the Fibonacci sequence. The chart below illustrates the distribution of HAC rewards over the next 70 years².
As the chart shows, the rewards are divided into four phases. The initial phase features a rapid increase in rewards up to the 6th year. This is followed by the second phase, where the reward stabilizes at 8 HAC for 11 years. The third phase has a gradual decrease in rewards from year 16 to year 47. Finally, the last phase stabilizes the reward at 1 HAC for the remaining years. This block reward design discourages the centralization of early miners by limiting initial rewards. What’s more, the slow decrease in rewards ensures sustained long-term participation within the mining community.
HACD:
Hacash implements HACD mining in a distinct manner. It includes both mining and bidding processes to ensure fair and open mining competition at all times. The mining difficulty progressively increases relative to the total number of diamonds mined. Additionally, the bidding process, which confirms a mined HACD every 5 blocks, helps make the distribution of HACD more controllable. The increasing complexity and difficulty of HACD mining ensure that the process remains challenging and competitive, aligning with the broader goals of a fair and decentralized financial system.
Mechanism Characteristics:
The core of the Hacash mining mechanism is highly resistant to specialized mining hardware. It delays the development of specialized mining and ensures a fair and open mining competition using specialized hardware in later stages.
Firstly, the cryptographic design of the X16RS algorithm makes it challenging for ASIC professional equipment and large-scale GPU resources to achieve high output and energy efficiency simultaneously³. The unique structure of Hacash mining rewards, which are not substantial enough to attract specialized development early on, significantly delays the production and deployment of specialized hardware. Cost of making ASIC hardware for Hacash mining may be in the range of millions of dollars or more. These characteristics prevent early advantages in the initial phase, allowing individuals to participate in mining with common CPU and GPU hardware. As a result, the Hacash community gradually understands and values this equitable approach.
Even if ASIC machines eventually emerge in the later phases, the ongoing upgrades and modifications based on Hacash block height will incur high iteration costs for ASIC producers. This ensures that the mining competition remains fair relative to investment in ASIC machines. Additionally, the cryptographic design of X16RS provides great opportunities for developing diverse specialized hardware, maintaining a competitive and dynamic mining environment.
Indeed, Hacash in its overall design has prepared for and embraced the emergence of ASIC machines in later stages. Preventing the emergence of ASICs is unrealistic; there will be open global mining competition in the long run due to the increasing value of Hacash currencies, following open market competition rules. This is evident in one reward stage of HAC mining distribution that provides high and stable rewards for a decade, which may encourage ASIC adoption during the period. As a result, the centralization of mining power will lead to the industrial concentration of currency distribution. This is necessary for the growth of the Hacash financial system as its scale expands and the payment system starts being adopted by the community.
Introducing ASICs too early would harm the Hacash mining community and discourage participation. Therefore, Hacash promotes open and fair competition during the “ASIC-allowed” stages. Hacash aims to maintain long-term fairness. This fairness extends to all miners, allowing new miners to join even as late as 2070 without being disadvantaged by earlier adopters.
Comparison of PoW Mining Mechanisms Between Bitcoin, Ravencoin, Kaspa and Hacash
Comparing Hacash with other PoW blockchains like Bitcoin and Ravencoin clearly illustrates why Hacash’s mechanism is the fairest and most decentralized in the long term.
Bitcoin (BTC): Bitcoin mining has been dominated by ASIC machines from the early phases due to its fundamental cryptographic design. Its halving reward mechanism, which halves rewards after a certain number of blocks, creates unequal benefits for early miners, giving early centralized miners significant advantages. Hacash, built upon Bitcoin, addresses these issues of centralization and unfairness in early mining with its improved PoW algorithms.
Ravencoin (RVN): Ravencoin initially had a very similar mining algorithm. After Ravencoin’s X16R algorithm was exploited by ASIC machines, the RVN community switched to the KawPow algorithm to maintain ASIC resistance. This demonstrates that merely adopting sophisticated cryptographic algorithms do not solve the fairness problem in mining. Because it ended up favoring early ASIC miners and resulted in unequal distribution for future miners. Additionally, the sophisticated KawPow algorithm inherently favors GPU miners, as it requires wide participation from more GPU users to maintain ASIC resistance.
