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The other options, unfortunately they aren’t as scientific and haven’t been as thoroughly analyzed or designed for memory-hard features. The most popular is known as X11 it is an amalgamation of 11 various hash functions that were introduced by an altcoin known as Darkcoin (later changed to DASH) and later adopted by many other cryptos. The purpose for X11 will make it much more difficult to create an effective ASIC because all 11 functions need to be implemented into hardware. This is really only an inconvenience for designers of hardware. If an ASIC was developed to run X11 It would certainly render GPU and CPU mining obsolete. marketing database Sample Email

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Sidebar: Where did the X11’s hash functions originate from? From 2007 until 2012 between 2007 and 2012, US National Institute of Standards conducted a competition to select an entirely new family of hash function that would be the standard SHA-3. This resulted in a wide range of hash function that were submitted as candidate along with the design documents as well as the source code. While many of them were not cryptographically secure in the course of the competition 24 of them survived without known security issues. X11 selected 11 of them which included Keccak who was the final contest winner. Sample Email  database providers

Another approach which has been proposed, but not actually implemented, is to have a mining puzzle that’s a moving target. That is, the mining puzzle itself would change, just as the difficulty periodically changes in Bitcoin. Ideally, the puzzle would change in such a way that optimized mining hardware for the previous puzzle would no longer be useful for the new puzzle. It’s unclear exactly how we would actually change the puzzle once every so often in order to obtain the security requirements we need. If the decision were to be made by the developers of an altcoin, it might be an unacceptable source of centralization. For example, the developers might choose a new puzzle for which they have already developed hardware (or just an optimized FPGA implementation), giving them an early advantage.

Perhaps the sequence of puzzles could be generated automatically, but this seems difficult as well. One idea might be to take a large set of hash functions (say, the 24 SHA‐3 candidates which were not broken) and use each for six months to one year, too short of a time for hardware to be developed. Of course, if the schedule were known in advance, then the hardware could simply be designed just in time to ship for the time each function was being used. Sample Email quality  lists

The ASIC honeymoon. The lack of ASICs for X11 so far, even though they are clearly possible to build, demonstrates a potentially useful pattern. Because no altcoins using X11 have a particularly high market share, there simply hasn’t been a large enough market for anybody to build ASICs for X11 yet. In general, designing ASICs has very high upfront costs (in both time and money) and relatively low marginal costs per unit of hardware produced. Thus, for new and unproven cryptocurrencies, it is not worth making an investment to build hardware if the currency might fail before the new hardware is available for mining. Even when there is a clear market, there is a time delay before hardware units will be ready. It took over a year for the first Bitcoin ASICs to be shipped from when they were first designed, and this was considered to be lightning fast for the hardware industry. Sample email lists

Thus, any new altcoin with a new mining puzzle is likely to experience an ASIC honeymoonduring which time GPU and FGPA mining (and potentially CPU mining) will be profitable. It may not be possible to stem the tide of ASICs forever, but there is perhaps some value in making it appealing for individuals to participate in mining (and earn some units of the new currency) while it is bootstrapping.

Arguments against ASIC‐resistance. We’ve seen that it may be impossible to achieve ASIC‐resistance in the long run. There are also arguments that it is risky to move away from the relatively proven SHA‐256 mining puzzle towards a new puzzle that might be weaker cryptographically. Furthermore, SHA‐256 mining ASICs are already being designed at close to modern limits on hardware efficiency, meaning the exponential growth period is probably over and SHA‐256 mining will therefore offer the most stability to the network.

Finally, there is an argument that even in the short run ASIC‐resistance is a bad feature to have. Recall from Chapter 3 that even if there is a 51% miner, many types of attack aren’t rational for them to attempt because it could crash the exchange rate and decimate the value of the miner’s investment in hardware since the bitcoins they earn from mining will be worth much less. Sample Email quality  lists

