Imminent Possibility of a Hostile Takeover for the Monero Chain on April 6th (Seriously)

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For those that are unaware, Monero is planning a hard fork on April 6th. This hard fork is a planned one that is designed to alter the mining algorithm in a way that will supposedly make the chain more impervious to ASIC miners.

I alluded to this issue in the first part of this series which you can find here: https://medium.com/cryptomedication/what-the-hell-is-monero-original-ea5d772d21f9

Here’s Why Monero is Seeking to do this:

1.) Monero is a privacy coin. They have/had the CryptoNight mining algorithm (bitcoin uses SHA-256).

2.) This company named Bitmain created ASIC miners for Monero. ASIC miners are are basically like computer chips that are modified to maximize the practice of mining itself. This allows them to mine stuff way more efficiently than a run of the mill graphics card.

3.) The process of mining itself on a blockchain for proof of work is pretty much putting your computer to work to solving a task. The more computing resources you have working on this task, the more likely it is that you beat everyone else to finding the correct value that allows you to create the next record (block) in the blockchain. Of course this gives you a reward if you win too.

ASIC miners are pretty much like giving your GPU steroids.

4.) The issue that people have with this is that it pushes up the mining difficulty. So, you know how bitcoin is ‘programmed’ to produce a block every 10 minutes? It does that by adjusting how difficult it is to solve that equation. The more computing power that enters the network, the more ‘difficult’ it becomes to solve the equation in order to maintain that 10-minute per block average time. This difficulty is based on how many computers are working on the equation at one time on the whole network.

What you should take away from all of the numbers posted above is that the Monero Dev team absolutely hates ASIC miners and it is their goal to eliminate them. See the tweet from one of their lead devs/creators below:

URL: https://twitter.com/fluffypony/status/974182821437825024

Why People Think ASIC Miners Lead to Centralization

If a LOT of computing resources are devoted toward the mining, the difficulty goes up. If fewer resources are being used, it has a lower difficulty.

When ASIC miners come on a network, they jack the difficulty up to the point where you can’t really compete if you have a GPU miner.

So, in order to maintain competitiveness, you’d need to buy an ASIC miner probably or you’d need to expand your operations pretty substantially.

That’s why you see ridiculously huge mining rigs like this one that exist for bitcoin right now like the one above.

Obviously, the average person probably can’t afford something like this. So, most ‘regular’ people end up quitting mining because they don’t have the resources to make it profitable and much fewer newbies foray into the marketse because they know they won’t be profitable in it without a shitload of startup money.

This has led the community in crypto, in general, to fear that this will make mining ‘centralized’ to only the few entities that have adequate resources to actually compete in the market.

If you follow Keynesian economics, the situation this creates is called monopolistic competition.

How Did Monero Even Know That ASICs Were Coming Onto Its Network?

If you’re new to the cryptocurrency space or the concept of mining, in general — virtually any protocol that claims to be ‘ASIC-resistant’ is just that, resistant. No one is impervious to ASIC miners being created for their mining algorithm. If there is a chain that hasn’t had ASICs launched on to its network yet, then its more than likely that this is because there have been no great efforts to create one for it as of yet.

Even the Ethereum protocol has found itself a victim of ASIC miners in the last day or so.

Also, there had been suspicions that the spike in hashing power on the network, which came randomly it seemed, had to be the product of ASIC miners. Or perhaps the Monero dev team simply received an inside tip.

Whichever happened, they were correct in their assumption that ASIC miners were begin used on their network, because the recent Bitmain press release announcing that they were selling miners that were capable of mining on the Monero network were released on March 15th, 2018, noticeably after the Monero announcement stating that they would be initiating a hard fork on April 6th, 2018, in order to slightly alter their mining algorithm in order to prevent ASIC miners.

Source: https://twitter.com/BITMAINtech/status/974180690295103488?ref_src=twsrc%5Etfw&ref_url=https%3A%2F%2Fthenextweb.com%2Fhardfork%2F2018%2F03%2F16%2Fbitmain-asic-cryptocurrency-miners

But What About the ‘Botnets’?

