Going to discuss that at the beginning of this video so we first have to talk about Bitcoin mining rigs or Bitcoin mining machines these are called Asics which is short for application specific integrated circuit and it’s they take place sort of in this hierarchy where you start with CPUs which are general Purpose computer chips they can do lots of different things on your phone on your computer Next Step Up would be gpus which are slightly more specialized computer chips that are good for gaming machine learning video editing Etc and then really at the top in terms of moving from generalized Hardware to Specialization or specialized Hardware we have Asics which are highly specialized computer chips and machines and Asic is designed to do only one thing but do that one thing really well in this case in the case of Bitcoin mining Shaw 256 hashing now specialized hardware and this is very important to Remember specialized Hardware will always be able to outperform general purpose Hardware doing one specific application in terms of both speed and Energy Efficiency this is when Asic looks like this is what Bitcoin mining rig looks like and this lecture applies only to proof of work coins like Bitcoin It does not apply to proof of stake coins like ethereum proof of stake as we’ve talked about many times is an inferior consensus mechanism since it doesn’t cost anything to create alternate histories of the blockchain and it’s especially toxic when you combine it with a pre-mine and pre-sale Like ethereum had by contrast Bitcoin mining you do lots of shot 256 hashes which has real world costs like mining rakes and electricity and so with proof of work it’s extremely cost prohibitive to create alternate histories of the blockchain unlike with proof of stake in case you’re wondering what shot tune if You’re 256 hashing looks like it’s basically you have an input in this case I put xrp as garbage one two three four five and then you just click the hash button and then what Bitcoin mining machines do is they essentially change What’s called the non-style change this Number they’ll hash it again and they’ll try to see if they can get a certain number of leading zeros in other words below a certain difficulty Target but there’s nothing magical about this this is a one-way function though there’s no way to work back directly from the Output back to the input if you’re enjoying this video so far just ask you to subscribe and like this video to help support this Channel’s mission of Bitcoin education for the world especially if you’re a regular Watcher and you’re not yet subscribed do please hit that subscribe button so what’s the Nice thing about shot 256 the nice thing is one of the very nice things is that there’s no there are no algorithmic shortcuts or ways to cheat using either software or Hardware you actually need to burn the electricity and do the work do the shot 256 work hence proof of work Now you used to be able to mine Bitcoin using CPUs or gpus and you can still try to do that but you’re extremely unlikely to earn any Bitcoin or produce any blocks even if you do it for the next thousand years so now the reality is you Need to use an Asic to mine Bitcoin A6 can cost thousands of dollars during bear markets they cost a lot less during bull markets they cost a lot more and some some people think that this is unfair why not make it so that anyone Can mine your coin and I think this is a nice sentiment but it’s not how the real world Works no one ever says why not make it so that anyone can mine gold this is what modern gold mining looks like and it’s obviously much more toxic to the environment than anything that Bitcoin does so why are Asics better than CPUs or gpus as a method of securing your blockchain for one thing Asics or more energy efficient than CPUs or gpus in other words you get more hashes for the same amount of electricity Energy Efficiency is a good Thing in other areas people seem to like it when washing machine machines and dishwashers are energy efficient More Energy Efficiency means less environmental impact so when people say that Bitcoin miners waste energy this is not technically true Bitcoin miners use energy in the most efficient way known To man by using Asics instead of gpus or CPUs Bitcoin mining is a highly competitive industry and you need to be very very efficient to do it now some communities like Monero have tried to make their cryptocurrency quote unquote Asic resistant in order to discourage Asics from entering the mining game and making It too hard for the little guy to mine now one way to make your crypto Asic resistant is to do a hard Fork every six months and switch hashing algorithms and this is one thing this is one path that Monero has pursued in the past once that whole that once that old hashing Algorithm is switched out your old Asic is basically worthless remember these are machines that do only one thing and so if for example you move away from shot 256 it means all those Bitcoin mining machines are worthless at that point hard Forks brick your Asic and the Idea is that these repeated hard forks will discourage people from trying to develop A6 for your crypto this is how you create a crypto that’s quote unquote Asic resistant so what’s the downside of repeated hard Forks hard Forks put a lot of power in the hands of developers and Those insiders who can get advanced notice us which hashing algorithm will be next and might be able to front run it hard Forks are also very hard on wallet makers and hodlers who might lose access to their coins if they fall into a coma or Rip Van Winkle sleep for a few Years unlike unlike Monero Bitcoin tries not to do hard forks and would only do one in an emergency now here’s another hard truth it’s very it’s impossible to make your your cryptocurrency permanently Asic resistant or Asic proof it’s possible to build specialized Hardware to run any hashing algorithm Any proof of where caching algorithm it may be really expensive to build these