Mining Bitcoin and getting altcoins for free: PoW in joint mining

Can Bitcoin mining machines only mine BTC? Of course not, they can also mine BCH or BSV, but just like you can't have your cake and eat it too, you can only choose one of the three.

Joint mining has changed this way of playing. For example, LTC (Litecoin) and DOGE (Dogecoin) are the most classic golden partners of joint mining. After the LTC mining halving in August, the LTC mining pools that support joint mining generally adopt the policy of giving away 2,000 DOGE for every LTC mined. This is very similar to an airdrop, which is basically free.

Joint mining first started with Bitcoin and Namecoin (NMC) in 2011. Today, the number of cryptocurrencies partnered with Bitcoin is enough to form a basketball team. According to incomplete statistics, in addition to Namecoin, Elastos (ELA), Emercoin (EMC), Systemcoin (SYS), and Vcash are the mainstream partners.

▲Token data was collected on 2019/8/28. The free data varies from mining pool to mining pool, so we take general data.

It is not difficult to find that, except for Elastos, the market capitalization of other tokens using joint mining are ranked outside the top 100. Although they may have been well-known in the past, their current ecological communities and application scenarios have encountered problems to some extent.

Moreover, as can be seen from the table above, the return ratio of these free altcoins to Bitcoin can be said to be quite tasteless. The turnover rate also shows that their current liquidity is not good.

What is merged mining? What is this parasitic life all about?

Dogecoin, after worshipping Bitcoin as its big brother, has lived a comfortable life

In 2014, the computing power of Dogecoin, which also uses the Scrypt algorithm, fell to 1/15 of Litecoin. The cost of attacking Dogecoin was only US$430. Therefore, at the suggestion of Litecoin founder Charlie Lee, the Dogecoin community went through fierce debate and finally had no choice but to conduct joint mining with Litecoin.

The principle of joint mining is difficult to understand, but you can understand Litecoin as the main chain and Dogecoin as the auxiliary chain. Through a technology called Auxiliary Proof of Work, mining nodes can produce blocks on Dogecoin after producing blocks on Litecoin. In this process, the mining node does not need to do any extra work, and it does not even know that it is mining Dogecoin.

There are also some requirements for implementing joint mining. For example, the two chains need to use the same consensus algorithm. For example, Dogecoin needs to perform a protocol upgrade that may cause a hard fork to achieve joint mining.

The initial experiment of Dogecoin was successful. The computing power of Dogecoin, which shared the computing power of Litecoin, increased by 1500% after one month. Currently, about 91% of Litecoin computing power is mining Dogecoin. The interesting point is that technically, Elastos can also conduct joint mining with BCH and BSV, so Elastos can have the sum of the computing power of the three. Just like NMC, judging from the computing power alone, the computing power of this lagging altcoin is actually much higher than BCH and BSV.

Binance Research Institute wrote a report when Litecoin was halved. The report stated that Litecoin output is halved every four years, but Dogecoin does not have such a routine. Therefore, joint mining of Dogecoin may solve the problem of lack of miner incentives in Litecoin in the future. However, this idea was soon thrown into the trash by Binance researchers themselves. Because the inflation rates of the two are different, Dogecoin will gradually depreciate relative to Litecoin. But is this really just a whimsical idea? You should know that the Dogecoin community is still very active, and it has also magically squeezed into the top 5 of the global cryptocurrency market value rankings, and it still ranks 27th on the list.

Dogecoin, the funny avatar does not prevent it from having a rich story and dazzling brilliance.

Will joint mining become the savior of mining coins?

Merged mining sounds perfect, so why was there no discussion about this concept except during the Dogecoin transformation?

This shows that there are still many difficulties. In addition to the conditions mentioned above, such as algorithm unification, joint mining is a commitment to others. You must know that even if Dogecoin is willing to embrace Bitcoin, Bitcoin miners may not necessarily be willing to mine Dogecoin. Although there is no additional cost for mining, it also requires maintenance costs, such as adjusting mining configurations, setting up wallets for payment, etc. At present, even for the currencies mentioned above that use joint mining with Bitcoin, not all mining pools support it.

If a new coin without any community foundation wants to join in joint mining, it is basically throwing itself in front of a large computing power, and it may be ravaged or attacked.

In 2019, new PoS cryptocurrencies have been given the green light, but new PoW currencies have become increasingly scarce. In addition to the fact that it is difficult for PoW public chain project parties to have control from the moment they are born, it is also too difficult for PoW currencies to resist 51% attacks.

ViaBTC Business Director Xu Haoyang told 8btc that if new PoW coins directly launch their own mainnet coins with their own algorithms, the cost is too high. First of all, there are no Asic mining machines. Even if GPUs are used for mining, market value management is mostly required, otherwise who will mine?

Even though PoW is declining, there are still many small mining coins mined with GPUs in 2019, and they are very popular. Several hundred-fold coins have emerged, such as Image Coin, Axe Coin, Crow Coin, and Turtle Coin. Each one has more stories and gimmicks than the other. To be frank, this is like being barefoot and not afraid of wearing shoes. In fact, you are in a dangerous dark forest, and no one knows if you will be attacked suddenly.

So, are these small currencies that have some community foundation, and most of them are forks of mainstream currencies, likely to start the trend of joint mining in the next few years? After all, it is not easy to really go through the long river of history, through bull and bear markets, and always ensure enough computing power to fight against 51%. You know, with the emergence of cloud computing power platforms, computing power leasing is becoming easier and easier, especially GPU computing power.

▲Mining Coin Pedigree Table

It is expected that in 2020, when Bitcoin is halved, there will be a high probability of a bull market, and then the copycat PoW coins may be sucked dry. If it does not come, the crown will fall, the bubble will burst, and the price may also collapse.

Once the price is gone, miners will vote with their feet. So, is joint mining an outdated concept? Can it become popular again? Perhaps, the answer to this question depends on how many PoW currencies will surrender to reality, but they cannot give up completely. Giving up means zero, and there is no need to save themselves.