The ASIC myth
Date: 2019-01-16
Source: https://craigwright.net/blog/bitcoin-blockchain-tech/the-asic-myth
It is interesting how the arguments against commercial mining come down to an outcry against “mining centralisation.” All things in life come from balance. In the commonly used image listed as Fig. 1 below, we see what people like to have as a concept of Bitcoin. Unfortunately, it is also utterly wrong.
In the last few years, we have seen a rather socialistic push for mining equality and the move towards altering the proof-of-work algorithm with a goal of “punishing miners” to be more efficient. For example, we have recently seen ETH move to an ASIC-resistant (which means they have not figured out how yet) algorithm with a goal of making the network more equal — what some call “decentralised.” The catch cry for enforced “fairness:” equality in outcome through the redistribution of wealth from the most to the least efficient.
Simply put: no, it does not stop “centralisation.”
In fact, you cannot create a system in Bitcoin or any “blockchain” for that matter that is designed to deliver an outcome of equality. The primary purpose of Bitcoin is to create a system that is immune to such a form of redistribution at the monetary level.
If you have any sense, you start to understand that 100,000 machines in a data centre are ALWAYS more efficient, use less power, and win hands down when compared to 1000 people who are each running 100 machines. In both cases, we have the same total number of machines, but a data centre is more efficient. It uses far less power and resources, and it will cost far less.
In the original Bitcoin code, there was a simple calculation that related to the propagation of transactions. The reality is that only miners matter here. The transactions must get to miners, and no other system makes any difference.
Peers send to the network, and the system propagates.
In the paper “On Red Balloons and Bitcoin,” [1] the authors provide proof of the theorem saying: Suppose that H ≥ 3. There is no Sybil-proof reward scheme in which information propagation and no duplication are dominant strategy for all nodes at depth 3 or less. They go on to develop a Hybrid propagation scheme. The authors did not test the Bitcoin network and, as most do, assumed that it is a distributed mesh as we see in Fig. 1 [c]. In the chart, the distance is an average of d>5 for only a few hops and nodes.
None of the researchers have studied Bitcoin enough to see that it is none of the ones in the chart, but rather it forms a small-world [2] network (Fig. 2). As such, as the hosts become more connected, they can come closer and closer to forming a semi-complete graph. If you read the original Bitcoin white paper, it is clearly and distinctly defined.
Miners send to all nodes (miners).
In a complete graph, all nodes are connected to each other. It precludes the use of small systems (such as Raspberry Pis), as the systems need to be able to efficiently send to many other systems at once. It is how Bitcoin was designed. Bitcoin nodes remember the IP addresses that they had previously connected to, and exchange node lists. Doing so means that they do not act as a pure random graph. Bitcoin nodes collect and remember other nodes.
As such, a more powerful system will always be able to handle a larger number of connections, and allows growth to a stage that is closer to a complete graph — improving efficiency, and rendering the network more secure.
In any of the networks in Fig. 1, the network is not secure, and can easily be “sybiled” or attacked. Even a distributed network can be attacked. Such an attack may have multiple paths, but a single well connected Sybil can then act as several nodes and delay or subvert transactional propagation.