A few folks have mentioned the idea that the alleged ASIC activity on the chain is due to the ‘botnets’ that have been deployed on the network.

What are Botnets?

When people mention botnets, they are referring to those automatic programs that have been illegally using unauthorized computing resources through exploits, hacks, WiFi access and other computer programs in order to mine the Monero protocol.

So, when you look at it from the outside without investigating the issue too thoroughly, this seems like a plausible suggestion. However, when you look at the actual network protocol’s hashing rates over the last 6 months, one can quickly see how these facts simply don’t add up.

One potent counterpoint that should be considered is the fact that botnet activity on the Monero protocol was reported months ago.

When you look at the network’s hashing rate, you can see that the increase in Hashing Power due to the botnets had already been well accounted for before the spike in December to Present (April 5th, 2018) was detected.

While there was a noticeably large increase from April 2017 to December 2017 — it was nothing compared to the rise that followed that period (December 2017 to Present).

As you can see from chart posted above, December to February (approximately), saw a 5x increase in the hashing power for the network.

Some Information About How Hard Forks Work

Monero wants to avoid this fate. So they’re initiating a hard fork on April 6th (two days from now) in order to alter their mining algorithm so that the ASIC miners won’t be able to mine on their network.

The hard forks that involve a chain split are ones that don’t have near-unanimous community support. Bitcoin Cash is the example most of us know. A lot of people in the bitcoin community hate bitcoin cash and they publicize it pretty often.

So, in the case that someone decides to hard fork the protocol without an actual mass consensus, it will more than likely lead to a forked coin being created.

However, if the entire community agrees to upgrade their nodes to run the latest software published by the main network, then there will be no fork. The protocol will simply be upgraded.

Putting This Into Perspective to Understand Where the Threat Comes From

Remember that the Monero Dev Team is initiating the hard fork. This isn’t like other coins where someone from the outside is doing the hard fork (i.e., Bitcoin Cash).

That’s how we get into the Monero Original team.

Who is Monero Original?

They’re a group of individuals that have openly stated that they will not be upgrading their full nodes to run the latest release of the Monero protocol.

They have issued multiple press releases through different popular crypto publications such as The Merkle (see below):

Source: https://themerkle.com/monero-original-announcement/

Within the article, it states:

What makes the above confusing is the fact that they’re planning on mining on the legacy chain.

So, the name of the protocol shouldn’t be changing. But it’s possible that exchanges have agreed to only use the main GitHub repository that Monero’s devs have been sending updates to as the preferred listing for these exchanges.

Who is Behind Monero Original?

As an author and avid observer of the cryptocurrency space, there’s no doubt that the ‘Monero Original’ press releases are tied to Bitmain in some way.

Why?

Here’s a bit of evidence/tertiary information that should make this a bit more clear:

#1 Bitmain is the Premier Producer of ASIC miners, and they have been the primary sellers of ASICs within the crypto space for a while at this point.

#2 Between the exchange listings (i.e., HitBTC) as well as the various publications that have paid for a press release, an entity with a pretty fair amount of disposable income would have to be orchestrating this.

#3 The fact that Bitmain announced that they were distributing ASIC miners for the CryptoNight protocol well after Monero had publicly announced that the protocol would undergo a hard fork to render the ASICs obsolete seems to reveal that they have all intentions of figuring out a way to use those ASIC miners in some way, shape or form on the protocol. Otherwise, it makes no sense to continue to attempt to sell those miners.

#4 If Bitmain does nothing and simply allows the hard fork to continue without any resistance on their behalf, then they will more than likely lose hundreds of thousands of dollars worth of ASIC miners that they have yet to sell & miners that have already purchased these ASIC miners stand to lose a considerable sum of money as well because these devices would essentially be bricked (worthless). However, this would not be the case if they decided to shrug their shoulders, thumb their noses at Monero’s dev team and keep mining on the legacy chain.

