Dedicated ASIC Cards and Blockchain Ecosystem Part 5

How ASIC cards protect blockchain networks: unbeatable hashrate.

 

Blockchain networks are peer-to-peer systems that can exist only when users agree on the value of the tokens of these systems. The way blockchain networks operate provide an absolutely ingenious way to connect digital value and digital resources to what is happening in the physical world. To obtain some digital currency, a person either needs to buy it with regular money, get paid in it, which means exchanging work for it, or mine it, which requires buying equipment, burning electricity and doing a lot of computations.

All these ways of getting cryptocurrencies are connected to what is happening in the real world. They are not just about the digital space. A new block on a popular blockchain such as Bitcoin costs thousands of dollars in electricity and some of the most powerful computer equipment in the world. If someone were to change the history created by these blockchains, according to the laws of physics they would need to spend at least as much in resources as the network has already spent, which is a tremendous number.

 

How ASIC cards add protection to blockchain networks: unbeatable hashrate

When people talk about ASIC cards, they often talk about the issue of centralization and how there are just a few companies producing the cards. According to this viewpoint, having ASIC cards contradicts the principle of decentralization of blockchain networks and gives certain parties too much power.

While this argument does have some validity to it, using ASIC cards comes with both disadvantages and advantages. The main disadvantage is potential centralization of network-specific equipment in the hands of a handful number of parties. However, ASIC cards also come with advantages and one of the main advantages is protecting a network from external attacks. Here’s why this is an advantage and here’s how ASIC cards protect the networks.

Network-specific ASIC cards can do one thing, yet do it really well, which is generate hashes for the blocks of the blockchain that they’ve been built for. This means that if someone is using non-ASIC hardware, the efficiency of this hardware is going to be thousands times less compared to a network-specific ASIC card. If an attacker where to attack the Bitcoin network and use something else than ASIC cards to recreate the blocks of the blockchain, the attacker would need a tremendous amount of equipment. This is the reason why even current models of supercomputers do not really pose a threat to the Bitcoin network and a relatively small number of ASIC cards would have a bigger total hashrate than a super computer.

An analogy between an ASIC card and a sports car doesn’t end with both the card and the car having extremely powerful performance in a small number of tasks. ASIC cards are also really expensive compared to a regular computer with a regular processor and a regular graphic processing card. The costs of the cards actually add protection to the cryptocurrency networks. If you spend money on an ASIC card that is good only for mining a cryptocurrency on a certain network and you are not using the card for mining, you are essentially wasting money. The waste comes from spending cash on a card and from losing money that you’d get as a reward for mining a cryptocurrency. For this reason, it is safe to assume that most ASIC cards today are in use mining cryptocurrencies in a legitimate way.

This is the reason why when talking about potentially overtaking a blockchain network such as Bitcoin many experts simply ignore the costs of electricity and only talk about the hashrate. It is very unlikely that there could be a combination of other devices on the planet, including all the data centers of global corporations such as Facebook, Microsoft and Amazon, that could pose a challenge to the current hashrate of all miners on the Bitcoin network. For this reason, talking about electricity and other expenses isn’t even necessary.