CryptoNight is a cryptographic algorithm utilized in the mining of certain Proof of Work blockchains. It made its debut in the digital currency world with Bytecoin (BCN) in July 2012. Since then, several blockchain initiatives have incorporated the CryptoNight protocol. Of the leading 10 CryptoNight-powered blockchains by market cap, CryptoNight secures assets worth over $130 million as of now
In this article, we delve into the origins of CryptoNight and its modifications by notable blockchain ventures. Subsequently, we'll evaluate its efficiency against other Proof of Work cryptographic mechanisms.
Why Is CryptoNight Important?
The inception and integration of CryptoNight hinge on two pivotal objectives: untraceable transfers and resistance to ASIC. To grasp the rise of CryptoNight as a dominant solution, one must look at the challenges that prevailed before 2012.
Untraceable Transactions
Bitcoin was once mistakenly dubbed in the media as an "untraceable asset." This perception is far from the truth. In reality, transactions in digital currencies on open, decentralized ledgers offer more transparency than their fiat counterparts. With someone's public address, viewing their balance, transaction history, and more, is straightforward.
To address these privacy concerns, CryptoNight was crafted as an adept mechanism for executing private blockchain trades. The creators embedded two pivotal privacy tools: ring signatures and stealth addresses.
Though these features met the privacy enhancement target, they also led to the removal of certain privacy-centric coins from mainstream cryptocurrency platforms due to regulatory apprehensions.
It's worth noting that CryptoNight-driven coins weren't the sole cryptocurrencies to face delisting because of privacy attributes that regulators found unsettling. Zcash, underpinned by the Equihash protocol, faced a similar fate on some platforms. However, with Zcash, users can opt between privacy (z-addresses) and transparency (t-addresses). In contrast, CryptoNight's design inherently emphasized privacy.
CryptoNight's Stand on ASIC Resistance
One of the core motivations behind CryptoNight's creation was to counteract the growing influence of ASIC mining rigs, which threatened to centralize cryptocurrency mining.
Although the first commercial ASIC mining rigs appeared in 2013, after the inception of CryptoNight, the CryptoNight developers foresaw a landscape where ASICs would dominate. They aimed for a system where GPUs and CPUs could retain their competitive edge in mining.
Unlike Bitcoin's SHA-256 hashing algorithm, which demands less computational memory, CryptoNight was engineered to be more memory-intensive. While Scrypt, another hashing algorithm, attempted to resist ASICs by requiring more memory, it didn't match the ASIC resistance level that CryptoNight aimed for.
CryptoNight's Origins
While CryptoNight is a widely recognized hashing algorithm, specifics about its beginnings remain elusive. What's certain is its impact on the cryptocurrency landscape.
Distinguishing CryptoNight from CryptoNote
The similarity between these two names tends to create some confusion. The simplest explanation is that CryptoNote is the consensus mechanism, and CryptoNight is the hash function within it. All CryptoNight coins are CryptoNote coins, and vice versa. Thus, they are often used interchangeably when referring to their implementations in various blockchain networks.
The Mystery of Nicolas van Saberhagen
TNicolas van Saberhagen is the recognized architect behind cryptonight as mentioned in the CryptoNote v2.0 whitepaper from October 2013. He's also acknowledged in the CryptoNote Standard 001, released in December 2011, as a foundational text for CryptoNote and cryptonight. Though he accepted an in-person speaking invitation at a workshop, van Saberhagen was a no-show, only connecting via Skype with a voice anonymizer.
The First Implementation of CryptoNight
CryptoNoteCoin uses cryptonight technology. Yet, its developers reset the network’s genesis block bi-monthly, ensuring CryptoNoteCoin doesn’t attain monetary value. As a result, platforms like Coin Gecko or CoinMarketCap don't list CryptoNoteCoin.
Bytecoin (BCN) claims the distinction of being the first digital currency to employ cryptonight. In 2011, its developers conceived and coded it, launching its genesis block in 2012 without a hard fork.
Prominent Projects Employing cryptonight
Here's a glimpse at five significant digital currencies utilizing the cryptonight hashing technique and their positions on ASIC resistance.
A range of modified cryptonight algorithms exist, like CryptoNight Lite and CryptoNight Heavy. A comprehensive chronicle of cryptonight project initiations can be found here.
Bytecoin (BCN)
The inaugural cryptonight-based currency was Bytecoin. Initially, it touted ASIC resistance.
But, the project later shifted its stance. A 2018 announcement revealed Bytecoin’s decision to favor ASIC mining, preserving the original cryptonight algorithm.Bytecoin’s reservations about changing algorithms stem from possible risks to security and anonymity, noting the intrinsic coin value is anchored in PoW and its consensus defense capabilities, seeing ASIC miners as protective.
Though Bytecoin is exploring GPU support, it proposes miners consider ASIC rigs. It concedes that banning ASICs might be in vain, given that upcoming ASIC versions will have FPGA devices, adaptable to minor algorithm changes.