#5 This recent lead on Twitter gives a lot of credence to the claim as well:

Source: https://twitter.com/kaylawangnow/status/981688076433899521

The legitimacy of this source can’t be corroborated, but, if true, would certainly make a lot of sense in light of the information posted above.

What’s the Danger for Monero?

It took us a while to get here, but this is actually the most important part of the entire article — discussing the potential danger for the Monero protocol. In order to do so though, this will also be a short lesson on how hard forks in general operate.

Take a look at the illustration below:

Source: https://lightco.in/2017/07/30/bitcoin-fork-split/

Even if there was just one miner with 1% of the total network hashing power and one full node with 1% of the hashing power, the legacy chain could be continued.

Another major facet of hard/soft forks in blockchain protocols that is extremely relevant to what’s going on is posted below:

A hard fork is an expansion in protocol rules (i.e., larger block size).

A soft fork is a restriction of the protocol rules.

So, since hard forks expand the rules, legacy blocks are always valid on hard forked chains but not vice versa.

Why is this an issue at all?

Check out this post from a Monero Contributor from their Reddit:

Source: https://www.reddit.com/r/Monero/comments/89irci/monerujo_to_support_xmo_xmv_s/

Pay attention to #3 up there.

The author of this post states, “Although Monero0 does not appear to be an outright scam like MoneroV [editor note: hard forks are not scams, even if the community hates/disagrees with it — that goes for Bitcoin Cash as well], they refuse to implement replay protection.”

This is a big deal if true.

Why?

Here’s a definition of what replay protection is, what it entails, and why it is necessary for a protocol to remain safe:

Source: https://bitcoin.stackexchange.com/questions/61212/what-is-transaction-replay-and-replay-protection

So, any hard fork that is devoid of replay protection could compromise the safety and stability of the chain itself.

Let’s Pedal Back for a Second Though Before Diving into the Implications of This

First, to clarify, it is not ‘Monero Original’ that would be implementing any type of replay protection because they’re the legacy chain. Replay protection refers to the responsibilities of the HF (hard forked) chain.

Source: https://www.reddit.com/r/Monero/comments/746kxv/question_monero_has_scheduled_hardforks_without/

This is a post from months ago from the time of writing, as you can see in the picture above. There’s no information out regarding whether the Monero team has decided to implement this feature now or not, but it would seem that they would need it now more than ever because the “Monero Original” chain could very well be longer than the Monero chain, because ASICs work faster and since the hashing power on the network increased five-fold, one could assume that the ASICs probably wield at least that much more power than the network itself minus GPU miners.

What’s the Biggest Threat?

A hostile takeover, essentially. In order to have an effective hard fork, users must upgrade/update their software to match the new one that is being released by the hard-forking team.

If they don’t, then there could actually be a legitimate risk of blockchain reorganization, which would essentially amount to Bitmain/whoever is mining on the legacy chain taking over the Monero protocol.

What is blockchain reorganization?

Source: https://en.bitcoin.it/wiki/Chain_Reorganization

For those that aren’t able to read the source above, it states, “The term ‘blockchain reorganization’ is used to refer to the situation where a client discovers a new difficultywise-longest well-formed blockchain which excludes one or more blocks that the client previously thought were part of the difficultywise-longest well-formed blockchain. These excluded blocks become orphans.”

Here’s the definition of orphaned blocks as well:

Source: https://monero.stackexchange.com/questions/3311/what-are-orphaned-blocks

What you see above is very accurate in terms of characterizing a true blockchain reorganization and defining an orphaned block.

What Does All of This Mean?

Basically, if the legacy chain is able to wield more hashing power than the HF chain being planned by the developers (providing greater Proof of Work) and has a longer chain, the chain that the Monero developers are working on could be orphaned entirely.

The loss of money that could result from this would be astronomical. The devastation on the protocol that would result could be devastating as well.

Given the fact that a decent number of nodes will fail to update their protocols in a timely fashion, there are probably a decent amount of GPU miners that will continue to mine on the legacy chain as well when the HF actually activates on the Monero protocol.

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