Charlie Lee, founder of Litecoin, has the tweeted the following in response to calls for changing the altcoin’s proof-of-work algorithm:
People have been concerned about the recent proliferation of ASIC mining, which due to higher litecoin prices relative to one year ago, has become highly profitable. This deviates from the traditional Litecoin ideal of it being a CPU-only, and more recently a GPU-only (Graphics Processing Unit- only) coin.
It has therefore been proposed that the proof of work algorithm be changed to keep thee coin from falling into the hands of ASIC miners and thereby keep it truly decentralized. ASIC mining has recently taken off, evidenced by KnCMiner’s recent selling out of its Titan.
In a thorough rebuttal posted today, Lee et al have discouraged such a motion. They argue that while it is tempting to change to the algorithm and strip ASIC miners from their growing domination, the risks outweigh the merits.
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The major risk is a hard fork forming in the Litecoin chain. While these do occur from time to time with other coins without such detrimental outcomes, such instances are usually bug-fixes or maintenance. Here, the entire face of the coin will change, essentially forming a second coin. Most merchants will understandably stick with the old version, the new version being incompatible with their business. Those electing to accept both with ultimately encounter much confusion. In short, it could be the end of Litecoin as we know it.
Such risks by far outweigh those posed by the current status quo, which doesn’t threaten the coin’s future. In the same way GPU mining didn’t kill the coin, as some had feared, ASIC will likely be the same. Lee ends by saying:
“Litecoin is on a roll right now. Major exchanges (BTCChina, Huobi) have started to support Litecoin. The few exchanges that aren’t supporting Litecoin right now have started to take notice that they are leaving money on the table if they stick to their Bitcoin-only plan. And new exchanges (AtlasATS) are launching with Litecoin support from the start so they don’t miss out. I can’t even count how many times people have approached me at various conferences and said “we are launching an exchange in [country] and we will trade Litecoins.” Venture funds are investing millions of dollars in companies (Kraken, OKCoin, GoCoin) that support Litecoin. Merchants can now use merchant processors (GoCoin, CoinPayments) to help them accept litecoins. Litecoin ATMs (Bitcoin42) are being deployed around the world. Even BitcoinShop has started to accept litecoins! Major players are starting to pay attention to Litecoin.”
The dissertation, which is expanded upon in even greater technical detail later on, implicitly acknowledges shortcomings in Litecoin’s very mandate and architecture, the raging debate being how to best deal with them. One may not be surprised if “rebels” within the Litecoin camp break off to form their own ASIC-resistant coin, perhaps a variant of Litecoin but more likely indistinguishable from the myriad of coins already out there, based off of Litecoin’s protocol but not associated with it in any way.
One may have to chose between sacrificing huge gains in coin value and huge profits for big miners versus changing the very essence of the coin itself. As per Lee’s comments in the altcoin panel discussion at CoinSummit, arguably the greatest output from altcoins is their learnings we gain in perfecting the recipe for the ideal coin.