ASIC Coming For X-Algorithms: Darkcoin Watch Out
First they came for SHA256, and before you knew it, you couldn’t mine any amount of Bitcoin with your PC anymore. Soon, you couldn’t even make money with a GPU rig. Then they came for SCRYPT, changing the game for Litecoin, Dogecoin, and similar currencies.
In response, in hopes of keeping the network truly decentralized and opportunistic for all, other algorithms were put together. X11, X13, X15, all of these are composed of a number of algorithms, the purpose being to outsmart application-specific integrated circuits (ASICs). The first successful X11 coin was Darkcoin last year, which eventually topped $10 USD. The scarcity of the coin as a result of the difficulty of mining it was a large contributor to its rocketing value.
What is X11, etc?
Based on the Quark algorithm, which is widely accepted as a CPU-only coin, X11 was developed for Darkcoin. It is composed of 11 cryptographic algorithms, some of which (skein for example) are used independently in other currencies. X11 offers the advantage of insurance against a single point of failure breakdown in that it would have to have simultaneous failures of all eleven algorithms. Darkcoin and other X11 coins are typically mined by many powerful computers rather than networks of high-powered ASIC miners.
In the early days of any CPU coin, the average person has an opportunity to earn a good deal of coin without any particular investment besides leaving their computer running all the time. During the boom of Darkcoin, entire farms of CPUs were devoted to its mining, but these were very expensive in comparison to similar powered ASIC farms.
Since the release of X11 a year ago, several other, similar algorithms have been released. X13, X15, and X17 all add a few more algorithms each. So far, though, Darkcoin has been the only relatively successful CPU-coin.
A Matter of Memory
One of the main attractions to these algorithms is that, it is believed, nobody will be able to come along midway through the game and start mining ten times what you are mining because they’ve bought a fancy new miner. There is a flaw in this belief, and it is important to mention that none of the promoters have ever claimed these algorithms are, in fact, “ASIC-proof.”
The flaw in this belief is that, in the case of X11, all of the algorithms used were candidates for SHA3, and all have been independently interfaced with FPGA (field-programmable gate array, similar to ASIC) successfully. The main barrier to dedicated hardware with the X-series algorithms is, simply, a matter of memory. Using multiple algorithms means that more logic has to be stored, and getting a single dedicated chip to the point where it can handle 11 algorithms simultaneously while not easy, is not impossible.
The Cat Is Out of the Bag
A company has appeared in the last few months which is promising deliverance from the CPU-only paradigm. Cleverhash promises three models of miner by the end of the year. However, in the legalese of its documentation, it’s making no firm commitments. The three models range in price from $900 to $7500. For their business model to work, they reportedly have to sell 4,000 units before they produce one. The legal jargon used in the product purchasing agreements and other documentation make it a risky proposition to actually shell out that much money, but if the product is not vaporware, if it’s something that will actually do what the company says it will, then it’s a game changer.
The trouble is that nearly a year is a long time to wait. In that time, other companies are bound to develop and get to market with the same idea. Even if their products are inferior, in technology the person who gets to market first is typically the one who rules the roost if he can stay competitive in terms of quality.
ASICs for X-series coins will likely, one year from now, be commonplace. Will a new algorithm arise that finds a way to dodge the application-specific processors? Will the value of all X-series coins drop as scarcity declines? Will this lead to a resurgence in more “traditional” coins such as Bitcoin, Litecoin, and Dogecoin? Will this have a positive or negative effective on the cryptocurrency world? Only time will tell. What we can tell from here is that the days of CPU coins presently appear numbered.
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