In April 2016 the news about a specialized technology aimed to speed
up bitcoin mining by 20% caused a real storm in Bitcoin community. The
method called AsicBoost was developed by Timo Hanke, a mathematical
researcher and cybercurrency expert, in collaboration with Segio Demian
Lerner, a security expert. AsicBoost is different from all existing
optimizations for mining chips because it is based on algorithmic
improvements, and therefore applicable to all types of mining hardware.
The algorithm will reduce the volume of mathematical calculations
required to find a valid hash. Technicalities behind this operation are
very complicated, but it allows the mining hardware to re-use
information acquired over time or share it with other hashing cores
shortcutting the computational steps of the mining algorithm. The
apparent benefits are improved energy efficiency and decreased silicon
cost. The algorithm can facilitate the work and increase the revenues
significantly but there is a fly in this ointment - the AsicBoost
inventors decided to patent the method, and to get fee from each
Why AsicBoost Patent is Bad Idea
Until now all Bitcoin algorithms have been open for all miners and
regular system users, and were widely used to achieve the best results.
The new precedent with license fees for the use of AsicBoost algorithm
may have a negative impact on the industry.
- Leaving the public domain. If patented, the algorithm components
will have “holders” demanding fees for their use. Each part of the
system will have its “owner” who will sell it to those offering the
best price. So Bitcoin opponents will have a tool to block the work
with the algorithm components or, at least to make it more difficult.
Accordingly, additional opportunities to attack the whole system will
arise, and trolls will use it immediately.
- Leaving the free zone. All patents are under control of government
authorities. Therefore, once AsicBoost obtains a patent, the
authorities may try to extend the sphere of their influence on other
components of Bitcoin system. According to Paul Sztorc, renowned
crypto economist: «It’s an engineering requirement that Bitcoin be
above the law». If it changes, the law will be dictating its own rules
for internal operation of the entire system. For instance, the patent
holder may require to use AML/KYC, when transactions are added to a
- Aggravation of mining centralization. Today different countries
have different opinions if patents for algorithms are required or not.
European countries, as well as the USA, have already created a legal
basis for such patents. At the same time, China rejects the idea of
patents for algorithms. Many specialists believe that introduction of
patents will lead to further centralization and concentration of
mining activities. For instance, it will be impossible to import
Chinese-manufactured equipment, which does not need a license, to
countries where patented algorithms system is accepted. It will lead
to concentration of transactions inside one country.
Bitcoin Community Response
Considering all the potential negative consequences of patents
introduction the logical response from Bitcoin community would be to
change the system, and thus to make AsicBoost algorithm invalid. It may
help to avoid all the above problems. But there is a trick. It can only
be changed with a hardfork.
As earlier agreed between miners community and Bitcoin Core, by the
middle of 2016 a special hardfork algorithm will be introduced into the
system which will allow to extend a block size. And the hardfork can
incorporate the changes required to make AsicBoost algorithm invalid.
Peter Todd, one of the system analysts, offered this method of defense
in his letter forwarded to Bitcoin developers in May 10, 2016. The
change will be introduced only if Bitcoin community agrees to the
change, however, no consensus is reached so far.
Bitcoin Core opponents, followers of the classic system, instantly
responded to that, overblowing the story, labelled as Core Sinister
Management. One of the Classic leaders, Olivier Janssens stated that
community should stick to original system, created by Satoshi: “If
Bitcoin Core changes the protocol to kill a small changing optimization
it implies miners should ask permission before innovating”.
Similar responses were coming from r/btc and bitcoin.com, sponsored
by Roger Ver, one more adherent of Classic. He already posted a few
propagandist essays aimed against Bitcoin Core. Trolls from r/btc
platform were also quick with their responses, they launched a real war
in technical discussions.
This situation seriously affects crypto-investors. After false
Satoshi scandal the purchase of bitcoins was rising. Currently the
situation with AsicBoost patent caused significant decline of their
activity. As off 15.05.2016 the bitcoin exchange rate was about $450
All the latest events, heated discussions, wild exchange rate
fluctuations indicate that there is a real information war launched
against Bitcoin. The community needs to be unite and work out an
agreement on many critical issues to be able to survive as a whole and
not to allow their opponents to split their ranks.
The only right solution for platform advocates would be to carry on
with their work. They should play it cool, create new projects, explore
new possibilities for Bitcoin ecosystem, search new prospective markets
for bitcoin technology application and to publish new articles.
Developers in their turn should create the hardfork algorithm. This is
the only way to keep Bitcoin system function as normal.