Vertcoin: A Call to Action Against ASICs

To ASIC or not to ASIC; ASIC mining has been a widely debated and hot button issue in the crypto-community. The main argument for ASICs is that they help ensure network security. The evidence is sparse. The main argument against ASICs is that they promote extreme centralization. The evidence is damning. With the recent claims that Bitmain developed an ASIC for Ethereum, the Vertcoin Team has issued a call to action to all coins to stand against ASICs. But first, let’s cover some basic information and start from the beginning.

What is an ASIC?

ASIC stands for Application-Specific Integrated Circuit. This is a circuit that is customized and intended for one specific usage. In the case of cryptocurrencies, it is usually a miner made for a specific coin. It is unlike a Computer’s GPU (Graphics Processing Unit) intended for general consumer usage (think image processing, calculations, machine learning, etc.).

As it currently stands, Bitmain (ASIC miner manufacturer) has a monopoly over the market to the tune where they are able to wreak havoc by controlling a cryptocurreny’s network with their machines.

What is Bitmain?

Bitmain is a privately owned company founded by Jihan Wu in 2013 headquartered in Beijing. The purpose for creating Bitmain was to help develop an ASIC chip that would mine Bitcoin.

What is Wrong with ASICs?

Let’s start with the fact that the financial bar of entry to mine certain cryptocurrencies has increased to the point where it’s not profitable for anyone not having an ASIC. For example, to mine Bitcoin with intentions of profit, which uses the SHA-256 hash function, you’d need to buy the Antminer S9 which costs around $1800 USD for one. Some of you may have just clocked out of trying to mine Bitcoin. However, maybe a few of you reading think that doesn’t sound too bad for you.

Credits: Photos: China has one of the world’s largest Bitcoin mines

Well, you’re competing with above photo. Pictured in the photo is one of the largest Bitcoin mines in China owned by Bitmain and all those units you see on the shelves are probably some version of the Antminers. Suddenly it looks less and less profitable. Additionally, there are certain companies and entities that have the capital to throw money down into huge mining operations similar to the one pictured above that further increases the bar of entry into mining.

Credits: Photos: China has one of the world’s largest Bitcoin mines

According Quartz, the above photo is from Ordos, Inner Mongolia. There are eight buildings; seven mines dedicated to Bitcoin, one to Litecoin.

Bitmain also has full monopoly over ASIC based mining. A huge percentage of mining occurs in China or is owned by Chinese institutions. Bitmain not only is the main supplier of ASICs, but they also own and operate two of the world’s largest Bitcoin mining operations that account for some 38.9% of the entire network’s hashing power. That is definitely not the decentralized vision put forth by Satoshi Nakamoto. If China actually did ban mining before any of these operations were to move overseas, then the Bitcoin (and other ASIC mined coins) hashrate would plummet overnight. Satoshi created Bitcoin as a means to not have to rely on central points of failure such as banks and financial institutions. Bitmain monopolizing the ASIC market is a central point of failure. Things such as double spending and payment censorship would be possible if a mining pool(s) takes over majority hashrate. In addition, if China’s (or other countries’) government start to meddle with ASIC mining farms or mining becomes unprofitable for whatever reason and Bitmain decides to move away from mining, then it would be detrimental to the network. Bitmain is already getting into the artificial intelligence industry so it does have other means to make money.

What Coins Are ASIC Mined?

This question should be more structured as: What Hash Functions Do Bitmain Have ASICs For? ASICs are hash function specific. You can get a list of the ASICs they have for which algorithms on their site. Below is a table of ASICs for specific hash functions and the coins that use those hash function. Note: This is not an exhaustive list but a list of the main coins. For a complete list of such coins, you can consult whattomine.

ASIC Sagas

There has been a ton of drama in the mining world. Below are but a few:

  • ASICBoost, Bitcoin, and Jihan
  • Monero battling an ASIC made for them
  • Siacoin and the battle between Obelisk and Bitmain
  • Ethereum and the alleged ASICs for their network
  • Vertcoin stunting ASICs twice
  • tacos- the struggle determining the best

ASICBoost Controversy

Last year, there was controversy when it was discovered that there was a potential attack vector in the Bitcoin proof of work function. The attack would allow an attacking miner to save up to 30% of their energy costs. According to this message:

Exploitation of this vulnerability could result in payoff of as much as $100 million USD per year at the time this was written (Assuming at 50% hash-power miner was gaining a 30% power advantage and that mining was otherwise at profit equilibrium). This could have a phenomenal centralizing effect by pushing mining out of profitability for all other participants, and the income from secretly using this optimization could be abused to significantly distort the Bitcoin ecosystem in order to preserve the advantage.

Reverse engineering of a mining ASIC from a major manufacturer has revealed that it contains an undocumented, undisclosed ability to make use of this attack.

In addition, Jihan Wu made it clear that he wanted to push Segwit through a hard fork or extension blocks (sound familiar?). The reason was rumored to be that if segwit was pushed through with a soft fork, Bitmain would lose the mining advantage.

Monero and Their Battle Against the Antminer X3

Bitmain announced their Antminer X3 that would be able to mine the CryptoNight algorithm, primarily used by Monero. It’s already sold out and is supposed to ship in May 2018. For those who were able to get them, it cost them about $12K USD. However, Monero developers released their Lithium Luna update that is supposed to squash the effectiveness of X3 miner. In order to stay ahead of the game against ASICs, Monero releases updates to their algorithm on a biannual basis. Ricardo “fluffypony” Spagni has said, “I will do everything in my power to help the community prevent the proliferation of centralisation-inducing ASICs on the Monero network”.

