Fearing being dominated by ASICs, Monero updates its algorithm again

Monero (XMR), a privacy-focused cryptocurrency launched in 2014, completed a protocol upgrade yesterday.

What sets Monero apart from other cryptocurrencies is its focus on privacy and security, and this upgrade is intended to strengthen those features.

The upgrade, called CNv4 fork, was hard forked at block 1,788,000 and brought four key improvements to the network to strengthen its privacy, security, and maintain ASIC resistance.

Monero developers said that ASIC chips have brought them new differences and need to be taken seriously. Therefore, for the team, the most urgent issue of this hard fork is to add an anti-ASIC algorithm CryptoNight-R. It can make all ASIC mining software codes invalid and prevent mining through ASIC chips.

In addition, the specific improvements of this upgrade are as follows:

1. Dynamic block capacity algorithm adjustment to fix big bang attacks (excessive capacity may cause insufficient blockchain resources).

2. Adjust the PoW algorithm (CryptoNight-R) to limit ASICs in the network and further maintain ASIC resistance. Therefore, miners need to upgrade their mining software.

3. Add a virtual encrypted payment ID to each transaction to improve the homogeneity of transactions.

4. The development team has simplified the code submission process by reducing the size of the quantity encoding and using deterministic masks. Monero ResearchLab believes these improvements are safe. In addition, the transaction format needs to be upgraded to the v2 format.

After the hard fork was completed, the Monero team informed users that block production may be slower in the next 24 to 48 hours.

Fear of being dominated by ASICs

The decision to modify the algorithm of Monero stems from the ASIC mining machine released by Bitmain in March last year. Initially, Monero mining could be done on personal computers, but as the mining competition escalated, the competitiveness of computers became weaker and weaker. The release of the new version of the ASIC mining machine also caused concerns among the Monero team, who believed that it could lead to the centralization of the Monero network and even a 51% attack.

Therefore, Monero conducted a hard fork in April last year to maintain its mining ecological balance. However, not everyone agreed to upgrade the protocol for this purpose. This hard fork even led to the emergence of four different currencies on the blockchain network.

According to Blockstream mathematician Andrew Poelstra, changing the algorithm could indeed render ASIC miners ineffective, but such resistance would ultimately prove futile.

In addition, some people believe that frequent changes to the underlying protocol may lead to vulnerabilities in the code. Some developers suggest giving up the resistance to ASICs and focusing on reducing hardware costs and popularization. But now it seems that the core development team has not given up the resistance.