What Are ASIC-resistant Cryptocurrencies?

Cryptocurrencies have inherited a decentralized structure, designed to encourage the fair distribution of resources. However, as crypto gained popularity and potential rewards have gotten bigger, mining farms are slowly dominating the industry. Hence, farms with massive hashpower have threatened the foundation of crypto decentralization. For example, the sudden drop in Bitcoin network hash rate due to the power outage in one of Chinese mining hubs drove a violent Bitcoin crash.

This in turn has led to the creation of ASIC-resistant coins. Technically ASIC-resistant cryptocurrency can mine coins but it’s not financially feasible because the algorithm used by the protocol does not provide fair benefits over GPU mining. ASIC-resistant cryptocurrencies also translate to a more fairly distributed mining ability for participants with just regular PCs. Ultimately results in a fair distribution of mining resources — keeping the network decentralized.

What Are ASIC-Resistant Coins?

Application-specific integrated circuits, or ASICs, have specific applications in fields such as medicine, satellites, research, and more. In the world of crypto, ASIC-resistant is a term used for crypto coins that are less susceptible to mining by ASIC miners. Such coins have unique mining algorithms and protocols which make it less incentivized for miners to create ASICs to mine the specific coin, hence the term ASIC-resistant.

Ethereum is a classic example of a cryptocurrency built to deter ASIC mining. Even if someone tries to use an ASIC to mine the coin, it’s usually very inefficient in terms of time and cost to do so.