With a highly ASIC‐resistant puzzle, this security argument might fall apart. For example, an attacker might be able to rent a huge amount of generic computing power temporarily (from a service such as Amazon’s EC2), use it to attack, and then suffer no monetary consequences as they no longer need to rent the capacity after the attack. By contrast, with an “ASIC‐friendly” puzzle, such an attacker would inherently need to control a large number of ASICs which are useful only for mining the cryptocurrency. Such an attacker would be maximally invested in the future success of the currency. Following this argument to its logical conclusion, to maximize security, perhaps mining puzzles should not only enable efficient mining ASICs to be be built, but be designed such that those ASICs are completely useless outside of the cryptocurrency! Sample Email consumer  database

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Proof‐Of‐Useful‐Work

In Chapter 5 we discussed how the energy consumed (some would say wasted) by Bitcoin mining, referred to as negative externalitiesby economists, is a potential concern. We estimated that Bitcoin mining consumes several hundred megawatts of power. The obvious question is whether there is some puzzle for which the work done to solve it provides some other benefit to society. This would amount to a form of recycling and could help increase political support for cryptocurrencies. Of course, this puzzle would still need to satisfy several basic requirements to make it suitable for use in a consensus protocol. Sample Email  database providers

Previous distributed computing projects. The idea of using idle computers (or “spare cycles”) for good is much older than Bitcoin. Table 8.3 lists a few of the most popular volunteer computing projects. All these projects have a property that might make them suitable for use as a computational puzzle: specifically, they involve some sort of a “needle in a haystack” problem where there is a large space of potential solutions and small portions of the search space can be checked relatively quickly and in parallel. For example, in SETI@home volunteers are given small portions of observed radio signals to scan for potential patterns, while in distributed.net volunteers are given a small range of potential secret keys to test. Sample email lists

Volunteer computing projects have succeeded by assigning small portions of the solution space to individuals for checking. In fact, this paradigm is so common that a specific library called BOINC (Berkeley Open Infrastructure for Network Computing) was developed to make it easy to parcel out small pieces of work for individuals to finish. Sample Email quality  lists

In these applications, volunteers were motivated mainly by interest in the underlying problem, though these projects also often use leaderboards for volunteers to show off how much computation they have contributed. This has led to some attempts to game the leaderboards by reporting work that wasn’t actually finished, requiring some projects to resort to sending a small amount of redundant work to detect cheating. For use in a cryptocurrency, of course, the motivation is primarily monetary and we can expect participants to attempt to cheat as much as technically possible.

Challenges in adapting useful‐proof‐of‐work. Given the success of these projects, we might attempt to simply use these problems directly. For example, in the case of SETI@Home, where volunteers are given segments of radio observations which they test for statistical anomalies, we might decide that statistical anomalies which are rarer than some threshold are considered “winning” solutions to the puzzle and allow any miner who finds one to create a block.

There are a few problems with this idea. First, note that potential solutions are not all equally likely to be a winning solution. Participants might realize that certain segments are more likely to produce anomalies than others. With a centralized project, participants are assigned work so all segments can be analyzed eventually (perhaps with more promising segments given priority). For mining, however, any miner can attempt any segment, meaning miners might flock to try the most likely segments first. This could mean the puzzle is not entirely progress‐free, if faster miners know they can test the most promising segments first. Compare this to Bitcoin’s puzzle, in which any nonce is equally likely to any other to produce a valid block, so all miners are incentivized to choose random nonces to try. The problem here demonstrates a key property of Bitcoin’s puzzle that we previously took for granted, that of an equiprobable solution space. Sample email lists

Next, consider the problem that SETI@home has a fixed amount of data to analyze based on observations taken by radio telescopes. It’s possible that as mining power increased, there would be no more raw data to analyze. Compare this again to Bitcoin, in which an effectively infinite number of SHA‐256 puzzles can be created. This reveals another important requirement: an inexhaustible puzzle spaceis needed. purchase Sample Email  lists

Finally, consider that SETI@home uses a trusted, centralized set of administrators to curate the new radio data and determine what participants should be looking for. Again, since we are using our puzzle to build a consensus algorithm we can’t assume a centralized party to manage the puzzle. Thus, we need a puzzle that can be algorithmically generated.