Monero (XMR) [No Longer Uses CryptoNight]
Of all cryptonight coins, Monero has been the most dedicated to thwarting ASICs.
In 2018, Monero transitioned from original cryptonight to CryptoNight v7, targeting ASIC producers like Bitmain. This move resulted in four new currencies: XMO, XMV, XMC, and ZMR.
Despite their efforts, by the end of 2018, ASICs rejoined the network. A study in 2019 revealed that ASICs constituted a significant network hashrate chunk. This finding triggered another fork to CryptoNight R. This series prompted Monero to develop RandomX, an innovative blockchain consensus approach.
Electroneum (ETN)
Electroneum's view on ASIC resistance has been inconsistent. In 2018, they switched from the original cryptonight to CryptoNight v7.
Electroneum's CEO, Richard Ells, commented on their transition saying GPU miners swayed their decision, but later departed, compromising the network's profitability and security.
After the shift, network vulnerabilities emerged. The network hashrate plummeted dramatically, rendering it susceptible to attacks. By mid-2018, Electroneum reverted to the original cryptonight, sparking community debates.
HYCON (HYC)
HYCON uses the CryptoNight v7 algorithm. HYCON (HYC) initially planned to implement a Blake2b hash function as part of its system. However, an updated whitepaper published in May 2019 revealed that the project would choose CryptoNight due to its higher ASIC resistance. This updated whitepaper also mentioned that developers would use periodic changes to the algorithm as a deterrent. The project GitHub includes repositories linking to HYCON-specific mining rigs for CPUs, Nvidia GPUs, and AMD GPUs.
Dero (DERO)
Dero (DERO) is aligned with the original CryptoNight algorithm and seems to support ASIC miners. The project website even connects users to the Bitmain Antminer X3 product page. However, the project has considered modifying its algorithm.
In October 2019, Dero discussed Monero’s RandomX algorithm, indicating potential security issues during testing and dependencies on chip manufacturers. Unexpected shifts from these manufacturers could result in issues for the network, such as invalid proofs. Given these concerns, Dero opted to remain with CryptoNight for the foreseeable future.
How Effective Has CryptoNight Been At ASIC Resistance?
CryptoNight, despite its intentions, has not robustly resisted ASICs. It outperformed other algorithms like SHA-256 for some time, but ASICs started dominating in early 2018.
Struggles To Combat ASICs
Monero, as a key player among CryptoNight coins, demonstrates the challenges faced. Monero acknowledged that consistent hard forks can decentralize mining but require more dependence on developers.
This often leads to unintended outcomes, such as the emergence of new forked coins and reduced core project support. ASIC producers adapted rapidly to algorithm tweaks, often within a month. This fast adaptation allowed them a quick return on investment.
In summary, CryptoNight projects often had to prioritize among private transactions, network security, and ASIC resistance, with most opting for the first two. To achieve all three, changing the algorithm entirely seems practical.
Monero Switches To RandomX Algorithm: Will Other Projects Follow?
On December 1, 2019, Monero announced a successful mainnet hard fork implementing RandomX.
Monero’s shift has garnered both interest and skepticism from other CryptoNight projects. Besides prior criticisms, concerns about increased botnets and mining malware have been raised.
Monero counters by suggesting that increased memory usage will be detected by administrators, resulting in decreased threats. A reduced network hashrate should also benefit legitimate miners, whether on CPUs or GPUs. Early results indicate CPUs outperforming GPUs in hashrate, but efforts to improve GPU competitiveness are ongoing.
With RandomX still to prove itself on the mainnet, focus shifts to its adoption beyond Monero. Arweave, aiming to facilitate serverless internet data storage, also employs RandomX. Arweave funded the initial audit before the algorithm's public test, while the Monero community financed the remaining three.
Improving Proof of Work Consensus Algorithms
Two major viewpoints exist in the blockchain sector concerning ASIC mining rigs: endorsing them for the augmented security they offer, or resisting them since these specialized miners promote centralization in a blockchain's peer-to-peer network.
Many CryptoNight-focused projects have endorsed ASICs, acknowledging mining centralization as a concession for network safety and sustained feature compatibility. Conversely, some have made ASIC resistance their utmost priority, much like Monero's multiple hard forks culminating in its transition to CryptoNight. Pertaining to ASIC resistance, every PoW blockchain shares this challenge. ASICs' emergence affects algorithms like CryptoNight, CryptoNight, and more.
Komodo's team is committed to making networks more equitable and open by tailoring blockchain consensus methods. Thanks to Komodo's diverse architecture, developers have the liberty to initiate a Komodo Smart Chain with personalized consensus stipulations.
Available choices span from Proof of Work, Proof of Stake, or an amalgamation of both. Opting for PoW? Decide between CryptoNight or CryptoNight hashing procedures. The Proof of Stake framework presented by Komodo can seamlessly merge with Proof of Work consensus regulations. Moreover, the Komodo developers aspire to introduce additional algorithms shortly, with CryptoNight as a prominent contender.
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