Cryptographic hash functions are vital security components of current computers. They form a key part of digital signatures, message authentication codes, and other security protocols.
So far, there are four series of cryptographic hash functions generally known as Secure Hash Algorithms (SHA). These are SHA-0 (published in 1993), SHA-1 (published in 1996), SHA-2 (published in 2001), and SHA-3 (published in 2015).
In 2007, the National Institute of Standards and Technology (NIST) opened a public competition to develop new hash functions that would replace SHA-2.
The competition accounted for 51 participants. BLAKE was announced as one of the five finalists in 2010, but lost to Keccak in 2012, which was selected for the SHA-3 algorithm.
Blake256 or Blake256r14?
Blake256 and Blake256r14 are virtually the same, the only difference being their rounds of hashing. The first Blake256 had only 10 rounds of hashing, but this was less secure. Therefore, the rounds of hashing were increased to 14 to improve the security. This birthed Blake256r14 or Blake 14r.
What is Blake256r14?
Blake256r14 was constructed based on the Hash Iterative Framework (HAIFA). This framework fixes the security flaws and complexities associated with the Merkle and Damgard hash function. Because it is built on HAIFA, Blake256r14 is easy to analyze. It also increases the security of iterative hash functions. Its 14 rounds of hashing not only improve its security, but its speed.
Being a SHA-3 finalist means that it was reviewed carefully and also brutally attacked by renowned crypto analysts in order to identify its security flaws. Blake256r14 allows efficient hardware implementation leading to stronger proofs necessary for network security.
Blake256r14 and Crypto
Blake256r14 is not used widely as a hashing algorithm in crypto. Only one coin uses this algorithm: Decred.
Decred (DCR)
Currently ranked 83rd by market capitalization, Decred was created in 2016 to foster open governance, community engagements and sustainable funding policies. The project was designed so that the community validates every transaction and modification made to the protocol. This means that even large token holders cannot manipulate the protocol.
The coin uses a hybrid PoW/PoS consensus mechanism. The PoW is used to mine new blocks on the chain, of which miners receive 60% of the reward. The PoS consensus, on the other hand, enables users to participate in a ticket-holder voting system, and offers 30% of the block reward.
Despite the merits of Blake256r14, it is important to note that the algorithm is not ASIC resistant.
ASIC Resistance and its Importance in Crypto
To understand ASIC resistance, we must first go back to the original intent of blockchain technology: decentralization. Blockchain transactions are verified by miners after solving blocks using computational power. Satoshi’s intent was that every miner contributes fairly to the blockchain network, thus creating a purely decentralized system.
In the early days of crypto, mining was done using CPU and GPU hardware (although it is now possible to mine crypto with a mobile phone). As the crypto space gained popularity, top Chinese companies began developing ASIC machines.
ASICs (an acronym for Application Specific Integrated Circuits) dominate the entire Bitcoin network and make it impossible to mine BTC using consumer-grade hardware. This, to some, erases decentralization and defeats Satoshi’s aim of not concentrating power in the hands of one entity.
Since the advent of ASICs, mining algorithms have undergone a series of evolutions so as to resist ASICs. First, there was the SHA256 algorithm for Bitcoin, then Litecoin’s Scrypt algorithm, which was then followed by Dash’s X11 algo and Ethereum’s Ethash.
It is important to note that ASICs themselves are not the problem. They are powerful, energy-efficient, cost-effective systems for crypto mining. As a matter of fact, they are more secure than GPUs. So if ASICs have these advantages, why are they a threat to miners?
Why Miners are Sceptical About ASICs
Because of the amount of power ASICs possess, miners fear that they can be used to initiate a 51% attack. A 51% attack refers to a situation where a miner or group of miners control over 50% of the mining power, computing power or hash rate on a blockchain network. With this control, a miner or a group of miners can block the processing or confirmation of new transactions.
So ASICs in themselves do not centralize the blockchain network. Rather, they can be exploited by corrupt miners to dominate and centralize the network. Cryptocurrencies such as Monero have upgraded their algorithm to be ASIC-resistant, but Decred still maintains its non-ASIC resistant Blake256r14 algorithm.
Why Decred is Using Blake256r14 Despite Non-ASIC Resistance
Blake256r14’s non-ASIC resistance is the very reason Decred uses the algorithm. This is an interesting irony. While other cryptocurrencies are trying to resist ASIC, Decred (DCR) is embracing it. A Decred developer revealed the following on Reddit:
“It would take me a while to delve into everything here in detail, but the short answer is that Decred was built with ASICs in mind and their development is a favorable outcome.”
Decred chose an algorithm that could be efficiently implemented in hardware. For them, switching to ASIC-resistance is not even feasible. According to the dev, it would be “an exercise in futility.” Algorithms can only be ASIC-resistant, not ASIC-proof. So resisting ASICs, which are powerful, energy-efficient and cost-effective, would only create a loophole for noxious methods of centralization, such as botnets. And as the dev pointed out, the crypto space has seen this happen:
“[…] For example, the rotating algorithms suggestion has already been deployed by Vertcoin and it was effectively defeated by botnets that took over the network. CryptoNote tried CPU-friendly mining with the same result. Litecoin tried a memory hard algorithm (scrypt) and ASICs were eventually developed for it too.”
Decred believes that PoW would always lead to centralization due to the financial cost of PoW. Capital costs for PoW mining increase with time while profits decrease. It doesn’t matter if the mining is done with a GPU farm, an ASIC facility or a botnet.
Therefore, Decred isn’t bothered about fighting centralization. Rather, they are using a hybridized PoW/PoS consensus mechanism to cope with it. Decred miners receive a single decentralized vote through the PoW, which is then checked by stakeholders through the PoS consensus.
Conclusion
It may seem as though Blake256r14 is the algorithm to redeem the reputation of ASICs. Miners are currently skeptical about ASICs because they are concentrated in the hands of a few. But what if they are deconcentrated by mass production? Wouldn’t this restore the original purpose of a purely decentralized cryptoverse unafraid of a 51% attack?
Blake256r14 may just be another algorithm and an unpopular one at that. But it may likely pave the way for a mining revolution.
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