New Mining Approaches Provide Hedge Against Centralization As Hash War Looms

Zcash recently announced their new protocol upgrade, Blossom, which among many new developments will include “Harmony Mining”, which will enabling the network to utilize two proof-of-work algorithm.

The forum post described the feature as “a dual-proof-of-work scheme, where one algorithm is backwards compatible with current mining equipment, and another is designed to work well with GPUs on a temporary time scale”. The post went on to describe how the upgrade will allow the network to attract both ASIC and GPU miners “to make the Zcash ecosystem more resilient by spreading issuance and political influence among distinct kinds of stakeholders”. Currently, most GPU miners are crowded out by the more powerful ASIC miners.

The upgrade is scheduled to be release around October 28th, 2019, which would be about a year after the sapling release, which was the last upgrade.

Importance of decentralized and robust validation

The potential hash war that nChain and CoinGeek are threatening with their Bitcoin SV code against the Bitcoin ABC code supported by Bitcoin.com, Coinbase, Binance, and others highlights the need for decentralized mining and transaction validation methods. nChain chief scientist Craig Wright has been speaking heavily on twitter and other media outlets that he will destroy the Bitcoin ABC chain through a hash war. However, Craig Wright has also hinted at his plans to attack other proof-of-work cryptocurrencies and there has been the suspicious emergence of Shark Pool, which is claiming it will maliciously mine empty altcoin blocks.

The concerns highlight the importance of cryptocurrencies having a robust and decentralized validation system, such as the one Zcash is exploring. PIVX provides a potential alternative with its proof-of-stake system to validate and secure its blockchain, however, it has created a centralization problem since the top 10 and 100 wallet addresses contain over 25% and 46%, respectively, of the network’s wealth. Another potential solution to create a robust and decentralized cryptocurrency is to employ multiple algorithms. This is what Digibyte has done by harnessing 5 different hash algorithms; Sha256 and scrypt optimized for ASIC miners, while skein and groestl are optimized for GPU miners, and qubit is good for multiple types of hardware. The diversity of these validation methods can help mitigate the risks of centralization and a 51% attack by increasing the capital requirements needed to gain enough computing power or coins to attack the network.

Dash pursuing its own form of decentralized and robust validation

Dash employs its own unique form of validation and consensus building mechanisms by splitting power between miners and masternodes, whom must stake 1,000 Dash to have a vested financial interest. This then makes it much more difficult and cost prohibitive to attack the Dash network since a would-be-attacker must buy 51% of mining power and 51% of masternodes to reverse transactions. This is thanks to Spork 3, InstantSend Block Filtering, which causes masternodes to reject blocks that conflict with InstantSend transactions that are already locked by the masternode network. Furthermore, the concept of collateralize mining has been discussed to better align miners’ incentives to protect the network through a vested financial interest since it then becomes less likely that a miner will want to destroy the coin that they had to invest in to mine.

This unique hybrid has also allowed Dash’s to be one of the better distributed coins with its top 10 and 100 addresses being just above 5% and 14%, respectively, of the network’s wealth. This helps indicate that Dash not only has better wealth distribution, but also provides some evidence of robustness in that Dash is being used for everyday transactions since it is not being concentrated in a few addresses that are miners or stakeholders. Further evidence to support this hypothesis can also be seen via the over 4,000 merchants that currently accept Dash around the world. This pursuit of decentralization and robustness will help strengthen the network in general and hopefully provide resistance against the idea of a large scale attack currently being floated around.

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