Siacoin and Their Battle Against the Antminer A3

In January, Bitmain announced their Antminer A3, which would be able to mine coins that use the Blake (2b) hash function. Siacoin co-founder David Vorick has his own ASIC company, Obelisk and was planning to release his own ASIC for Siacoin in June. So, Bitmain has beaten Vorick to market on his own coin. Vorick and the Siacoin development team released a statement on Reddit about Bitmain releasing the Antminer A3. Below are a few quoted points from the release:

Bitmain has historically been extremely greedy, and very willing to sacrifice the well being of the community, of their customers, and of the ecosystem if it means they can make a couple of extra dollars. The biggest way this has manifested for altcoins is that they will over-sell hardware. When a ton of miners suddenly join the network, the difficulty adjusts. If too many miners join the network, nobody is able to make any money, and everyone eats a loss on their hardware purchase

“We did add an extra feature to the SC1 unit that would allow us to invalidate the Bitmain hardware without invalidating the SC1. The community would need to choose to adopt a soft-fork (it’s not something we could just magically activate, we have to change the hashing algorithm slightly), and then we could get rid of this cycle of Bitmain hardware”

“If the hardware is used to harm the Sia network, either by doing double spends, rejecting soft forks, mining empty blocks, we will invalidate it without hesitation.”

Ethereum Under Fire

Rumor has it that Bitmain has developed (and other rumors say they have had the miner for Ethereum for a while now) an ASIC miner for Ethereum.

According to the Ethereum whitepaper:

The current intent at Ethereum is to use a mining algorithm where miners are required to fetch random data from the state, compute some randomly selected transactions from the last N blocks in the blockchain, and return the hash of the result. This has two important benefits. First, Ethereum contracts can include any kind of computation, so an Ethereum ASIC would essentially be an ASIC for general computation — Kooie. a better CPU. Second, mining requires access to the entire blockchain, forcing miners to store the entire blockchain and at least be capable of verifying every transaction. This removes the need for centralized mining pools; although mining pools can still serve the legitimate role of evening out the randomness of reward distribution, this function can be served equally well by peer-to-peer pools with no central control.

This model is untested, and there may be difficulties along the way in avoiding certain clever optimizations when using contract execution as a mining algorithm. However, one notably interesting feature of this algorithm is that it allows anyone to “poison the well”, by introducing a large number of contracts into the blockchain specifically designed to stymie certain ASICs. The economic incentives exist for ASIC manufacturers to use such a trick to attack each other. Thus, the solution that we are developing is ultimately an adaptive economic human solution rather than purely a technical one.

It be safe to assume that Ethereum are against ASICs as well so it will be interesting to see what their response is to the rumors going forward.

Another thing to note is that Bitmain will be cutting into AMD and Nvidia. In fact, it is likely that Bitmain has made as much money as Nvidia did last year. If the rumors that Bitmain has a miner for Ethereum are true, then it is expected that demand for GPUs will go down.

Vertcoin: The People’s Coin Is Having None of It

Vertcoin has been committed to its mantra of ASIC resistance and promoting fair mining since its inception on January 8th, 2014. On December 13th, 2014, Vertcoin forked from Scrypt-Adaptive-N proof of work function to Lyra2RE to defend against Scrypt ASICs. In addition, on August 10th, 2015, Vertcoin forked from Lyra2RE to Lyra2REv2 because a botnet was controlling more than 50% of the hashing power of the Vertcoin network.

Lead Developer James Lovejoy has been adamant about keeping Vertcoin decentralized.

80% of the bitcoin mining occurs in China. So, that isn’t very decentralized. What if China really did ban Bitcoin mining and they just turned the power off, which they totally have the power to do? 80% of Bitcoin’s hashrate would disappear overnight, which would be pretty catastrophic. With Vertcoin, that would be pretty hard to do because you would be going into people’s homes and telling them to turn their computer off.

The key difference is between permissioned and permissionless systems. In my mind, the way the system is constructed now, ASICs in a system effectively makes it permissioned because you need to be friends with Bitmain in order to get the latest hardware so you can actually be a meaningful participant in consensus. Whereas with GPUs, they are general and they are everywhere and they have been sold for years and they are in every computer store. My propensity to contribute to a system in a consensus fashion is not limited by anyone else…

This can not be overstated. If this was about trying to make a resource run better in a computer system then we wouldn’t be having this conversation. But this isn’t about making a resource or component run better; this is about consensus across a network. That shouldn’t be centralized to any one entity.

You can see a debate between lead developer of Vertcoin James Lovejoy and lead developer of Siacoin, David Vorick about the benefits and drawbacks of ASICs on YouTube.

ASIC Resistant Coins

Note: This is not an exhaustive list but a list of the main coins. For a complete list of such coins, you can consult whattomine.

The Call to Action

Vertcoin is committed to ASIC resistance and fair mining. One of the major points (if not, the whole point) in the creation of cryptocurrencies is to not have a central point of failure. Increased centralization increases the chances of network failure. We support Monero in their fight against the Antminer X3 and their fork happening in April. With the rumors of an ASIC being created for Ethereum, we urge Ethereum to continue with their vision they set out in their whitepaper to stymie ASICs. We urge all coins, not just the ones without ASICs, to join the fight against ASICs and Bitmain for the security and continued decentralization of each respective networks.

Links and Resources

Credits:The Vertcoin Marketing team