Short for application-specific integrated circuit, ASIC is a microchip designed for a specific purpose, such as a transmission protocol. In the cryptocurrency space, ASICs are used to compute cryptographic puzzles, in particular, to mine new Bitcoins. As Bitcoin mining requires miners to solve mathematical problems through difficult computational calculations, ASIC machines are very suitable. However, the crypto space is also full of cryptocurrencies that don't require ASICs to mine new currencies.
In this article, we will discuss:
What are ASIC-resistant cryptocurrencies?
ASIC resistant coins, as the name suggests, are cryptocurrencies with ASIC resistant algorithms. Its ecosystem is built in a way that prevents users from mining coins with ASIC machines. Therefore, mining these cryptocurrencies with ASICs is almost impossible. One could still try to extract these currencies using an ASIC, but that would not bring significant returns. While some networks create ASIC-resistant coins to preserve and increase the degree of decentralization of their blockchains, others do so to make mining accessible to everyone.
Which cryptocurrencies are ASIC resistant?
Ethereum (ETH): Ethereum is a popular example of blockchain ASIC resistant. The reason Ethereum is ASIC resistant is because the network uses the Keccak-256 hashing algorithm, which rejects hashes from ASIC machines. The algorithm is designed to produce hashes for mining purposes only and does not serve any other computing function. Unlike Bitcoin, which relies heavily on ASICs to mine new blocks, Ethereum's PoW hashing algorithm favors GPU units that are affordable and accessible.
Monomer (XMR): Monero is another cryptocurrency designed to be ASIC resistant. Therefore, no special machines are needed to create a new Monero. Privacy-based currency uses a RandomX hash function together with the CryptoNote protocol to produce new blocks. While Bitcoin is mostly mined by mining farms full of ASICs, Monero coins can be mined via CPUs and GPUs. Also, Monero being ASIC resistant means that there has been a considerable increase in the network's hash rate, which can be seen in the graph below.
Ravencoin (RVN): Ravencoin is a forked version of Bitcoin that used an X16R hashing algorithm in the past. However, last year, developers forked the network and switched to the new KAWPOW mining algorithm. This mechanism allows miners to utilize the memory and computing resources of the GPUs. This update made Ravencoin resistant to ASICs and helped to achieve more decentralization, as new coins could be mined by anyone using GPUs.
Ethereum Classic (ETC): Ethereum Classic is a hard fork of the Ethereum network that aims to maintain the integrity of the original Ethereum blockchain. Ethereum Classics are non-ASIC coins that previously used a modified version of the Ethereum mining algorithm called EtcHash. However, like Ethereum, the Ethereum Classic team also updated the network with the Kecaak-256 algorithm in their recent Thanos update, which allowed miners with up to 3GB GPUs to mine Ethereum Classic.
Vertcoin (VTC): Vertcoin is a fork of Bitcoin, designed as a GPU mined version of Bitcoin to add more security and decentralization to the network. It is probably the most ASIC resistant coin on the market that uses an ASIC resistant algorithm called lyrar2v3. The reason is that its developers are highly committed to a non-ASIC approach because they decided to fork the network if someone could successfully build an ASIC. This approach discourages creating an ASIC for Vertcoin.
ASIC Resistant Mining – Reducing the threat of computing power monopolies?
While blockchain networks have always been considered a decentralized technology, the 51% hack on the Ethereum Classic network showed that computing power can still be monopolized. A large mining pool can employ dubious methods to increase its block rate more than its compute power rate using ASIC boost, eclipse attack or other means, resulting in a 51% attack. This is exactly what happened in the case of the Verge network (XVG). The blockchain suffered a 51% attack when a mining tyrant possessed 10% of the network's total computing power.
A network-like attack like Bitcoin is nearly impossible, but smaller cap currencies remain under threat of being monopolized. Thus, to avoid problems caused by monopolies, many blockchain networks have adopted the concept of ASIC-resistant protocols.
In addition, proponents believe that ASIC-resistant algorithms increase community participation, lowering the barrier to entry and creating a more secure and distributed blockchain ecosystem that is fair and affordable.
Conclusion
Cryptocurrencies that do not support ASICs can be exploited using GPUs and CPUs, allowing everyone to be part of the network without buying expensive machines. This not only makes a blockchain-based platform more decentralized, it also makes mining more accessible. The cryptographic world has already begun to transition to ASIC-resistant consensus algorithms such as proof of wager ( PoS ) and proof of authority (PoA).
