AsicBoost Patent or Information War Against Bitcoin

May 20, 2016 | by VienS
AsicBoost Patent or Information War Against Bitcoin

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 license.

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 block.
  • 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 per BTC.

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.

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