Kaspa (KAS): Kaspa’s block reward distribution follows an emission reduction model, where block rewards decrease over time to create a stable mining ecosystem. However, this incentive has already led to the emergence of specialized GPU and ASIC hardware for mining. Early mining participants gained significant advantages because of this. The rapid pace of KAS mining in recent years, with over 60% of KAS already mined, indicates an unfair mining distribution for future KAS miners. In contrast, only 8% of HAC has been mined, and the pace of HAC mining is stable. Hacash’s unique reward design ensures that no early miners gain significant advantages, allowing people to compete in computational power fairly. Individuals can still benefit from mining HAC and HACD even after decades.
By comparing these PoW algorithms, it becomes evident that Hacash ensures a fair mining mechanism, making it a great long-term project to invest in.
Remaining Challenges:
As the Hacash mining community is still in its early stages, there are several areas that require significant improvement and some significant challenges to solve.
A crucial challenge at this stage is addressing the potential for mining centralization, especially when large mining operations or potentially emerging specialized GPU mining groups may dominate the current reward phase. Here are some areas where the Hacash mining community can focus to mitigate this issue:
- Increase Mining Pools to Enhance Individual Participation
Currently, options for individuals to participate in mining HAC and HACD are limited, and finding third-party mining pools remains a challenge. The mining pool introduced by HacashOrg supports both CPU and GPU mining for HAC, but no GPU mining pool exists for HACD. As an early contributor to the Hacash mining ecosystem, HacashOrg cannot take on the responsibility of supporting mining pool offerings for all Hacash users due to its limited development capacity. Still, more third-party mining pools are needed.
It would be beneficial to have more contributors in the development of Hacash mining pools. The goal should be to develop and maintain efficient GPU mining pools with GPU integration software for both HAC and HACD. Hacash developers could achieve this by being more interactive and collaborating on mining tools and support. This could help individual miners maintain participation in Hacash mining, as competing against specialized and often invisible mining groups on Hacash is challenging.
By making these changes, Hacash can build a more robust and resilient mining community for long-term growth.
2. Increase Community Participation
The recent stable growth in the hash rate of the Hacash blockchain shows an increase in mining participation, as indicated by the hash rate graph above. After February 2024, when the Hacash reward distribution increased to 8 HAC per block, more individuals joined the mining community. The hash rate has shown remarkable growth, rising from 1 GH/s to a stable 700–900 GH/s over the past 5 months.
But to address the issue of potential mining centralization, the Hacash mining community must focus on increasing new miner participation. Currently, many miners are not fully aware of Hacash’s long-term vision and its equitable mining mechanism, leading to limited involvement. If the reward incentive is enough to encourage the development of ASIC hardware or more advanced GPU mining pools, multiple groups in a larger Hacash mining community would realize the same opportunity and start an open and fair competition in mining. Additionally, it is crucial for community miners to proactively advocate for Hacash within the broader blockchain mining field to attract more mining power and resources to the community.
In conclusion, Hacash revolutionizes the PoW mining landscape with its X16RS algorithm and unique reward distribution, ensuring long-term fairness and decentralization. By preventing early mining centralization and building a community-oriented environment with fair mining at all stages, Hacash aligns with Satoshi Nakamoto’s vision and will help create a better and broader financial system. Continuous improvements and community engagement will be significant for Hacash to maintain its commitment to fairness and reach its potential.
Citation:
[1]: Hacash. X16RS algorithm design and GPU code explanation Hacash/paper. GitHub. https://github.com/hacash/paper/blob/master/tech/x16rs_algorithm_description.md
[2]: Hacash. (2023, November 29). Whitepaper. Hacash/paper. GitHub. https://github.com/hacash/paper/blob/master/whitepaper.pdf
[3]: Hacash. Hacash Mining Technology Development Description Hacash/paper. GitHub. https://github.com/hacash/paper/blob/master/tech/mining_tech_development_description.md
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