Monero Hard Forks Successfully: Four New Projects The Result
It has indeed been quite an eventful past few weeks for Monero (XMR). The privacy conscious cryptocurrency has had to go through a hard fork in order to stave off the impact of ASIC miners on the network.
The hard fork was completed at Block number 1,546,000. This block was reached at about 8:20 UTC on Friday morning. The software upgrade went live with version 12 and those in the community eagerly watched the rate of adoption.
In the end, the hard fork was a success as many of the miners decided to upgrade to the new version of the software. Some of the hashing power that came from Botnets dropped off initially but this is likely to pick up soon again.
The upgrade has also resulted in the creation of four new Monero coins. They were all driven by developers who wanted to use the hard fork opportunity to support a coin which they thought should be “the Monero”.
Let’s take a deeper look into Monero’s busy week and the coins it sprouted.
Why The Fork?
Everyone knows that mining centralisation is a big problem for all distributed cryptocurrencies. When one miner or mining pool gets too much power they can effectively attack the network through something called a 51% attack.
Moreover, miner centralization leads to other negative externalities where the miner will attempt to drive technological changes based on their own self interest. We saw all of this last year with the discussions around SegWit2X and the Bitcoin fork.
For Monero, Miner centralisation is even more of concern given that the cryptocurrency is privacy focused. Those who use Monero do so because of the advanced privacy protocols that hide transactions and keep it completely anonymous.
Sick of ASICs
One of the tools that miners can use to help centralize their power is an Application Specific Integrated Circuit (ASIC). These are essentially machines that are able to mine coins much more efficiently than any GPU miner can.
The most prolific maker of these ASICs is Bitmain. Bitmain is not only the largest manufacturer of ASICs in the world but they are also one of the largest miners in the world and control massive hashing power on a number of different cryptocurrency chains.
Bitmain has introduced many different ASICs that are able to mine other cryptocurrency much more efficiently than the GPUs. Other cryptocurrency chains have similarly despised this and some have even threatened to implement similar hard fork solutions. We saw this in the Siacoin Bitmain battle earlier this year.
Bitmain officially released a tweet stating that they will be introducing their own version of a Monero ASIC. The Antminer X3 was announced which would mine cryptocurrencies that relied on the Cryptonite hashing algorithm.
Monero is based on this hashing algorithm and the developers were not happy. After this announcement the lead Dev of Monero, Riccardo Spagni tweeted in response to the Bitmain announcement.
The Monero developers were perhaps already aware that Bitmain had developed some sort of cryptonite ASIC and were already mining Monero in private with it. Prior to this public announcement by Bitmain, they had decided that the best way to defang the impact of the ASIC miner was to slightly alter the Monero protocol.
Changing a protocol like this requires a hard fork and this would make Monero the first coin to fork away the threats of ASICs. They also took the time to improve on some security features of Monero. Lastly, there other developers who saw it as an opportunity to drive their own coins.
More Rings, More Monero
In terms of security enhancements, the Monero developers increased the minimum ring size on transactions from 5 to 7. Ring confidential transactions are one of the fundamental pieces of technology on the Monero protocol.
They are able to create a “plausible deniability” for all transactions on the network. By increasing the ring size, the developers are increasing the robustness of the protocol as well as reducing the chances of any sorts of de-anonymization attacks.
Ring size was an important talking point recently given other attempts to fork the Monero chain into competing cryptocurrencies. The project, called MoneroV, was viewed suspiciously by the community and raised questions about privacy when transactions take place on the different chains.
Sounds like it should be a no brainier to upgrade right?
This was not the view taking by some other developers. They wanted to create their own Monero coins that operated based on the older technology. The result are the coins that follow:
This project was initiated by some “Monero Enthusiasts” in Singapore. One of the developers for the group called Bento Tan said that the ASICs can be healthy for the ecosystem and that hard forking the monero chain will produce bigger risks that than the ASICs will themselves.
He gave an interview to Bitcoin magazine and stated the following:
The main message of Monero Classic is that we believe that the developers changing the proof of work creates more centralization and harms decentralization
He went on to claim that the Monero developers insituting a change to the algorithm now demonstrates that they can and will make changes to it in the future.
