Centralizing mining is probably one of the biggest challenges digital currencies face.
Many of Bitcoin’s properties, such as censorship resistance and double-spend protection, rely heavily on a decentralized mining landscape. But over the years, the Bitcoin mining system has become increasingly centralized in fewer hands and fewer geographic regions. There are several explanations for this trend. But one of them is the appearance of specialized mining hardware: Chips and ASIC miners.
In an attempt to solve this problem, scientists at the Interdisciplinary Center for Security, Reliability and Trust (SnT) at the University of Luxembourg have developed a mathematical algorithm called ‘Equihash’. Equihash is the brainchild of Prof. Alex Biryukov, head of SnT’s “CryptoLUX” research group – focused on cryptography research and technology transfer – and CryptoLUX researcher Dr. Dmitry Khovratovich. The algorithm was first presented at the 2016 Distributed Systems and Network Security Symposium in San Diego.
Probably its most significant success to date, Zcash, the new decentralized and open source digital currency that aims to set a new standard for privacy and anonymity through the use of groundbreaking cryptography, announced the Equihash integration in April 2016. In an article Titled “Why Equihash,” Zcash founder Zooko Wilcox and engineer Jack Grigg noted that Equihash has very efficient verification that could enable thin clients on restricted devices and Zcash clients within Ethereum. But the main reason for the enthusiasm for the Zcash technology is, in fact, Equihash’s resistance to ASIC mining.
“Equihash is a memory-oriented proof-of-work, which means that the amount of mining that can be done is highly dependent on how much RAM you have,” said Wilcox and Grigg. “We believe that it is unlikely that anyone will be able to build custom hardware (ASICs) for mining in the foreseeable future.” Wilcox and Grigg added that Equihash’s large optimizations are unlikely to give miners who know optimization an advantage.
Equihash is a difficult memory problem, more suitable for general-purpose computers with a lot of memory than for special hardware chips. “If 10,000 miners with a single PC were active, in Zcash the investment to compete with them would be 10,000 times the price of a PC, while with Bitcoin, the investment would be significantly less,” said Khovratovich. “The strength of a cryptocurrency comes from the fact that the ledger is distributed globally. Our Equihash algorithm reverses the situation to this most ideal world. “
According to the CryptoLUX scientists, the algorithm makes it possible to avoid centralization of the mining process in the hands of a few first-class miners with specialized mining hardware, thus contributing to the ‘democratization’ of Equihash-based digital currencies.
“Since Equihash is based on a fundamental computing problem, advances in Equihash mining algorithms will benefit computing in general,” added Biryukov. “Equihash is unique among all mining algorithms: it is difficult to memorize on the one hand and very easy to verify on the other.”
Equihash inventor Biryukov also emphasized that Equihash is a portable algorithm, not limited to specific digital currencies.
“We have no formal relationship with the Zcash project,” he said. “Equihash is not limited to Zcash, it can be used in any cryptocurrency.” That said, Biryukov was cautiously enthusiastic about Zcash. “Compared to many other cryptocurrencies, Zcash definitely brings new features based on state-of-the-art academic crypto. Whether it will climb well or not, the future will show.
Given Equihash’s portability, it is interesting to speculate on its possible integration into Bitcoin itself. “I’m not aware of such attempts, but it would be technically easy to do,” Biryukov said.
For more details on Equihash, see the research paper “Equihash: asymmetric proof-of-work based on the Generalized Birthday problem.”