machines it may not be economically feasible it may be really difficult it may take a lot of time but it can be done and guess who’s best able to build an Asic that is really difficult and Expensive it’s rich people and Rich companies that have lots of capital in other words the incumbents in the mining industry so Asic resistance ironically has the effect of empowering large corporations that have the cap capital and talent to deal with repeated hard Forks now this is the opposite of what The Monero Community wants since they want to empower anyone to be able to mine with the GPU the thing is your crypto may be being mined with Asics and you won’t even know it until months or years later and this was the case with Monero it was estimated that monero’s Secret A6 made up more than 50 of the hash rate for almost a full year before Discovery in other words a huge fraction of the Monero issuance was centralizing into the hands of a small group and a 51 attack could have been executed at any time and here in this article which I’ll Link to in the description notes below the author goes on to say that he believes that every proof of work coin with a block reward of more than 20 million has a group of secret Asics mining it he sums up the economics by writing the Asic game has become such an Advanced game because there’s so much money on the table so even if you don’t think you have A6 mining your coin you probably do if your coin has a certain real world value it’s really common sense when it comes to Asic resistance and proof of work if you have your money In a giant safe do you want the person guarding it to be holding a knife in which case this would be a CPU or a GPU or a machine gun in which case would be an Asic a much more powerful machine Satoshi understood these things quite well which is why he was secretly Preparing to defend the Bitcoin network with gpus against CPUs if he needed to so don’t let anyone tell you that he wanted the little guy to be in charge of Bitcoin security and I’ll link to my description I’ll link in the description notes below to my video where I talk About satoshi’s secret weapon gpus and Asic resistance and it’s an interesting little piece of history now when Asics first come on the scene for a cryptocurrency like Bitcoin they’re usually being produced by just one company like Kanan back in the old days or bid main which continues to produce A6 today there’s lots of centralization risk there’s the whole problem of most of our chips still being made in China of course but as time goes by A6 become more commodified the longer they’ve been around and the larger your current becomes and you know more companies making them thus reducing centralization Risk so there’s this Asic Horizon you have to pass and as you’re getting close there you get a lot of centralization as we had for example in 2017 in Bitcoin when bitmain was making all the Asics but as you continue forward you actually reduce centralization and the A6 for your cryptocurrency become more Commodified and Bitcoin is the only coin that has successfully made the transition to Asics it hasn’t resisted this in the same way that the Monero Community has no other crypto has been able to do this ethereum can never play catch up and compete with bitcoin’s proof of work so converted to proof of Stake which had the added benefit as we’ve talked about many times have given more control to beneficiaries of its large pre-mind so this is what you need to know about ethereum switch from proof of work to proof of proof of stake and sort of the the dirty underside of it Here’s a list of different Asic manufacturers for Bitcoin again we can see the centralization problem in terms of China this is a problem of course for your phone and computer chips and your automobile chips and for for everything else between China and Taiwan but we are seeing more and more names here United States Israel Etc and now the what’s minor there there is a plant I believe that’s assembling it in the U.S with imported Parts this is a Chinese company but it’s starting to be made here even though even the circuit boards I believe are being made In the U.S now it’s just the chips that are being made in China or Taiwan also block stream in August of 2021 raised some money to move into Asic development and they basically did an aqua hire acquisition of spondulis I’m not sure if I’m spondulis I’m not sure if I’m Pronouncing that correctly their intellectual property this was a Bitcoin mining Hardware manufacturer in other words an Asics company so we have more and more different companies beginning to make Bitcoin Asics and this is a really good thing when it comes to decentralization but you still get to Have your coin protected by the power of Asic machines summary there’s no such thing as a permanently Asic resistant hashing algorithm if your proof of word crypto succeeds if you’re wasting your time with proof of stake there’s no reason even really mention your project but if you’re doing proof of work and if Your proof of work crypto succeeds and becomes worth enough someone will start mining it with Asics whether you’re aware of it or not these may be secret Asics that are then finally marketed to the com to the general public once they become less profitable and I believe This is what bitmain did as well only Bitcoin has successfully made the transition to being secured by generic commodity like Asics Monero has not you also here’s the other thing you also want to own the coin that has the most hashing power protecting it so it makes Zero sense to be in a smaller sha-256 coin like be cash or bsv not just because they’re scammy they have people like csw behind bsv who claim to be Satoshi together a magically unable to sign a single transaction or sign a message but it makes zero sense for Other reasons just for these technical proof of work reasons to be in a smaller shot 256 coin since just a small percentage of BTC miners can launch a permanent empty block attack on