What is Scrypt-N

27 Mar 2017

Today, Bitcoin is considered the safest cryptocurrency out there. Not only has it withstand the test of time, it is also the network with the most computational power in the world. However, this security comes with a cost, centralization. When Bitcoin was first created, mining was done in CPUs, meaning that anyone could mine from their home computer. As mining evolved, GPU miners came along and then came ASICs (Application-specific integrated circuit).

ASICs are basically big calculators that have only one purpose: To solve one or various specific algorithms. In Bitcoin’s case, this algorithm is SHA256. Due to this specialized machines,Bitcoin mining has become a largely industrialized practice, available only to those that are capable of hosting large mining operations. This is because mining companies have an easier time selling their hardware in bulk.

Since ASICs are specific for the job, they have made it impossible for regular users to mine from their homes due to the difficulty increase they brought to the network.

In light of this centralization, one of the most popular altcoins today was created, Litecoin. The idea was to employ an algorithm with high mining requirements as a means to bring back CPU and GPU mining. Although Litecoin was able to do this with its Scrypt algorithm, it also didn’t last long.

Companies were able to build ASICS for Scrypt despite the high memory requirements and no upgrade or change has been made in the network in order to change this situation. As so, Litecoin has failed its initial purpose.

However, changing the algorithm after ASICs are built would probably be impossible in Litecoin. Since miners are required to vote on changes to the network, these would just vote against any change that would render their expensive mining equipment useless, as he would have a direct monetary incentive to do so. As so, one must assume this issue of centralized mining must be dealt with from the start.

Enter Scrypt-N, an algorithm brought about by Vertcoin. The idea behind the algorithm is that even if the memory requirements of the Scrypt algorithm used by Litecoin were adjusted, there would always come a time when it would not be high enough to render ASIC development impossible. Since this issue must be dealt with from the start, Scrypt-N is a perfect solution.

Scrypt-N relies on the “Adaptive N-Factor” in which  N is the memory required to complete new hashing functions. The idea is that N (memory requirement) will always increase over time, rendering ASIC development unfeasible.

This system allows small scale miners to exist. Mining becomes more distributed as everyone has access to CPU or GPUs. Even though some users can build large mining operations with multiple computers (rigs), smaller miners can still stay afloat as this kind of hardware is widely available.

Instead of using a fixed value of 10, such as Litecoin does, the Vertcoin N-factor begins at 11 and gradually increases over time using the following schedule:

| N         | Memory| Timestamp   | Date/Time                     

|----------|----------|----------------|----------------------------------------|

| 2048     | 256 kB | 1389306217  | Thu, 09 Jan 2014 22:23:37 GMT 

| 4096     | 512 kB | 1456415081  | Thu, 25 Feb 2016 15:44:41 GMT

| 8192     | 1 MB   | 1506746729  | Sat, 30 Sep 2017 04:45:29 GMT

| 16384    | 2 MB   | 1557078377  | Sun, 05 May 2019 17:46:17 GMT

| 32768    | 4 MB   | 1657741673  | Wed, 13 Jul 2022 19:47:53 GMT

| 65536    | 8 MB   | 1859068265  | Tue, 28 Nov 2028 23:51:05 GMT 

| 131072   | 16 MB  | 2060394857  | Tue, 17 Apr 2035 03:54:17 GMT

| 262144   | 32 MB  | 2463048041  | Sun, 19 Jan 2048 12:00:41 GMT

| 524288   | 64 MB  | 2999918953  | Fri, 23 Jan 2065 06:49:13 GMT 

| 1048576  | 128 MB | 3536789865  | Wed, 28 Jan 2082 01:37:45 GMT

| 2097152  | 256 MB | 5684273513  | Mon, 16 Feb 2150 04:51:53 GMT 

| 4194304  | 512 MB | 7831757161  | Sat, 07 Mar 2218 08:06:01 GMT

| 8388608  | 1 GB   | 9979240809  | Thu, 25 Mar 2286 11:20:09 GMT

| 16777216 | 2 GB   | 16421691753 | Fri, 19 May 2490 21:02:33 GMT 

| 33554432 | 4 GB   | 22864142697 | Sun, 15 Jul 2694 06:44:57 GMT 

However, the problem of Mining pools still remains. Mining pools, despite providing a useful service, centralize the network on a couple of full nodes that end up making all the decisions in the network. Although miners can always change pool to allow their hashpower to be directed to a pool that votes on the proposals they want, there will always be miners that will rather not change due to fees or convenience.

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