PoW Not Flawed Regardless of Rash of 51% Attacks in Crypto
Verge, Monacoin, Bitcoin Gold, and several other altcoins have been sucessfully 51 percent attacked over the last few months. The episodes have lead to massive inflation worth millions on the more successful chains. Many are framing these crypto attacks with proof-of-work at fault, claiming that the trustless validation technology is flawed because larger networks make smaller ones with the same hashing algorithms vulnerable. This is categorically not the case.
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Truth vs. Sensationalism
Of the people pushing this narrative, several larger publications have asserted that PoW is the problem. In particular, TheNextWeb’s piece directs their message as “PoW isn’t suitable for small cryptocurrencies” despite their only authoritative source, Peter Todd, positing otherwise.
“The smart way to implement what they’re attempting to do is to share the security of an existing PoW chain.”
To expound on this concept: yes, it’s easy to 51 percent attack a currency with the same hashing algorithm as a larger network with covert ASIC mining. This is an emergent quality of competing PoW protocols. However, there are proven and well known mitigations accessible to smaller networks, as well as experimental PoW schemes that make ASIC manufacture redundant. PoW isn’t unsuitable for small networks, badly implemented PoW is just less secure. What can altcoins do to help mitigate attacks?
Sidechains Let Bitcoin Handle the Heavy Lifting
There are a number of competing sidechain implementations, like Counterparty (XCP), OMNI (OMNI), colored coins, and drivechains.
A sidechain is a second layer or protocol extension on a large chain (like BTC) that allows an altcoin to offload its security process to the larger chain.
This is a proven technology, and the security model is more or less as robust as Bitcoin proper. A network of essentially any size can exist with this model, and it still relies on PoW.
Merged Mining Lets Bitcoin Miners Secure Your Altcoin – For Free
So let’s say you’re developing an altcoin, and you don’t like the trade-offs of sidechains.
Well, there’s another proven option that gives you complete autonomy from the larger chain you choose to validate with, and people will want to start mining the smaller chain if they’re on the larger chain because it costs them almost nothing. You won’t have 1:1 security, but you’ll have a large enough network from the outset to make 51 percent attacks much less feasible.
This option is called “merged mining” and it’s been put into practice by several coins already (notably namecoin and dogecoin), and it still relies on PoW.
ProgPoW an Algorithm That Makes GPUs Better Than ASICs
Ok, okay: sidechains don’t seem like the way to go for your project and merged mining still seems too risky.
Well, there’s a few new algorithms that take a different approach to ASIC resistance. ProgPoW is interesting in particular because it’s designed to be incredibly well optimized for GPU mining. Everything from the compute units to the cache and GDDR are accounted for, meaning that even if they do make ASICs for it, the advantage provided by that specialty hardware will be marginal at best.
So, in the worst-case scenario of ASIC manufacture and stealth mining on your new altcoin, casual and independent miners only lose a few percentage points in efficiency, and enough reserve farms of GPUs exist to rebuff a 51 percent attack in the short term. There’s a more detailed brief on the math of it, but again, this is still stock standard PoW.
Pushing Anti-PoW Narratives Is Dangerous and Misleading
The energy concern is understandable, and so are the concerns raised by localities with cheap electricity seeing unsustainable miner influxes.
However, calling PoW impractical for small crypto networks because of the underlying mechanics of the technology can easily do more harm than good.
Proof-of-work is the only proven security model in production, and if developers shy away in exchange for PR points, that’s only going to lead to more massive crypto thefts in the future.
What’s your take? Do you agree that it all comes down to implementation? Let us know what you think in the comments below.
Images via CNBC, Finance Magnates