Cryptocurrencies use proof-of-work to maximize security. Or was it decentralization?
Both of these goals are close to the hearts of the cryptocurrency community at large, but they’re especially important to the miners whose hardware rigs perform that proof-of-work: the power-hungry computations used to update the blockchains of bitcoin and many other cryptocurrencies.
Unfortunately, decentralization and security can be a tradeoff - one that’s at the center of the sometimes-acrimonious debate over application specific integrated circuits, or ASICs.
At a panel held Monday at CoinDesk’s Consensus 2018 event, three big names in cryptocurrency mining came to grips with this debate, discussing ASICs’ implications for security and decentralization. The discussion often came back to role of governments, sometimes as partners, other times as adversaries.
ASICs are custom-built computer chips used to mine cryptocurrencies hyper-efficiently. When an ASIC is developed to mine a specific coin, it tends to drive graphics processing units (GPUs), used by many small-scale miners, out of the mining market.
For some, including panelist Marco Streng, CEO of Genesis mining, that’s a problem. “GPUs are the most decentralized mining hardware we have on the planet,” he said at the event. Part of the reason is that GPUs are cheaper, requiring less of a sunk-cost investment to launch a mining operation.
For Gideon Powell, CEO of Autonomous Crypto Corp, Streng has a point. “Yes, [ASICs] are not as decentralized,” he said. But he added, “I like ASICs, they’re much more secure than GPUs.”
Even though bitcoin mining has been completely dominated by ASIC miners for several years, Powell is not concerned:
“I don’t see the centralization issue going forward being a huge issue for bitcoin at all.”
The pair’s disagreement seems to come down to which issue they perceive as being more of a threat. While Streng worried about concentration of mining power in fewer hands, Powell - who said he was “from the libertarian-anarchist wing” of the cryptocurrency space - was more concerned with hostility from governments.
“Governments could give [GPU miners] a run for their money with 51 percent attacks,” Powell said, referring to a brute-force attack on a blockchain, in which the attacker amasses more computing power than all honest participants on the network. “In terms of bitcoin,” he continued, “it would be extremely challenging.”
Streng is not quite as skeptical of governments. He even brought up the possibility of working with them, providing them with GPU cloud mining to power their blockchain networks.
“If they want to use proof-of-work consensus, which is the only proven way so far, they’ll need computing power,” Streng said.
In any case, Streng continued, GPUs provide a practical benefit when it comes to the kind of anti-ASIC hard forks some in the zcash and ethereum communities are pushing for. “You’re more flexible,” he said.