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Which volunteer computing projects might be suitable as puzzles?. Returning to Figure 8.3, we can see that SETI@home and Folding@home clearly won’t work for a decentralized consensus protocol. Both probably lack all three properties we’ve now added to our list. The cryptographic brute‐force problems taken on by distributed.net could work, although they are typically chosen in response to specific decryption challenges that have been set by companies looking to evaluate the security of certain algorithms. These can’t be algorithmically generated. We can algorithmically generate decryption challenges to be broken by brute forcing, but in a sense this is exactly what SHA‐256 partial pre‐image finding already does and it serves no beneficial function. Sample Email consumer  database

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This leaves the Great Internet Mersenne Prime Search, which turns out to be close to workable. The challenges can be algorithmically generated (find a prime larger than the previous one) and the puzzle space is inexhaustible. In fact, it’s infinite, since it has been proven that there are an infinite number of prime numbers (and an infinite number of Mersenne Primes in particular). Sample Email  database providers

The only real drawback is that large Mersenne Primes take a long time to find and are very rare. In fact, the Great Internet Mersenne Prime Search has found only 14 Mersenne primes in over 18 years! It clearly wouldn’t work to add less than one block per year to a block chain. This specific problem appears to lack the adjustable difficulty property that we stated was essential in Section 8.1. It turns out, however, that a similar problem involving finding prime numbers appears workable as a computational puzzle. Sample email lists

Now, to turn this into a computational puzzle, we need three parameters m,n,and kwhich we will explain momentarily. For a given challenge x(the hash of the previous block), we take the first mbits of xand consider any chain of length kor greater in which the first prime in the chain is an n‐bit prime and has the same mleading bits as xto be a valid solution. Note that we can adjust nand kto make the puzzle harder. Increasing k(the required chain length) makes the problem exponentially harder, while increasing n(the size of the starting prime) makes it linearly harder. This provides fine‐tuning of the difficulty. The value of mjust needs to be large enough that trying to pre‐compute solutions before seeing the value of the previous block is infeasible. purchase Sample Email  lists

This provides strong evidence that it is possible to make proof‐of‐useful‐work practical in some limited circumstances. Of course, it’s debatable the extent to which finding large Cunningham chains is useful. It’s possible that they may have some applied purpose in the future and they certainly stand as a small contribution to our collective mathematical knowledge. Currently, however, they have no known practical applications.

Permacoin and proof‐of‐storage. A different approach to proof‐of‐useful work is proof‐of‐storage (also sometimes called proof‐of‐retrievability). Rather than requiring a solely computational puzzle, what if we could design a puzzle that required storing a large amount of data to compute? If this data were useful, then miners’ investment in mining hardware would effectively be contributing to a widely distributed and replicated archival storage system. Sample email lists

We’ll take a look at Permacoin,the first proposal for proof‐of‐storage for use in consensus. We begin with a large file which we’ll call F.For now, let’s assume everybody agrees on the value of Fand the file will not change. For example, Fmight be chosen by a trusted dealer when a cryptocurrency is launched, much as any new currency needs to agree on a genesis block to get going. This would ideally be a file of public value. For example, experimental data collected from the Large Hadron Collider already consists of several hundred petabytes (PB). Providing a free backup to this data would be quite useful. purchase Sample Email  lists

Of course, since Fis a huge file most participants will not be able to store the entire file. But we already know how to use cryptographic hash functions to ensure everybody agrees on Fwithout knowing the entire thing. The simplest approach would be for everybody to agree on H(F),but a better approach is to represent Fusing a large Merkle tree and have all participants agree on the value of the root. Now, everybody can agree on the value of Fand it is efficient to prove that any portion of Fis correct.

As usual, this is a slight simplification of the full Permacoin proposal, but this is enough to understand the key design components. The biggest practical challenge, of course, is finding a suitably large file that is important, public and in need of additional replication. There are also significant complexities if the file Fchanges over time, as well as with adjusting the mining difficulty over time.

