The threat of mining centralization is a common topic. But what is the solution? So far, most answers have been either to switch to proof-of-stake, or regularly change algorithms to resist ASIC developments. Some have even said that ASIC resistance is futile (Trek reference intended), or that the issue should sort itself out over time. But one ASIC manufacturer, Obelisk, wants to take things in a completely different direction.
Their plan is to offer a service to design and create a custom algorithm and begin manufacturing ASIC hardware for a coin before it is launched or updated, then release the specifications for building the devices freely so that other companies can make them too. Will this lead to a universal ASIC device?
Can’t Beat Them, Join Them?
A number of high-profile members of the cryptocurrency community like author Andreas Antonopoulos and Anthony Lusardi of the ETC Cooperative have come forward and stated that ASIC resistance is either a useless endeavor, or harmful one. In their opinion, ASIC miners are by their very nature better at securing a network and provide a number of benefits to the blockchains they’re mined on.
For the sake of argument, let’s assume that their assertions are correct. Let’s say that trying to fight ASICs is a bad idea. So how can a cryptocurrency both benefit from the advantages offered by ASIC mining but still not suffer from the downsides of centralization and supplier monopolies?
This is where the Obelisk launchpad program could offer an (expensive) alternative. The service, which clocks in at “about $10 million” includes the design and development of a new proof-of-work algorithm that is designed to be resistant to 51% attacks as well as the design and manufacturing of ASIC hardware for the new algorithm.
So how would this be a game changer? The answer is that once the initial run of devices are released, Obelisk will make public the design specifications for the device. This will mean that any manufacturer, including ones that may have never dealt in cryptocurrency before will have full access to what is normally a highly guarded and secretive set of schematics.
Endless Supply Chain Problems a Thing of the Past?
One of the biggest issues facing ASIC miners today is the chronic short supply of new devices.
Once a new device is announced and put on presale, it will inevitably completely sell out in usually less than one hour. Then, those lucky enough to get on the preorder list will only get their devices 3-to-6 months later at the earliest. This results in a massively inflated secondary market where greedy opportunists buy as many of the devices as possible and then resell them for triple or quadruple price.
This is only on the retail market, however. Large, wealthy buyers are almost certainly able to make advance orders direct from the manufacturer outside of the system. This gives them an arguably unfair advantage against smaller competitors that may just want to run a handful of the machines in their basement or garage.
This is where Obelisk’s idea becomes truly compelling.
If what they say is true and plans are released publicly, then shortly after the initial run of devices, potentially dozens of manufacturers or more could start to produce the device themselves. This would lead to not only an increased supply of the devices, but also a degree of competition both for price and quality among multiple manufacturers – something that would absolutely benefit buyers both large and small.
Will Anyone Use the Service?
The big question now is will anyone take Obelisk up on their offer.
As mentioned above, the price for the service is a whopping $10 million. In the early days of ICOs, projects were pulling in a hundred million dollars easily. Dropping $10 million on custom ASIC hardware to avoid 51% attacks or centralization could have been an easy decision. Today, however, most ICOs fail to break even $1 million, much less $10 million, the bare minimum to even begin this process.
The reason why Obelisk is charging so much is likely because of the critical component that they will be giving out the designs for their devices and thus they will not be able to profit from them exclusively. A company like Bitmain, on the other hand, would get exclusive manufacturing rights for their own designs in perpetuity. This gives them an infinite degree of control to maintain their own market as they see fit. This is understandable, but $10 million seems excessive to the casual observer.
To make things worse, projects that could benefit most from this type of service, such as smaller proof-of-work coins that face a high threat of a 51% attack would almost certainly not be able to afford this service.
Paving the Road to a Universal ASIC Standard?
If anyone takes up Obelisk to create a new proof-of-work algorithm and open-source ASIC design, small projects could choose to simply hard fork into the open source proof-of-work algorithm made by Obelisk, and take advantage of the potential widespread availability of the new ASIC devices.
Let’s say for instance that Obelisk creates a mining algorithm called “ObHash” and a miner called the “ObMiner1”. Imagine then if most every small proof-of-work coin all switched to a standardized ObHash algorithm that used the open source ObMiner1 ASIC design that was manufactured by many different competitors and at many different price points. Perhaps there would be a Bitmain ObMiner1, a Halong ObMiner1, a GMO ObMiner1, and so on.
This kind of outcome could solve a lot of problems. Suddenly many projects could be protected by sharing a similar algorithm and standardized mining hardware. But it’s hard to say whether or not it ever would be a reality. It’s also difficult to say what sort of unforeseen technical problems or threats this kind of arrangement could cause.
The other major question would be – who would pay Obelisk the $10 million to do it in the first place?