Merkle Tree Proofs (MTP), Proof of Work Crypto Mining and ASIC Resistance Debate Heats Up

    Merkle Tree Proofs ASIC Resistance

    Egalitarian mining and the proof-of-work algorithm (PoW) makes ASIC resistance worth the pursuit. The algorithm, called Merkle Tree Proofs, is one that Zcoin seems to believe in and states that it is “premature” to give up this early on in the game.

    There are many reasons for ASIC resistance. The project is often quibbled about between algorithm and ASIC designers. With a MPT proof of work algorithm, mining centralization can be fought against, which arises from ASICs.

    Zcoin is looking to create a more level playing field and to do so, it is hoping to implement MPT. With such an implementation, it may be able to democratize, what it believes to be, an undemocratic cryptocurrency mining system. Here are three factors identified by ASIC and that it relates to ASIC resistant proof-of-work algorithms:

    • ASIC gains advantages over commodity hardware like CPU and GPUs, but such advantages are limited
    • The algorithm will become costlier to develop

    Accordingly, an ASIC resistant algorithm mitigates development of ASIC, which then allows individuals with commodity hardware like CPU and GPU to mine in an area that is more equal.

    There are two benefits to this approach, including more coin distribution and decentralized security. Rather than gathering security on the blockchain in large mining farms, the network’s security is dispersed evenly throughout and among miners. Some believe that decentralized hashrates may also enhance resistance to censorship.

    ASIC resistance also promotes distribution of more coins. MPT allows everyone to have a fair chance of earning a coin with their existing computer hardware, rather than needed to purchase specialized ASIC that mine specific algorithms. Some countries, such as Venezuela and Vietnam, have also banned ASIC import into their countries in an attempt to stagnate the development of cryptocurrencies.

    Some believe that ASICs should be welcomed, even when a coin is in its early stages of development. A condition to this adoption is that the ASIC must be commoditized, which means that it is widely available to the average consumer and manufacturers can compete to place ASICs at a competitive rate on the market.

    As one can tell, ASICs do have many benefits. For instance, the hashrates are stable and miners can enter their specific algorithm and need not switch from coin to coin during the mining process. Some also believe that this ultimately leads to more security on the network and higher levels of commodity hardware mining.

    Bitcoin, Bitcoin Cash, Litecoin, and Dahs tend to do well with ASIC, perhaps because their communities have taken years to develop and they can be likened to new projects. Those who embrace ASIC at the early stage of a coin’s development may find themselves benefiting most. There is also discussion surrounding the creation of an open-source ASIC technology. This will enable manufacturers to produce them – but on the downside, larger companies with R&D will also need to produce ASICs that are more efficient so that they can be mined secretly on their coin distribution.

    There are some projects out there that are trying to control the process – one of the most notable being SIA, which has spend a lot of funds and time developing its own ASIC. Unfortunately, Bitmain seems to have beat SIA to it. SIA has now generated a hard fork in response in favor of its own miners, which works to defeat commoditization of ASICs. At the end of the day though, it is important to recognize that cryptocurrency projects are not part of the hardware business – and instead, they should be focusing on developing software and technology that provides companies with the tools and resources needed to develop ASICs.

    Those who are pushing for the commoditization of ASIC argue that there are a very select few of companies that are able to product ASICs – one such being the computer industry. Therein, companies such as Intel AMD and Nvidia are dominant players. The issue is that this argument bypasses the fact that dissimilar from companies where cryptocurrency mining is only a minuscule part of their business model, the main goal is to ensure that as many chips as possible are sold. As a result, there is little incentive for ASIC manufacturers to sell their ASIC if they will profit more by selling them through mining and at a price that leads to potential gains.

    Another group believes that ASIC resistance is impossible and that ASICs for any algorithm is just part of the game. While there is some truth that ASICs can be developed for any algorithm, it is possible to increase the cost of development and manufacturing, which will then reduce potential gains in efficiency. This may then lead to the delay of ASICs development.

    This is already apparent when it comes to SHA 256 ASICs, which are attributed to Bitcoin and Bitcoin Cash. These ASICs are faster than GPU. Further, Scrypt ASICs for Litecoin and Dogecoin are also fast, and algorithms like Equihash, which is used in Zcash, are five to ten times faster. As for Ethash, which is used in Ethereum, it is two to three times faster.

    Zcoin’s implementation of MPT allows for 4 GB of memory to be used and even then, higher values like Ethash, which is ASIC resistant, refreshes memory every 100 hours¸ while MPT must be refreshed at every block. Using so much memory also has the benefit of being less attractive to botnet mining.

    MPT ASIC is costly to develop as well – especially given the memory usage, limited efficiency gains, and more. As a result, Zcoin’s community may have more time to adopt and grow ASICs before they are viable on the market.

    It is also important to note that a PoW hard fork may not be sustainable. Coins like Monero pursue ASIC resistance in an ad-hoc manner – they schedule hard forks every few months and alter their proof of work algorithm. The theory behind this practice is that the changes limit ASIC lifespan and discourage manufacturers from developing them. There are also some coins that release very little information about any changes, which makes it difficult for ASIC manufacturers from getting ahead.

    There is also growing evidence showing that ASICs may be able to accommodate changes, even with less efficiency. Even with the anti-ASIC approach that many projects take, there are still incentives to not disclose miners to the public. Some even believe that ASICs mined Monero before the public release.

    When a hard fork take place, there is a risk and the introduction of instability into the mining ecosystem. Miners often need to transition to new algorithms and coin security becomes more susceptible to attack. To make matters worse, the POW may be kept secret as well. As a result, new forks take place, which can confuse users. The same issue occurred with Monero 0, Monero V, and Monero Classic.

    Using hard forks just to combat against ASIC resistance may not be sustainable over the long term due to the introduction of risk on the network. For such reasons, it may be better to research and implement algorithms like MPT. Further, dissimilar from other ad-hoc algorithms, MPT has undergone academic review and a funding program by Zcoin to ensure that it is able to overcome cheating and attacks.

    At the end of the day, MTP may be a prime solution for coins like Zcoin, which are still early in distribution stages. Of course, feedback may help the platform improve its MPT, so it is always welcome.

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