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“ PoW consensus, derived from the consensus mechanism of Bitcoin, has been one of the mainstream development directions in the field of cryptocurrencies for a long time. PoW mining, which has developed based on PoW consensus, has begun to take shape. ”
Since the birth of Bitcoin in 2009, the cryptocurrency industry based on Bitcoin has become increasingly prosperous. In the past decade, tens of thousands of new currencies have been created, most of which were short-lived and quickly exited the market. However, there are also many new currencies that contain rational thinking and amazing wisdom, which have brought countless inspirations and vitality to the cryptocurrency industry and even the entire blockchain field. Among them, the PoW consensus derived from the consensus mechanism of Bitcoin has been one of the mainstream development directions in the field of cryptocurrencies for a long time. Currencies based on the PoW consensus have many participants, a broad and solid community foundation, and have formed a mining industry of initial scale. The blogger has compiled information on the top 50 PoW currencies by annual output value and discovered some interesting phenomena, which he will share with readers in this article. The basic data in this article comes from F2Pool, one of the world's largest comprehensive mining pools, and CRYPTOSLATE, a blockchain vertical media and data analysis website. The data on currency prices and market capitalization comes from CoinMarketCap, a well-known crypto currency market website. The blogger also proofreads the relevant data based on the official information of each currency and the block browser, but due to limited manpower and the recent sharp fluctuations in currency prices, the data provided cannot be guaranteed to be completely accurate. Therefore, the data listed in the article is for reference only . 01 PoW mining has taken shape and will gradually mature Since the birth of Bitcoin in 2009, there have been thousands of PoW projects. Every year, some projects disappear due to various problems, and new PoW projects are born. As of now, there are still more than 300 blockchains that are still running and using PoW consensus . However, more than half of these PoW projects are small in scale, with few participants and a sluggish community. The market value and annual output value of the top 50 projects account for more than 99% of the total market value and annual output value of PoW projects . The following is the top 50 PoW projects by annual output value in US dollars: Table 1 List of the top 50 PoW currencies by annual output value Note: 1. The above data is calculated based on the coin price at 8:00 am on July 26, 2020. The coin price fluctuates greatly, which has a particularly significant impact on the coins with lower market capitalization and daily output value. The data in the above table is for reference only. (All data below this article are the same) 2. The currency market value ranking is the market value ranking of all PoW projects.
At present, the total market value of all PoW currencies is about 230 billion US dollars , and the annual total output value is about 5.2 billion US dollars . They support the global PoW mining industry with a scale of nearly 5 billion US dollars (including nearly 5 million BTC mining machines, nearly 10 million graphics cards, servers and PC mining machines, and hundreds of thousands of ZEC, DCR, Dash and other currency-specific mining machines, and mining farms and other infrastructure around the world), and support hundreds of thousands of people around the world who rely on PoW mining for their livelihood. PoW mining has taken shape, the industrial chain has basically taken shape, and industry standards have gradually been standardized . I believe that as cryptocurrencies are gradually accepted by the public, PoW mining will also become a stable and mature industry as one of the infrastructures of cryptocurrencies. 02 PoW coins have a head effect, and coins with high annual output value receive more attention From Table 1 , we found that the top few currencies account for more than 90% of the total market value and annual output value of all PoW currencies, regardless of market value or annual output value. The total market value and total output value of the top 50 currencies account for more than 99% of the total market value and total output value of PoW currencies. The total market value and total output value of the top 5 currencies account for more than 90% of the total market value and total output value of PoW currencies. In order to show this situation more clearly, we make a pie chart of the market value and annual output value of the top 20 currencies, as shown below: Figure 2 Market capitalization share of the top 20 currencies
Figure 3 Annual output value share of the top 20 currencies From Figures 2 and 3, we can see that the total market value of the top 20 currencies accounts for 99.33% of the total market value of PoW currencies , and the total annual output value of the top 20 currencies accounts for 98.42% . This means that nearly 90% of PoW projects do not have sufficient markets and participants, and may even be just a "self-entertainment product" of developers, without scale effects, and the ecosystem is very fragile. In addition, it can be found that the annual output value of some PoW currencies with the highest market value is not high. This is because some PoW currencies such as XVG, BTG, SC, etc. were born earlier and have produced a large number of tokens. Their current total amount is much higher than some new currencies born in the past two years. These currencies may have experienced multiple reductions in production, and their actual annual output value is lower than some new currencies, such as CKB, GRIN, BEAM, HNS, etc. As for mining, miners are more willing to focus on currencies with higher annual output value because they can bring more benefits to miners. We found that currencies with higher annual output value are actually the most popular projects at the moment. In comparison, market capitalization has less impact on the popularity of PoW currencies. 03Some PoW currencies transform to PoW/PoS hybrid consensus or other consensus In the process of summarizing the data, we also found an interesting phenomenon. Among the top 20 PoW currencies in annual output value, one currency (DCR) adopts PoW/PoS hybrid consensus, and among the top 50 currencies, 8 currencies (such as BTM, HC, AION, etc.) adopt PoW/PoS hybrid consensus. For currencies with lower PoW output, more currencies have converted consensus from PoW to hybrid consensus (such as CLO, VEIL, etc.). There are also some PoW currencies that directly abandon PoW consensus and completely switch to PoS or DPoS consensus (such as CRW, XDNA, etc.). The lower the annual output value of the currency, the more likely it is to choose to adopt PoW/PoS hybrid consensus, or even completely switch to PoS consensus . The higher the annual output value of a PoW currency, the easier it is to bring profits to its miners, thereby attracting more participants, and its community foundation will be more solid, and it will be easier to form economies of scale, bringing certain positive incentives to the project itself . At the same time, the more miners there are in a PoW currency, the greater the computing power, the higher the cost for attackers to maliciously destroy the currency network, and the safer the project itself . The opposite is true for currencies with low annual output value. It is difficult for miners to profit from this currency, and the number of participants will decrease. If the currency itself does not have a good community foundation and operation plan, it will be difficult to form a scale effect to maintain its value. Its currency price may continue to fall, leading to a further decline in output value, and the project will fall into a vicious circle . At the same time, when fewer and fewer miners participate in network maintenance, these currencies that have lost computing power protection will inevitably fall into a security crisis : attackers may only need a small cost to tamper with the data of the currency network and destroy the entire project . We found that most of the currencies with lower output value may face an embarrassing situation: either expand the project, increase the currency price, and attract more miners to maintain the network; or quietly wait for their own network to become increasingly fragile until it collapses . Although some projects are developed by the initiators with the mentality of experimentation or even gaming, and the developers do not care about the final direction and operation of the projects, there are still some project developers and operators who hope to break this curse. Modifying the consensus has become one of the ways for some PoW projects to survive. The more common modification plan is to modify the PoW consensus to a PoW/PoS hybrid consensus. Some currencies also directly abandon the PoW consensus and adopt PoS or DPoS or other consensus schemes. Although there has been controversy about the security of PoW, PoS and hybrid consensus, and many studies have shown that the security of hybrid consensus or PoS consensus is not higher than that of PoW. But it is undeniable that without a large number of miners participating in PoW currencies, their security and anti-attack capabilities are indeed not as good as hybrid consensus or PoS consensus currencies . Of course, not all currencies undergo consensus transformation because of low annual output value and too few miners participating in network maintenance. Some currencies also fall into the computing power trap (machine gun pool attack, large computing power mining machine attack, etc.), which causes the value to collapse and eventually decline. The blogger will introduce the details in a new article. Welcome to follow the WeChat public account "Xianhua Mining" to discuss mining-related issues with us. 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