Long‐term challenges and economics. To summarize this section, proof‐of‐useful‐work is a very natural goal, but it is quite challenging to achieve it given the other requirements of a good computational puzzle for a consensus protocol. Although at least two examples are known which are technically feasible, Primecoin and Permacoin, both carry some technical drawbacks (primarily longer verification time of purported solutions). Furthermore, both provide fairly minor public benefits compared to the scale of effort we’ve seen levied at Bitcoin mining with millions of dollars worth of capital and megawatts of electricity consumed. Sample Email consumer  database

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There is an interesting economic argument that the benefit of any proof‐of‐useful‐work should be a pure public good.In economics, a public good is one that is non‐excludable, meaning nobody can be prevented from using it, and non‐rivalrous, meaning the good’s use by others does not affect its value. The classic example is a lighthouse. Sample Email address lists

Some of the examples we discussed here, such as protein folding, might not be a pure public good because some firms (such as large pharmaceutical corporations) may benefit more from increased knowledge about protein folding than others. Essentially, mining would be cheaper for these parties since they are gaining more benefit from the public benefits than others would be.

Nonoutsourceable Puzzles

Let’s turn to another potential design goal for alternative mining puzzles: preventing the formation of mining pools. As we discussed in Chapter 5 and elsewhere, most Bitcoin miners mine as part of a pool rather than independently. This has resulted in a few large pools which together represent most of the mining power. Since each pool is operated by a central pool administrator, some feel this is a dangerous trend away from Bitcoin’s core design principle of decentralization and can compromise its security. Sample email lists

While a mining pool with a majority share is an obvious problem, any large centrally managed pool might implement a non‐default mining strategy and attack the network. Such pools are also a juicy target for hackers to try and compromise to immediately control a large amount of mining power. The pool operators might collude to censor transactions or enforce high transaction fees. At the very least, having most miners in pools also means that most miners aren’t running a fully validating node.

Interestingly, these concerns have an analogy in the realm of voting. It’s illegal in the United States and many other nations for individuals to sell their vote. Arguably participating in a pool controlled by someone else is akin to selling your vote in the Bitcoin consensus protocol. buy Sample Email targeted  list

Technical requirements for pools. Recall that mining pools appear to be an emergent phenomenon. There’s no evidence that Satoshi was thinking of mining pools at the time of Bitcoin’s original design. It wasn’t apparent for a few years that efficient pools could be run between many individuals who don’t know or trust each other.

As we saw in Chapter 5, mining pools typically work by designating a pool operator with a well‐known public key. Each of the participating miners mines as usual but sends in shares to the pool operator. These shares are “near misses” or “partial solutions” which would be valid solutions at a lower difficulty level. This shows the pool operator how much work the miner is performing. Whenever one of the pool participants finds a valid block, the pool operator then distributes the rewards amongst the pool participants based on the number of shares they have submitted. As we discussed in Chapter 5, there are many formulas for dividing the revenue up, but all mining pools follow this basic structure. Sample email lists

The existence of pools thus relies on at least two technical properties of Bitcoin. The first is that it’s easy for a miner to prove (probabilistically) how much work they are doing by submitting shares. By choosing a low enough threshold for shares, miners can easily prove how much work they are performing with arbitrary precision regardless of the actual difficulty of finding an valid block. This facet of mining puzzles appears difficult to change, given that we need a puzzle that can be created with arbitrary difficulty.

Second, pool members can easily prove to the pool operator that they’re following the rules and working to find valid blocks which would reward the pool as a whole. This works because the pool’s public key is committed to in the coinbase transaction included in the block’s Merkle tree of transactions. Once a miner finds a block or even a share, they can’t change which public key is the recipient of the newly minted coins.

Block discarding attacks. There is one weakness in this scheme for implementing mining pools: there is nothing to to enforce that participating miners actually submit valid blocks to the pool manager in the event that they find them. Suppose that there’s a pool member that’s upset with a large mining pool. They can participate in the pool by mining and submitting shares just like normal, but in the event that they actually find a valid block that would reward the pool they simply discard it and don’t tell the pool operator about it. buy Sample Email targeted  list

This attack reduces the pool’s overall mining power as none of the attacker’s work is contributing towards finding valid blocks. However the attacker will still be rewarded as they appear to be submitting valid shares and simply getting unlucky to not find any valid blocks. If the mining pool is designed to be revenue‐neutral (that is, all mining rewards are redistributed back to participants) then this attack can cause the pool to run at a loss. Sample email lists

