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Michael J. Casey is the chairman of the CoinDesk advisory committee and a senior blockchain research consultant at MIT's Digital Currency Initiative.
The following article originally appeared in CoinDesk Weekly, a personalized newsletter that is delivered every Sunday exclusively to our subscribers.
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You may not have heard of Vertcoin, an encryption project designed to reduce concentration in mining power in the interest of broad participation. But if you worry about security, decentralization and open access to cryptocurrencies, the issues raised by a recent blockchain violation will be important to you.
In a textbook, the 51 percent attack documented in a blog post by Coinbase security engineer Mark Nesbitt, someone took control of the hashing power majority of the Vertcoin network to conduct more "reorg" of the blockchain. The attacker basically rewrote part of the history of the ledger and then, using his dominant hashing power to produce the longest chain, he convinced the rest of the miners to validate this new version of the blockchain. With this, he or she could commit the ultimate cryptic crime: a double expense of previous transactions, leaving the previous beneficiaries with invalid coins.
It was a blow to the Vertcoin enthusiast user community. Led by a dedicated and decentralized developer team – the antithesis of ICO issuers who have accumulated money in the last year – defended their "ASIC-resistant" algorithm for four years as a way to avoid the industrialized concentration of bitcoins and other cryptocurrency work trials.
Now, the bear market of cryptocurrencies has asked them a demanding question: is their continued commitment to maintaining the competitiveness of cheap mining and general-purpose equipment worth it? Does their otherwise praiseworthy goal of democratized mining only create an unsustainable security risk?
Not surprisingly, critics, including many bitcoin maximalists, see the deal as a nail in the coffin of Vertcoin and other similar projects. These algorithms of ASIC-resistant projects are designed to ensure that powerful rigs with uniquely designed application-specific ICs have no advantages over those with graphics cards or GPUs, a widely available processing unit and cheaper that can also be used for game consoles and other purposes.
The problem, say these critics, is that if mining is relatively inexpensive and can be used simply by taking a machine that is doing one thing and doing it a different task, it is easy for an attacker to deploy enough hashing power. to take control of the network. As stated by the title Breaker Mag, "the greatest strength of Vertcoin" now seems to be "a fatal flaw".
There is still a case for ASIC resistance
Yet there is still a crushing argument in favor of the cryptocurrencies dominated by ASIC.
With each measure, the concentrated mining power, led by ASIC, has favored centralization around a few large players, which not only increases the risk of 51% attacks by these large operators alone or in collusion, but in fact guardians. This violates the anti-middleman objectives of cryptocurrencies and blockchain technology in general.
See how Bitmain periodically used its position as a dominant supplier of bitcoin mining hardware to manipulate the market and force its interests on the wider community. While it is true that Bitmain has sometimes been hampered by its opponents, particularly by developers who have successfully introduced the updated Secret Witness (SegWit) to the bitcoin code against its desires, there is a discussion that this it only puts users at the mercy of a different kind of gatekeeper group: the Bitcoin Core developers.
The arms race unleashed by ASIC's block-based competition has also led to massive energy consumption in cryptocurrencies proof-of-work. While I think the bitcoin threat to the planet is outdated and encouraged by a recent calculation by Coinshares that 77.6 percent of bitcoin mining uses renewable energy, there is no denying that the use of electricity is an environmental challenge and a serious public relations problem for this sector.
Furthermore, it is not clear that the ASIC extraction models are immune to the root cause of Vertcoin's problems. Basically, the fall in coin prices has made mining less profitable and has led to lower rental rates for hardware already installed on cloud mining sites like Nicehash. It was that the rented capacity, not the newly deployed machines, provided the attacker with a quick and low cost path to accumulate hashing power.
All cryptocurrencies, both ASIC and ASIC versions, have seen their mining leases decrease while cryptocurrency markets have plummeted. This has provided the attackers with a large pool of installed ASIC capabilities, undermining the argument that ASIC coins are protected because their equipment is more expensive to buy and distribute than generic GPUs.
It is true that if there is not enough hashing power rented to reach 51%, then an attacker will have to face a bigger barrier if he has to implement new ASICs to get there. But if the attacker is already a large-scale ASIC miner, it's not necessarily a big jump.
Some developers are seeing the Vertcoin experience as a warning to all cryptocurrencies, displaying this bear market, which is playing chaos with mining profitability, as an all-encompassing threat to consensus models.
Even before the worst period of crisis, 51% attacks seemed to become more common. In the comments to a Twitter thread started talking about Nesbitt's blog post, Zcash developer Zooko Wilcox suggested that the threat was quite large:
Bitcoin is special, not necessarily ideal
To be sure, bitcoin seems to be significantly less vulnerable than other currencies, because its enormous total hashing power, albeit strongly declining from the beginning of October, makes it extremely expensive to rent enough of that power to conquer. the network.
In contrast to a simple $ 131 charge for a 51% attack on Vertcoin starting Friday, a bitcoin attack will cost you $ 226,000 an hour, according to the Crypto51 website. And that does not take into account the fact that the current list of cloud mining providers could never provide enough hashing power for a tenant to gain majority control over the network.
In addition, if the bottom fishermen eventually stabilize the price of bitcoin, which is now down more than 80% in the last 12 months, it will allow the system to adjust the ongoing difficulties of the protocol to recover and start restoring mining profitability.
However, this case for the superior security of bitcoin derives from its status as a dominant currency, not from the presence of ASIC per se. And unreasonably it does not assume further improvements in the various models aimed at reaching alternative models of consensus and governance.
We are not at all in the stasis. Developers, within the altcoin and bitcoin communities, continue to explore decentralized solutions. And for good reason: the purpose of this technology has always been to achieve a peer-to-peer exchange with ample and unauthorized access that no gatekeeper can control.
The way in which the Vertcoin community has approached this goal deserves to be recognized. It combines an anti-ASIC algorithm with a clear community-level pact to enter code whenever an ASIC chip is designed to extract its currency.
The model brings together two fundamental design elements for the success of this technology: intelligent cryptography on a chain with a clear structure of social governance outside the chain. (Disclosure: two of Vertcoin's leading developers, James Lovejoy and Gert-Jaap Glasbergen, are researchers at the MIT Digital Currency Initiative, where they are senior advisors.)
Fight the good fight
However, this latest attack reminds us that this game of cats and tacts between the community and potential attackers is really difficult to manage. The recent foray into the Vertcoin network by specially designed ASIC Vertcoin has shown how difficult it is to keep up with the threat it has built up against it.
But in the spirit of learning from bankruptcy, Vertcoin's developers are now making corrections that will improve the security of their cryptocurrency. For example, an update of the protocol will make the new Vertcoin ASICs uncompetitive.
It is not clear whether these are sufficient to compensate for the loss of trust between investors and Vertcoin exchanges, which were the biggest losers in the double-expense attack. The price of Vertcoin has been hammered. From a peak of $ 10 in January, it was close to $ 0.24 on Friday. And it is down 64 percent from the beginning of November alone. He could never recover from his reputation.
But what the Vertcoin developers are trying to achieve is important. It would be a mistake to liquidate their work on the basis of this latest development.
If this same cryptocurrency survives or the lessons learned from it are applied to other projects, models that encourage open access and decentralization should be able to continue.
Image of the Bitcoin mining structure through the CoinDesk archives.
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