Coinbase recently released a blog post on Proof-of-Work titled ‘How Coinbase views proof of work security.’ However, this blog post failed to appease the Monero community, with some of its proponents highlighting the lack of research done about the privacy-enhancing cryptocurrency. This was in light of the fact that the post had a case study column on Monero’s regular network upgrades to ensure it was ASIC-resistant.
The case study made two points,
- It is a security feature for a particular coin’s mining operations to be the dominant application of the hardware used to mine that coin
- Manufacturing and ownership diversity will be improved with ASIC-friendly algorithms
The largest fungible cryptocurrency was used as an example for the second claim made in the post, with the first point under it being that algorithms will never be “ASIC-proof,” but merely “ASIC-resistant.” Along with citing the example of Monero’s Cryptonite to make this case, other cryptocurrency algorithms that were quoted included Litecoin’s Scrypt, Ethereum’s Ethash, and ZCash’s Equihash.
The second point presented under the claim was that “ASIC-resistant algorithms raise the barrier to entry in the mining hardware market.” The blog post by security engineer Mark Nesbitt stated,
“This [ASIC-resistance] results in greater centralization of mining hardware manufacturing – the very situation that the selection of an ASIC-resistant algorithm is meant to avoid! The goal, instead, should be to select an algorithm where it is cheap and easy to manufacture ASIC.
Opting for an algorithm that enables “cheap and easy” manufacturing of ASIC would result in “ASICs that are practically a commodity,” the blog post said. This, in turn, results in the diversification of manufacturers and thereby, the diversification of owners and operations, leading to a decentralized mining ecosystem.