This attack is sometimes called a vigilanteor sabotageattack and is considered a form of vandalism because the attack appears to be costly for both the attacker and the pool. The attacker loses money because every block they discard would have led to some proportion of the block rewards being returned to them. Of course, the attacker still gets rewards for other puzzle solutions that are found. Sample Email  database free

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It appears that a rational attacker wouldn’t employ this strategy, since they would lose money without gaining anything tangible. It turns out (quite surprisingly) that there are cases where this strategy can be profitable, as discussed in the box below. But in any case, we want to design an entirely new mining puzzle formulation that ensures this strategy is always profitable. Sample Email address lists

Sidebar: block discarding attacks between pools. People assumed for years that it can’t be profitable for a participant to discard valid blocks found on behalf of the pool. It turns out this strategy can be profitable if one mining pool uses it to attack another. This was proposed apocryphally many times and first thoroughly analyzed in a paper by Ittay Eyal in 2015.

Let’s consider a simple case: suppose two mining pools, A and B, each have 50% of the total mining capacity. Now suppose B uses half of its mining power (25% of the total capacity) to mine as a member in pool A, but discards all blocks found. We can show, in a simplified model, that B will now earns 5/9 of the total rewards, greater than the 50% it would earn by mining normally. In this simple case, dedicating half of its mining power to attacking can be shown to be the optimal strategy for pool B.

The situation grows more complicated with multiple pools. Block discarding has not been observed in practice on a large scale as of this writing. But it remains possible that in the long run, attacks like this one will throw the viability of large mining pools into question. Sample email lists

Rewarding sabotage. Our design goal is to make it so that miners are incentivized to mine in a pool but not submit valid blocks to the pool manager. Currently, only the pool manager can collect the mining rewards because the manager requires all participants to include a specific public key in the coinbase transaction of blocks they are mining. Proper inclusion can be easily checked in submitted partial solutions. The pool manager is the only party that knows the private key and hence can determine where the newly minted coins go. buy Sample Email targeted  list

But what if we required that all participants also knew the private key (and hence could redirect the funds after mining a block?). To do this, we need a puzzle in which each solution attempt requires knowledge of the private key in the coinbase transaction. We can change the puzzle from “find a block whose hash is below a certain target” to “find a block for which the hash of a signatureon the block is below a certain target.” This signature must be computed using the same public key in the coinbase transaction.

Such a puzzle leaves would‐be pool operators with two untenable choices. They might distribute the private key to all pool participants, in which case any of them can steal all of the funds. Alternately, they can perform the signatures on behalf of pool participants. Computing a signature is orders of magnitude more expensive than computing a hash, however, so in this case the pool manager would be doing the majority of the heavy lifting. It would be better for the pool manager to simply be a solo miner.

The pros and cons of non‐outsourceable mining. Since this puzzle can’t effectively be outsourced to an untrusted participant, it makes it much more challenging, if not outright impossible, to form a mining pool with untrusted participants. It effectively prevents allpools, even efforts like P2Pool to make a decentralized pool without a pool manager. buy Sample Email database for marketing Sample email lists

There’s an argument that deploying such a puzzle might perversely lead to morecentralization, not less, because it would discourage small miners from participating due to the high variance they would face. This would leave only large mining operations. Currently, while pools may nominally control a large amount of mining power, it isn’t clear that they can use this to launch an attack without seeing many of their members defect. It remains an open question which risk is worse — that of large mining pools, or of limiting mining to operators large enough to live with a high variance.

The holy grail would be to design a consensus protocol which is “naturally” low‐variance by rewarding miners a small amount for lower‐difficulty puzzles. This would mean miners don’t need to form pools and yet small miners may still participate. Simply decreasing the average time between blocks won’t work — it would need to be decreased by a factor of 1,000 or more for the resulting variance to be equivalent to today’s large mining pools. But then the delay between blocks would be less than a second and the number of stale blocks would be chaotically high. It remains an open question if there is an alternate version of the consensus protocol which would enable easier mining puzzles without requiring near‐instantaneous broadcast of all solutions. Sample Email  database free

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Proof‐of‐Stake and Virtual Mining

To wrap up this chapter, let’s look at the idea of replacing computational puzzles with virtual mining. This term refers to a disparate set of approaches but they all have in common that they require only a small expenditure of computational resources by participating miners. Sample Email address lists

Closing the loop on mining. As a thought experiment, suppose Bitcoin or another cryptocurrency becomes the dominant form of payment globally. Miners would start with some initial holding of cryptocurrency, use it to purchase mining equipment and electricity, consume these resources, and in the process, acquire new cryptocurrency in the form of mining rewards. This process continually burns energy and raw materials.

