If you’re familiar with the drama leading up to last year’s SegWit activation on Bitcoin, the Bitcoin Cash fork, and the subsequent failure of SegWit2x, you’re probably familiar with AsicBoost — a patented technology that gives parties that implement it a huge advantage when mining bitcoin.
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There’s been a few recent developments, though, regarding the status of its patents. These changes could change the mining game forever, so we’re here to explain what they mean, both for you and for miners at large.
AsicBoost and the Drama Surrounding it
AsicBoost is a method of reducing power usage in mining hardware when the machines attempt to find a block, by recycling certain parts of the calculation needed to create a valid block hash. This limits the overall set of invalid hashes the miner can find, and reduces energy consumption per block by 15-30 percent over naive, random hashing methods.
A good way to think of AsicBoost is as a “rainbow table” for bitcoin mining — a method for finding hashes more efficiently by reusing precomputed data, while naive miners are “brute forcing” valid blocks.
So if AsicBoost reduces the energy used per hash in miners, which means each transaction on the network is lest costly to verify, it’s a positive outcome for everyone involved, right?
As it turns out, things are a bit more complicated than that. There are two types of AsicBoost, one of which is (a) difficult to detect and (b) encourages miners to mine empty blocks, at considerable expense to users of the bitcoin network. While the patent holders have owned AsicBoost as intellectual property for over a year, recent ASIC miners released by Bitmain are capable of using both types of AsicBoost.
This intellectual property conflict, combined with a proposal in SegWit that makes the more detrimental variety of AsicBoost much harder to get away with, is often pointed to as what motivated Bitmain support for Bitcoin Cash — a large block fork of Bitcoin that never implemented SegWit.
Critics reason that Bitmain, who they claim profits from running covert AsicBoost, could make more doing the same on Bitcoin Cash, without revealing any IP infringement, as doing the same on SegWit-enabled Bitcoin would require.
Protective patents and the BDPL
So Last Thursday, the stalemate between Bitmain and Little Dragon LLC seemingly ended with the latter releasing their patent under a royalty free, copyleft patent license called the Blockchain Defensive Patent License, or BDPL.
If you’ve ever looked into or developed open source software, the concept of the BDPL should seem familiar. Essentially, it licenses the patents of participating companies irreversibly under a royalty free license for all other adopters of the BDPL, in a similar manner to the GPL’s insistence on derivative or connected works being released under the GPL.
This theoretically opens up AsicBoost to legitimate use by Bitmain, and one of their competitors, Halong mining, has already hopped onboard and enabled AsicBoost on their products.
Of course, this could potentially expose other Bitmain IP to the wider mining market, which is a big incentive to hold out, especially when you consider China’s history of siding with native industry in intellectual property disputes.
Over Under on AsicBoost
So, in short, anyone can now implement AsicBoost by licensing their IP under the BDPL. Bitmain probably won’t want to, but it opens up the field for innovation in the already monopolistic market, even if Bitmain continues to manufacture AsicBoost compatible chips without BDPL compliance.
In addition, the BDPL stops further capture of technological innovation that could harm Bitcoin and other cryptocurrencies that rely on specialized mining hardware.
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