Wu Jihan: The emergence of ASIC mining machines is inevitable and more conducive to achieving decentralization

Mars Finance reported that on March 28, the "POW'ER China Blockchain Contributor Annual Summit" hosted by Mars Finance and co-hosted by Consensus Lab and VBLOCK was held in Chongqing, with 1,000 industry guests and 150 blockchain technology companies attending the event. Wang Feng, founder of Mars Finance and Consensus Lab, Zhao Yahui, general manager of People's Venture Capital, Wu Jihan, co-founder of Bitmain, Li Lin, chairman, founder and CEO of Huobi Group, Li Guoqing, founder of Dangdang.com & CEO of Li Guoqing Book Club, Cai Yige, general manager of Tencent Blockchain Business, and other well-known industry figures attended the summit.

Jihan Wu, co-founder of Bitmain, delivered a speech titled "Centralization and Decentralization of PoW Mechanism" at the summit. He mentioned that the purpose of the invention of PoW mechanism is to solve the integrity problem of cryptocurrency (such as double spending). The blockchain project based on PoW is essentially a market economic model, and the operation of PoW mechanism is based on two foundations: full and open competition and fair and reasonable incentive mechanism.

In Wu Jihan's view, compared with the centralized mechanism, the decentralized mechanism has three major advantages: 1. Certainty of rules; 2. Strong network resilience; 3. Security of funds. It includes decentralization at the governance level, decentralization at the physical network level, and decentralization at the market operation level. The PoW mechanism can ensure decentralization from these three aspects.

However, he also said that some reasons may cause market failure and lead to the centralization of the PoW mechanism, mainly including four factors: 1. Artificial barriers to entry; 2. Price distortion caused by human interference; 3. Insufficient incentives; 4. Path dependence. The PoW mechanism is thus trapped in a centralization puzzle: ASIC = centralization?

Wu Jihan said frankly that ASIC ≠ centralization for five reasons: 1. Centralization is a market failure problem and has nothing to do with whether ASIC is adopted; 2. ASIC itself is a product of competition. Under the PoW mechanism, the emergence of ASIC mining machines is inevitable; 3. ASIC has a low design threshold and small patent barriers, making it easier to achieve full competition; 4. ASIC is actually more conducive to decentralization; 5. The recent 51% attack on some currencies is mainly due to the low opportunity cost of GPU mining. ASIC is actually a solution to this problem.