either of these and this is another way that bch and bsv lose and why they’re so Fragile as I’ll discuss in this video which I’ll link to in the description notes below now that ethereum has moved to proof of stake it’s really unbelievable bitcoin’s only real competitors in the proof of work Arena are dog ship coins and other dying projects like eth classic and Litecoin If we take a look at the speed how many confirmations are equivalent to six Bitcoin confirmations we can see that Dogecoin is 14 times slower Litecoin is 14 times slower ethereum classic is 35 times slower simply because you need a lot more confirmations to have the confidence that you’re that part of the Blockchain that tip of the blockchain is not going to be Rewritten so in spite of the fact that Litecoin this is very counterintuitive Litecoin has much faster blocks I believe they’re every two and a half minutes instead of every 10 minutes so they’re four times faster block time but in terms of Confirmation And security and in terms of uh reasonable confidence that the blockchain will not be Rewritten it’s 14 times slower and a lot of Litecoin people fail to understand this even to today but the market does understand that Litecoin continues to lose value against Bitcoin as the chart moves down That shows Bitcoin strengthening against Litecoin Bitcoin strengthening against ethereum classic these look like classic pump and dumps and uh if and Bitcoin strengthening against Monero as well and this is the problem of course with competing with Bitcoin it’s so so difficult and we’ve seen one reason today simply because Ace because Bitcoin Has passed the Asic resistant Horizon which is a very very significant accomplishment Bitcoin is already one it’s just not fully priced into the market yet but even hardcore Monero supporters are now moving over to bitcoin instead we’re beginning to see this someone passed on this Seth for Privacy blog post and Seth it looks like used to be basically a Monero maximalist and now he’s focusing on bitcoin because he realizes that bitcoin’s Network effects are much stronger than Monero he also realizes that most people will enter cryptocurrency through Bitcoin and he’s figured out that this is a much Better place to devote one’s energy very smart guys like this who appear to have very smart blogs so this is another way that bitcoin’s Network effects continue to strengthen when you have defections from the Monero Camp into the Bitcoin Camp if you found this video helpful be Sure to hit that subscribe and like button hit the notification Bell if you want to be notified when I publish my next video and let me know your questions and comments in the comment section below thanks a lot for watching and I’ll see you in the next video Get the “Ultimate Guide to Bitcoin” course: https://www.trader.university/courses/38824-the-ultimate-guide-to-bitcoin Use the discount code YT99 to get the best price.In this video, I discuss the downsides to trying to make your crypto “ASIC resistant,” as the Monero community has attempted to do.It is impossible to make your cryptocurrency permanently ASIC-resistant or ASIC-proof.It’s possible build specialized hardware to run ANY hashing algorithm.And once your crypto’s market cap is large enough, you can be sure that someone will be running ASICs to mine it, whether or not you are aware of it.ASIC resistance ironically has the effect of empowering large corporations that have the capital and talent to deal with repeated hard forks.By contrast, Bitcoin has successfully passed the “ASIC horizon.” Bitcoin is being secured by ASICs, but the SHA-256 ASIC manufacturing market has become much more diverse and less centralized over the years.This is a good thing, since ASICs are much more energy-efficient, and they create a much stronger energy barrier that discourages rewriting the chain.
Bitcoin has already won.It’s just not fully priced into the market yet.Even hardcore Monero supporters are now moving over to Bitcoin instead, further helping to strengthen Bitcoin’s network effects.Not investment advice! Consult a financial advisor.
SHA-256 online calculator: https://emn178.github.io/online-tools/sha256.html Gold mines are really dirty and toxic: https://upload.wikimedia.org/wikipedia/commons/8/8d/Kalgoorlie_The_Big_Pit_DSC04498.JPG Secret ASICs in Monero: https://www.newsbtc.com/all/insiders-reveal-asic-mining-inevitable-cryptocurrency/ Satoshi’s Secret Weapon and ASIC Resistance: https://www.youtube.com/watch?v=6FdPd-ZP9_I&ab_channel=BitcoinUniversity List of ASIC manufacturers: https://www.asicminervalue.com/manufacturers Whatsminer being built in the US: https://twitter.com/SinoCrypto/status/1582812239022940161 Blockstream developing ASICs: https://www.prweb.com/releases/blockstream_raises_210m_makes_move_into_asic_development/prweb18139105.htm Why BCH and BSV Are So Fragile: https://www.youtube.com/watch?v=f5RNsgvEd7o&ab_channel=BitcoinUniversity Why LTC and ETC and DOGE are slower than Bitcoin: https://howmanyconfs.com/ The brain drain from Monero into Bitcoin: https://sethforprivacy.com/posts/why-i-focus-on-bitcoin/ I am not being paid or otherwise compensated by any company or cryptocurrency project that I mention in my videos.My opinion is not for sale.Please do not contact me with any affiliate or advertising deals.#Bitcoin #monero #bitcoinmining Disclaimer Neither Bitcoin University, nor any of its directors, officers, shareholders, personnel, representatives, agents, or independent contractors (collectively, the “Operator Parties”) are licensed financial advisors, registered investment advisors, or registered broker-dealers.
None of the Operator Parties are providing investment, financial, legal, or tax advice, and nothing in this video or at www.Trader.University (henceforth, “the Site”) should be construed as such by you.This video and the Site should be used as educational tools only and are not replacements for professional investment advice.There is a high risk in trading.source.
