Before we discuss Resistant ASICs, we need to know what ASICs are. ASIC stands for application-specific integrated circuit. ASICs are chips that are specifically designed to perform certain tasks, for example to perform crypto mining. Because it is specially designed, ASIC performance will be much higher than non ASIC chips, such as GPU (Graphics Processing Unit). For example, if a GPU can mine 0.1 coins per day, ASIC can generate 0.5 coins.
ASIC resistant refers to cryptocurrencies that are equipped with special algorithms to prevent ASICs from working. As a result, ASIC mining results are not better than GPU, and even ASIC results are much worse. Cryptocurrencies that are ASIC resistant are those that use blockchain consensus based on Proof of Authority (PoA), Delegated Proof of Stake (dPoS), and Proof of Stake (POS). While some Proof of Work (PoW) based blockchains are immune, some are not.
However, the growing ASIC industry has allowed the birth of ASICs that are immune to the ASIC Resistant algorithm. On the other hand, the developer will also develop a new ASIC Resistant algorithm for the latest ASIC chips. So the ‘battle’ of developing ASIC Resistant will never end.
Examples of crypto that ASIC resistant
– Ethereum (ETH): ETH is ASIC immune thanks to the Keccak-256 hashing algorithm. This algorithm allows ASIC not to work well because it only takes into account the hash production process as a mining process and not a computational function.
– Monero (XMR): XMR combines the RandomX hash function with the CryptoNote protocol in the process of creating blocks. The impact is that only the CPU and GPU can do mining.
– Ethereum Classic (ETC): ETC is ASIC invulnerable after adopting the Keccak-256 hashing algorithm in the Thanos Upgrade update. The effect is that miners can mine with a 3GB GPU.
Why is ASIC resistance so important for the survival of cryptocurrencies?
Cryptocurrency is very dependent on the block creation process carried out by the computing network (nodes). The existence of ASICs allows one to master the computing network which allows them to take over the entire blockchain network. If we’ve heard of 51 percent attack, then ASIC opens up opportunities for this attack. Where the attacker controls 51 percent of the nodes so that they can manipulate the block creation process.
To prevent this, ASIC resistant is applied. The existence of ASIC resistant allows anyone to participate as a node. The greater the opportunity for participation, the stronger crypto decentralization will be. As a result, the chances of 51 percent attack getting smaller. The problem is that attackers need to take over a lot of nodes which will cost a lot of money and energy.
Advantages of ASIC resistant
– Allows anyone to become a miner. Just buy a cheap CPU and GPU, no need for an expensive ASIC.
– Maintaining crypto decentralization and ensuring the future sustainability of blockchain.
– Prevent network takeover through 51 percent attack.
– More environmentally friendly because the CPU and GPU are not as wasteful as ASICs in electricity usage.
ASIC is an acronym for Application Specific Integrated Circuits, which is a computer with a special processor specifically designed to carry out certain tasks, one of which is solving the mining algorithm of a transaction block to get coins from the blockchain. A number of parties have seen for themselves how superior ASIC is in mining crypto coins such as bitcoin compared to ordinary computers or graphics cards.
Imagine there are all kinds of cars. Public cars on the market such as Avanza, Rush, Pajero can go quite fast on the racing circuit. This car can be likened to a CPU tasked with mining crypto coins. Luxury cars such as Mercedes Benz to BMW can go even faster when lauched on the race circuit. This type of car deserves to be equated with graphics cards such as the Nvidia Geforce RTX3070 which has higher computing power for mining crypto coins. But all of those cars lost far when they were pitted against a formula 1 car. Well, this formula 1 car can be likened to an ASIC that is able to mine certain coins with far more computing power than a graphics card.
The emergence of coins with different mining algorithms
It is human nature to always want to create something different. The same is true for a number of coins that are developed by a group of teams and apply different algorithms in the mining process. For example ASIC A has been designed in such a way that it is able to mine dozens of bitcoins every day. But when ASIC A is used to mine Litecoin, the results are not superior because it is only able to produce 10 Litecoins, the same as the performance produced by a CPU. The condition experienced by ASIC A when mining litecoin is then called ASIC resistant. It is like a formula 1 car that is being driven on the highway and must obey traffic signs so that it cannot step on the gas.
ASIC resistance is not permanent
An ASIC is designed by humans to perform a specific task. If ASIC A is not able to show superior performance when mining bitcoin then it can be overcome by redesigning ASIC A by adding or removing a number of components to match the litecoin mining algorithm. If the design has been completed and it is proven that the modified ASIC A can gain more litecoin, then ASIC A cannot be categorized as ASIC resistant anymore.
ASIC Presents Cryptocurrency Development Challenges
Decentralization is the spirit of cryptocurrencies that use a permissionless blockchain. However, the presence of ASIC rigs poses challenges to decentralization. Some of the problems caused by ASIC mining equipment are:
* Increasing the difficulty in mining, because the greater the computational power in the mining that is scrambling to solve the algorithm on the system.
* An increase in energy requirements in mining activities, because ASIC equipment is very energy-intensive. This condition can reduce the profits of miners because more costs are incurred to pay for energy (electricity).
* Inflated mining investment costs, because ASIC chips are made by only a few manufacturers, with this scarcity the price of ASIC rigs rises sharply.
* Lowering the level of decentralization, which is why large miners dominate the computing power of the cryptocurrency system.
So to deal with ASIC rigs that are a threat to cryptocurrencies, some crypto developers have developed transaction validation algorithms that cannot be mined using ASIC chips which we know as ASIC Resistant. Mining on Ethereum, for example, can only be done using GPU and CPU, or general computing equipment. ASIC chip manufacturers can make ASIC chips to overcome restrictions on the use of ASIC rigs, but the mining equipment can only be used to mine cryptocurrency for a short time, because developers will update mining algorithms, whereas ASIC chips are designed only to solve certain algorithms.