OK. I've been thinking about this for a while. And this is still a "thought in progress". But...
On ASICs, and ASIC-resistant PoW.
Ok, I'm an XMR holder and bullish XMR. But the one thing I don't like about Cryptonote is the ASIC-unfriendly PoW. I'm, admittedly somewhat tentatively, coming to the opintion that ASICs (or at least custom hardware miners of some sort) are essential to the long term stability of a cryptocoin network.
Look at it this way. Which coins have a reasonable assurance of a stable hashrate?
- Bitcoin. There is a huge amount of ASIC hashing power pointed as Bitcoin, and no matter whether the owners get RoI on it or not, most of this hashing power is not going to get switched off until the value of the coins is less than the cost of the electricity. It's unlikely that a significant portion of this hash power will defect to another coin (there aren't really any major SHA-256 altcoins anyway) but perhaps more importantly there is almost certainly no serious (i.e. comparable with the Bitcoin network) pool of SHA-256 hardware doing something non-Bitcoin (whether altcoin or something entirely unrelated to cryptocurrency) that could be pointed at the Bitcoin network at a moment's notice if someone felt it worth their while
- Litecoin. At least once scrypt ASICs start to dominate the hashrate, Litecoin will be in a similar (but far less strong) situation to Bitcoin. Less strong, because Litecoin is smaller and because there are far more scrypt altcoins below it
What of the other SHA-256 coins? Well they will always be at risk of huge hashrate fluctations even if only a tiny proportion SHA-256 ASICs out there gains interest in them or loses interest in them.
And what of coins using neither SHA-256 nor scrypt? The CPU and GPU coins?
Well, CPU minable coins, such as our XMR, have the problem that we have to worry about not just cryptocurrency mining power, but
all CPU power in the world that
could mine. What if all idle CPU power in the world suddenly started mining Monero? What if someone subverted AWS and pointed
all Amazon's hardware at Monero? Could they mount a 51% attack? (Extermely unlikely, I know, that anyone will subvert AWS, but the point is we now need to worry not about someone having 51% of the SHA-256 ASICs, but simply somone having more CPU than the Monero miners).
GPU minable non-scrypt coins are in a similar situation - and might have an added shock from a massive switch of GPUs away from scrypt as ASICs start to dominate scrypt coins. And, of course, we're a GPU minable coin, too.
Bottom line: no coin can start with ASICs, but ASIC mining ultimately creates stability and makes it
harder, not easier, for someone to rapidly attain 51% of the network, at least if you can create an ecosystem where you by far outnumber other users of the ASIC.
I think it's clearly ideal for any serious long-term new coin to create a new hash function (living in BTC's or LTC's shadow is too dangerous). But the goal should be to move to migrate to an ASIC-based ecosystem over a number of years once the coin gains enough success. I therefore believe that while the Cryptonote designers were right to choose a novel PoW, they were wrong to pick a strongly ASIC-resistant PoW.
Put another way, I think we've moved beyond Satoshi's "one CPU, one vote". I'm much happier with "one SHA-256 ASIC, one vote". That's because there are far more CPUs in the world in hands that i don't trust than there are SHA-256 ASICs in the world in hands that I don't trust. And we have a fair amount of transparency as to the total SHA-256 hashpower in the world (because to a first approximation, it's all hashing Bitcoin. We have no transparency as to the total CPU power in the world.)
Thoughts, anyone?
roy
EDIT TO ADD: This certainly isn't fatal for XMR. I'm not sure it's even
particularly seriously damaging. It is non-optimal though, IMO.
