In market cap terms Monero (XMR) is the biggest of the three leading ‘anonymous’ cryptocurrencies. At around 2.5 billion, it just edges out Dash (at 2.4 billion) and is roughly four times the size of ZCash (at 680 million). Sometime in the next 24 hours the Monero network is upgrading (nobody in the core team is referring to it as a ‘fork’ — but more on that later).
According to its core developers, there are two primary reasons behind the upgrade. One is to increase the minimum ring size to 7 (mixin 6), and the other, is to drop a spanner in the works of the ASIC miners who crashed the Monero party back in January and never left.
So what’s the back story?
Currently, Monero runs a consensus proof-of-work algorithm called CryptoNight which can be mined using standard CPUs and GPUs. Consequently, with lots of CPU and GPU miners operating internationally, the network has remained decentralized, with no central point of failure and resistant to manipulation. The network is not Application Specific Integrated Circuit (ASIC) resistant, however, and once ASIC miners enter the equation things change quickly.
Designed with only one function in mind (to mine Monero for example) the ASIC rigs are way faster and more powerful than CPUs and GPUs. When they start working a network, the total hashing power on the network is raised exponentially. Why is this a problem? Because in order to keep a coin’s block times consistent, the difficulty of solving the PoW equation must be increased.
With the difficulty increased, CPU and GPU miners can’t keep up and they drop out — forcing the network to resort to ASICs to effectively mine. This leads to centralization of the protocol itself, making the network inherently less safe.
Enter the Antminer
Back in March Bitmain announced the Antminer X3, which is an ASIC miner specifically designed to mine coins that use the CryptoNight algorithm. It appears, though, that ASIC miners actually came on to the Monero network well before that announcement was made. In the chart below, the Monero network shows modest increases in hashing power throughout 2017, before heading stratospheric in January — with the most likely explanation being the introduction of ASIC mining rigs.
So, with a clear and present danger to the autonomy of its network, Monero’s core dev team have decided to instigate an upgrade sometime around April 6th that will lock out the ASIC rigs and keep its mining community working on CPUs and GPUs.
The story doesn’t end there, though, as on the other side of the equation there are a lot of people who have shelled out US$12,000 for an ASIC rig specifically built to mine Monero, who come the 6th of April will find themselves with a very expensive paperweight. Sure, they could mine one of the other coins that use the CryptoNight algorithm — like Bytecoin — but given Bytecoin’s current price is fractions of a cent, they would spend more on electricity than they could ever make mining coins.
What these people want to get a return on their investment is a Monero hard fork. While anyone can fork any coin any time they want (it’s a decentralised world after all), there are some obstacles to doing so. It’s technically a little challenging, but not terribly. What’s more important is that the hashrate comes with you, and the branding. Put those two together and the odds that a new fork will survive get much better.
Which brings us to ‘Monero Original’ announcement we received last week, posted here verbatim:
To whom it may concern,
We are contacting you on behalf of the developers team behind the Monero Original project. Monero Original (XMO) is the original Monero chain that we will keep up and running after the Monero hard fork scheduled for the 28th of March 2018 at block #1539500.
We are eager to spread the information about Monero Original to ensure that even more miners, exchanges and wallets can benefit from the upcoming hard fork, support the original chain and get XMO coins. By this email we invite you to share this information with the readers of [Media Name]. Please feel free to use the attached detailed information and kindly get back to us if you have any further questions regarding Monero Original.
Monero Original team
While the funky grammar and ‘insert media name here’ errors here make it pretty obvious the senders of this email maybe aren’t really equipped to pull off this attack on Monero, it should, nonetheless, highlight to all how great the potential is for big money interests to take over a trusted brand. Decentralized cryptocurrencies are just that — decentralized. Nobody “owns” them.
The name Monero, for example, isn’t trade marked, because a distributed decentralized user community can’t trade mark anything. That requires an individual or some other legally recognised entity like a company.
Monero Original? Looks similar, but It’s not the original Monero
As stated above, ASIC mining rigs perform at a level that outstrips any GPU or CPU miner and the propensity for a fork to be unsuccessful when substantial hashing power remains on the legacy chain is great. So what would happen on April 6th if a big chunk of Monero’s hashing power decided to join the ‘Monero Original team’ that emailed us last week? Might these ASIC miners, in fact, be able to outwork the real original chain and keep mining? And facing the potential loss of the cash they’ve poured into their rigs why wouldn’t they try and do this?
The Monero core team notes on its Reddit page that what’s about to happen is “a scheduled and consensual network upgrade” and thus, unlike the Bitcoin / Bitcoin cash split “a new coin won’t be created.” Well not by them anyway. But that won’t stop others from trying to hijack the upgrade and launch their own coins — and perhaps the next group that gives it a go will be sophisticated enough to pull it off.
And it’s not just Monero that’s vulnerable, as far-fetched as it sounds, what about Ethereum? Currently, it’s being mined predominantly on GPUs, but Bitmain’s announcement of Ethereum ASIC rigs this week is bound to shake things up for the world’s second largest cryptocurrency too.
The threat of a hostile takeover for any cryptocurrency is very real but seldom discussed to the extent that it warrants. Seriously, can you think of any other brands worth billions of dollars that aren’t protected by armies of lawyers? Sure, a crypto blockchain can’t be hacked — but a crypto brand? Now that’s a different story.