There was no trademark on Monero Classic as another fork has labelled itself “Monero-classic” (XMC). Both are no doubt trying to make the most of a well established name in Ethereum classic.
This XMC has been started by another Monero enthusiast called PZ. In a similar script to that presented by the Singapore developers, PZ was of the view that ASIC miners are the natural result of a free market economy. He also stated that:
if there are professional mining machines, the events like ‘Monero was attacked by more than 500,000 botnets’ could be avoided
Of course, one should view this project with an air of suspicion. That is because one of the pools that is supporting XMC is Antpool which is Bitman’s mining pool.
This has led many to believe that Bitmain has given some financial backing to XMC and has financial incentives to keep the coin functioning. You can view their website here.
Monero 0 or XMZ, was created by a bunch of “concerned users”. On their website they have claimed that these network updates by the Monero developers are a “trojan horse” that could compromise the network in the long run. They went on to say:
The so-called "network upgrades" that are centrally mandated by the Monero Project are a trojan horse designed to compromise the effectiveness of Proof of Work in the Monero network. Monero 0 is not a fork, it is the original Monero
Like Monero Classic and XMC, Monero 0 will work on version 11 of Monero. In another interview with Bitcoin magazine, the developer said that Monero 0 is an NVDA project and that "proof of fork is not a consensus method”.
Monero Original (XMO) does not have a website unfortuantely so there is much less information that one can glean from their incentives. There is, however, a Github page for the project. The developer behind the project told Bitcoin magazine:
We are providing the Monero fans [with] a possibility to support the iconic coin and stay on the original chain. Monero Original team stands for diversity, which is a logical marker of evolution. We are excited to see our favourite coin mature, and we are even more excited to help [in] keeping this diversity
While there is relatively little we can gather from the Github, the coin seems to have gained a great deal of support from exchanges including HitBTC.
So given all of these coins that have forked from Monero, one would be tempted to claim all the free coins. However, given the nature of Monero’s protocol, there are a number of complications with doing so.
Replay and Privacy Attacks
When it comes to blockchain forks, one of the common concerns that people have is that of a blockchain replay attacks. These are sometimes avoided through the use of specifically developed replay protection mechanisms.
The Monero developers have not built in any sort of protection. This means that those users who decide to spend their XMR on the new blockchain could also open themselves up to a similar transaction on one of the other chains.
Thankfully, for those users who are only using Monero on the old blockchain, the risk of a replay attack does not exist. This is because of the change in the default ring size on the new protocol, transactions on the old chain will not be valid.
However, the risk of replay attacks for those who use the new updated chain are still present. This is because the default transaction on the new chain is still valid on the old chain which means someone can still perform the attack.
The risk of replay attacks decreases as we move farther from the fork as more transactions take place. This is because of the coin mixing that takes place in Monero transactions. As more mixing occurs, the likelihood of mixing with coins only valid on one chain increases.
Don’t be fooled though, there are other risks.
Just like the concerns that many had with the MoneroV fork that we mentioned above, using coins on both chains increases the risk of de-anonymisation. Hence, those users that were really concerned about their privacy are best advised to only use one chain.
This is probably one of the reasons that the Monero devs have decided to increase the size of the default rings. This will reduce the risk of discovering the real transaction by identifying spent transactions.
Monero Leading the Way
Irrespective of the risks that could have been presented by the hard fork, it seems as if it was a success. Mining hashing power is returning to the original chain and many in the community are cautiously optimistic.
Moreover, this is the first time that a cryptocurrency chain forked it’s code in order to neuter an ASIC manufacturer. This could also create a precedent where Bitmain may be more inclined to think twice before challenging a determined community.
What about the free coins?
Currently, it does not seem as if any of these alternative coins will have the potential to challenge the new version of Monero. There are some that have labelled them as nefarious and users should approach with caution.
There is even another supposed coin that has forked called MoneroC. Their website is up by there is no information as of yet. At least they did’t call themselves Monero Classic.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.