Standard Kepler

Monero Leads the Way Towards ASIC Resistance

10/22 – 10/28

Blockchain Cryptocurrency Research Monero XMR ASIC Resistance
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WEEKLY RECAP

  • Total market cap. reached $209bn (a 0.8% decrease), and 7 day trading volume slumped 13.9% for top 100 crypto


WEEK AHEAD

  • 29 Oct: IOTA at IoT Atlanta blockchain summit
  • 29 Oct: ADA supports Trezor hardware wallet


THOUGHTS OF THE WEEK

First launched in April 2014, Monero (XMR) is a pioneer among privacy tokens, preserving user privacy using ring signatures, ring confidential transactions and stealth addresses. Recently Monero launched the “Monero 0.13.0 Beryllium Bullet” hard fork, introducing “bulletproof” technology, and updating XMR’s CryptoNight proof-of-work algorithm.

Following the introduction of bulletproof technology, XMR transaction (tx) fees dropped 94% to US$ 0.017 per tx (as observed in our Chart of the Week). Prior to bulletproof, XMR adopted “range proof” to prove that the value of a tx falls between 0 and a large number, so as to prevent the sending of negative tx amounts. The downside of using range proof technology is the resulting large data size per tx (about 4x higher than BTC), leading to higher tx fees. Bulletproof shrinks the size of cryptographic proofs used, leading to a ~80% decrease in tx size.

The latest upgrade of XMR also includes a tweak to its CryptoNight proof-of-work algorithm, increasing the memory bandwidth requirement of mining to 64 bytes (a 4x increase), in line with XMR’s stated goal of pursing ASIC mining resistance. ASIC mining devices are customized to execute a single hash algorithm, and are thus able to compute hashes 100,000 times faster than GPUs. There are several reasons why major altcoins strive to achieve ASIC resistance. ASIC mining devices are largely operated by large mining pools as they are too expensive for most home users, and this centralization of mining power can in turn lead to increased vulnerability to 51% attacks. This risk of centralization is further enhanced by the monopolistic nature of the ASIC device manufacturing industry.

The mining difficulty of XMR has dropped 24% in the wake of the Beryllium Bullet fork, primarily a result of the increased memory requirements to mine, making XMR mining an unviable option for ASIC miners. Responding to increasing pressure from altcoins, device manufacturers, and mining pools alike, ASIC manufacturer Bitmain recently launched the “overt ASICboost” update to the company’s S9 Antminer devices. While the update brings about energy cost savings of an estimated 13%, competing mining pool SlushPool urged its users not to apply the update due to its incompatibility with the BIP310 standard.

Moving forward, we expect further major altcoins to strive towards achieving ASIC resistance, with sector behemoth Ethereum pursuing ASIC resistance in its upcoming Constantinople update.

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