To preserve its decentralized vision, the Monero team has instituted a hard fork and incidentally spawned four new iterations of the vaunted privacy coin. However, the move has been met with a good deal of skepticism and confusion by the market at large. Here, we’ll explain briefly why the fork occurred, what led to the new coins’ creation, and what the market landscape looks like now.
The Contentious Fork
The original fork was planned for and implemented on April 6, primarily to deal with issues arising from application specific integrated circuits (ASICs).
ASICs are the powerhouses of the crypto mining world, and they are typically geared toward the mining of a specific currency. Deploying an ASIC creates issues of centralization, as the power balance between miners shifts suddenly and irreversibly to ASIC miners.
Monero has dealt with this situation in the past by adjusting its proof-of-work (PoW) standards to keep the system as egalitarian as possible.
This particular fork was spurred by the launch of Chinese company Bitmain Technologies’ Antminer X3 in March.
His argument against ASICs rests on the fact that Monero employs extensions that boost CPU’s mining status, giving them a planned “unfair advantage.” If similar extensions were widely employed in ASICs, thus making the hardware more democratic, then Monero would adopt a less hostile attitude toward ASICs.
Until then, however, it’s necessary to keep Monero a moving target to combat the gravitational pull of high-powered ASIC miners, he said.
“If SHA3 extensions existed, and most GPUs came with SHA3 ASICs baked in, then the Monero network would benefit by embracing those commoditised [sic] ASICs,” Spagni wrote. “It would lead to a PoW algorithm that is significantly faster to verify, which would lead to faster IBD and more efficient transaction and block propagation, whilst making it much harder to DDoS the network. Between now and then I will do everything in my power to help the community prevent the proliferation of centralization-inducing ASICs on the Monero network.”
Dissent was swift.
“I don’t think you can dismiss the downsides of this active anti-ASIC strategy,” wrote GitHub user and thread initiator iamsmooth. “I’m offering an alternative that attempts to reach a more sustainable outcome while reducing centralization harms (or perhaps one could say substituting different, and hopefully less problematic, ones). Neither of these approaches may be fully successful though.”
GitHub user maesitos added that Monero’s move was ironically counter-free market, a concept that Monero in general champions.
“Any attempt to control the economy has failed and will always fail. Bitmain has only proven how you can’t calculate the future and the economy. The sooner the market evolves, the less abrupt the changes on the mining difficulty will be,” he wrote. “I don’t know why you think I’m less interested in the project if I buy from Nvidia or Bitmain. I see no relation. I’m very disappointed with Monero and the boycott on free enterprise. I can’t understand how one can hate miners in a PoW system.”
New Coins on the Block
The four new coins that immediately resulted from the hard fork are Monero Classic, Monero-Classic, Monero Original, and Monero 0. Each of the coins relies on the pre-fork blockchain. And that’s not a typo above – there are now two coins dubbed “Monero Classic.” Watch out for that hyphen.
The hyphen-less Monero Classic originated in Singapore.
“The main message of Monero Classic is that we believe that the developers changing the proof of work creates more centralization and harms decentralization,” according to a post on the BitcoinTalk forum, purportedly from a developer. “Around 80% of the current Monero hash rate agrees with our stance and refuses to follow the PoW change. That is why we declare in advance that we will maintain the original software which follows the original rules. We reject centralized developer control and we believe that voluntary participation for both users and miners will uphold the principles of decentralization.”
Monero-Classic’s Chinese developers echo much the same thought on their homepage. There is at least some suspicion in the crypto community that the project is being supported by Bitmain.
“For a long time, due to the excellent work of Monero team, XMR and its community have achieved great development, providing much valuable contributions to the entire cryptocurrency community,” self-professed spokesman PZ wrote. “In the community, many people agree with this hard fork of changing algorithms. However, I feel that there is still a part of people who want to maintain the original algorithm and accept the existence of mining machines. They should be heard and respected.”
Monero Original’s GitHub update is straight and to the point.
“Monero means anonymity. Monero means untraceability. Monero means people. We are Monero,” the GitHub readme proclaims. “We are working to keep the original blockchain running. Join us on our quest.”
Finally, Monero 0 takes a more aggressive tact.
“We’ve decided that the Monero Project’s strategy to continuously hard fork is no longer a stable or a sane strategy,” a developer wrote on the project website. “We believe that Satoshi’s proof-of-work is the only mechanism for decentralized consensus. The so-called ‘network upgrades’ that are centrally mandated by the Monero Project are a Trojan horse designed to compromise the effectiveness of proof-of-work in the Monero network. Monero 0 is not a fork; it is the original Monero.”
With five fully fledged Monero coins now circulating, there is no shortage of market confusion. Ugly words like “scam” are making the rounds on Monero forums. The debate centers around what it means to be truly free market and decentralized. The egalitarian argument is that everyone should have a more or less equal chance to mine Monero. The counterargument is that the free market will eventually level the overall playing field. Trying to artificially impose a democratic system via a fork looks an awful lot like the “top-down” autocracies that developed in certain Soviet Republics. To paraphrase George Orwell – all miners are equal, but some miners are more equal than others.
As one commenter in the Monero forum on Reddit said, “It remains to be seen if their fork will be worth anything, this only serves the interests of miners but actually hurts the users (because of the reduction in anonymity). Also, Monero code is really evolving all the time, maintaining the fork code will take some effort. I don’t see this ending well for the miners.”
Much like the initial fork discussion, the rebuttal was quick and blistering.
“Ha. Enjoy your heating brick. You don’t get it. GPUs and CPUs are multipurpose devices that are and will continue to serve many purposes as things change into the future. As for me I’m mining XMR full-blast tonight. The real XMR that has a current exchange rate of 170 USD per coin. GL [sic, good luck] getting anything for Monero Classic.”
Only time will tell which, if any, of the Monero forks ultimately proves successful.
For now, speculation is the name of the game.