Once mining hardware becomes a commodity and electricity is a commodity (as it generally already is), no miner would have a significant advantage over any other miner in terms of how efficiently they could convert their initial cryptocurrency holdings into mining rewards. Barring minor variations in efficiency, whoever invests the most into mining will receive the most rewards. buy Sample Email database for marketing

The basic question motivating virtual mining is: what would happen if we removed the step of spending money on power and equipment? After all, this process is primarily used to prove who has invested the most in mining. Why not simply allocate mining “power” directly to all currency holders in proportion to how much currency they actually hold? Sample email lists

Recall that the original goal of Bitcoin mining was to enable a form of voting on the state of the block chain, with miners with more computing power gaining more votes. We could instead design our “voting” system so that votes are determined by how much currency one currently holds.

Advantages of virtual mining. The primary advantage of this approach is obvious: it removes the wasteful right half of the mining cycle from Figure 8.5, leaving us with a “closed” system as shown in Figure 8.6. buy Sample Email database for marketing

In addition to simplicity, this approach would dramatically reduce Bitcoin’s environmental footprint. It wouldn’t reduce energy consumption to zero, because miners will always have to expend some computational resources to communicate with the network and validate. Some virtual mining
schemes also require a small amount of computational mining as well. But in either case, the vast majority of the mining work performed in Bitcoin can potentially be eliminated.

Virtual mining may also reduce the trend towards centralization. Because there is no mining hardware involved there is no concern about an ASIC advantage; all miners are able to mine as “efficiently” as all others. Any virtual mining puzzle achieves all of the goals of ASIC‐resistant puzzles. Sample email lists

Perhaps most importantly, virtual mining might solve the problem which we discussed in the context of ASIC‐resistant puzzles, namely that miners may not be invested in the long‐term health of the currency. Anybody who holds any bitcoins is effectively a stakeholder in the currency, and a powerful virtual miner (such as one who holds 51% or more of all currency) is a very large stakeholder. They have an incentive to do things that would benefit the system as a whole because it increases the value of the coins that they hold. This argument is even stronger than the argument that a miner sitting on a large stock of mining equipment whose value depends on the future of the currency will not behave maliciously. Sample Email  database free

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This is where the term proof‐of‐stakecomes from. Even more than eliminating mining and saving energy, perhaps the most fundamental motivation for virtual mining is to ensure that mining is done by stakeholders in the currency who have the strongest incentives to be good stewards of the system. Sample Email database for sale

Implementing virtual mining: Peercoin. There are many variations of virtual mining of which we’ll describe a few of the most common ideas. We should emphasize that these ideas have not yet been studied in a scientific and rigorous way, nor have they undergone the level of practical testing that proof‐of‐work has due to Bitcoin’s popularity.

To start with, we’ll consider the approach taken by Peercoin, which was launched in 2012 as the first

altcoin using proof‐of‐stake. Peercoin is a hybrid proof‐of‐work/proof‐of‐stake algorithm in which

“stake” is denominated by “coin‐age.” The coin‐age of a specific unspent transaction output is the

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unspent. Now, to mine a block in Peercoin a miner must solve a SHA‐256 based computational puzzle

just like in Bitcoin. However, the difficulty of this puzzle is adjusted down based on how much Sample Email database for sale

coin‐age they are willing to consume. To do this, the block includes a special “coinstake” transaction

in which some transactions are spent simply to reset their coin‐age to zero. The sum of the coin‐ages

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It is possible for miners to mine with very little stake and a large amount of computational power, but the difficulty formula is chosen to make it dramatically easier to find a block if some coin‐age is consumed. The effect of the computational puzzle is mainly to ensure that the process is randomized if two miners attempt to consume a similar quantity of coin‐age. Sample Email business  database free download