We would like to make a formal statement to address the release of the new Baikal BK-G28 ASIC which supports our Groestl algorithm. Many of you have had questions and discussions regarding whether Groestlcoin will or should hard-fork to a new Proof-of-Work algorithm.

A testament to Groestlcoins recent success

ASICs are largely considered the devil for altcoins and altcoin mining, and with good reason. As a community and as the Groestlcoin team, we would love for the security of Groestlcoin to increase whilst remaining a GPU-only coin. Unfortunately, as the coin becomes more successful, people will ultimately create ASICs for any algorithm that is profitable, and the production of ASICs are a testament to the booming success Groestlcoin has been over the past year. The time has come to look at how these ASICs affect Groestlcoin as a community and as a cryptocurrency.

Initially, it makes sense for the developers to change the PoW algorithm to keep mining decentralised. ASICs threaten the original goal of Groestlcoin and it threatens the mining profitability of GPU miners. We are aware that a small majority of the Groestlcoin community vote for changing the PoW algorithm whenever there is a poll or discussion on the matter. This statement will try to explain as best we can the effects of a hard-fork of this nature and the constant struggle that would follow.

Are you hard-forking?

Ever since the genesis block of Groestlcoin over 4 years ago, it has faced these hard-fork dilemmas. At first, it was purely a CPU-only minable coin, a month later, it was made possible for GPUs to mine Groestlcoin. Around a year ago, open source implementations of FPGAs started popping up on Github. Now Groestlcoin faces its first ASIC. At each stage, the consideration to hard-fork to another algorithm was discussed and at each time to this pointit was agreed that no hard-fork was necessary. Based on these decisions over the past 4+ years,Groestlcoin is still standing and has seen vast growths in community and development.

With the revelation of ASICs for Groestlcoin, the discussion was met again with all the developers and after heated discussions, the unanimous consensus amongst the team is to not hard-fork away from ASIC miners. Given the recent 51% and double-spend attacks performed on several big-named altcoins over the past two years, our personal views on ASICs have changed dramatically. We now undoubtedly believe that; for the reasons we hope to express in this statement, ASICs are the correct and inevitable evolution for any successful cryptocurrency.

Why has this decision been made?

We do not feel that any PoW algorithm in existence today can be considered GPU-Only, if there aren’t ASICs for an algorithm, chances are there will be, and we can guarantee there are FPGAs in production that are far out-weighing the profitability and usefulness of GPUs.The issues behind running from an ASIC each time it is found after each algorithm change are as follows:

· Make no mistake, hard-forks are messy and can be disastrous if not handled with finesse. With each algorithm change requires a hard-fork, and with each hard-fork splits the coin into two chains and all nodes (users, exchanges, pool operators etc.) must then move to the new chain. It can be considerable work for node operators to update the nodes/wallets to continue operating.

Hard-forking due to major bugs in the code is obviously necessary, however, it is far more difficult to convince node operators to keep operating the new chain if just for an algorithm change. With a relatively small cryptocurrency, this proves difficult, and if two chains were to split and consensus fails, the fungibility of Groestlcoin could be destroyed — You can imagine the issues that come from a split chain, consider a merchant is accepting Groestlcoin but is still on the old chain, and you send Groestlcoin from the new chain. That merchant would not receive the payment. Also consider if Exchange 1 moved to the new chain but Exchange 2 did not, and you tried withdrawing your funds between exchanges.

· After the algorithm change, our hash rate will inevitably decline. With a smaller hash-rate and lower difficulty, the blockchain is more vulnerable to attack via 51% attacks and double-spend attacks. Pool operators may stop supporting Groestlcoin or take time to support the new algorithm and miners will find new coins to mine.

· Mining with a GPU is not more decentralised. There are people running over a thousand GPUs mining farms currently doing the same as what ASICs will do, but at a higher monetary environmental cost.

Finality, Security, and Risks

It is the duty of the developers of a decentralised currency to ensure that the network is secure and functions the way it was intended to function. For Groestlcoin to succeed as a currency we need transaction finality i.e. once a transaction is confirmed, the users want to know that nobody can take this money away from us — This is what we are trying to move away with a cryptocurrency as opposed to a traditional FIAT banking system, aren’t we? Proof-of-Work provides that, the history of the chain must not be altered without doing a lot of work. With Groestlcoin, we know that the only way we can lose that money is if an alternate history appears that doesn’t include our payment, and that alternate history has more work than the history we see.

The facts remain that GPU-mineable coins are far more prone to being attacked than coins with ASICs and ultimately the security of the blockchain must be the core priority of the Groestlcoin core developers in order to protect the community’s funds from future potential attacks. If nobody mines Groestlcoin, the coin dies, if the coin is 51% attacked, the image of the coin is dramatically damaged as well as potentially people’s funds and can lead to delisting’s or permanently high confirmation requirements. The purpose of Proof-of-Work is to make attacking as expensive as possible, and ASICs help to achieve this.

We have already touched upon some of the issues that come with low-hash-rate PoW cryptocurrencies, but we’d like to take a moment to explain further the risks of GPU-Only mining. Many of you would have seen of the issues other cryptocurrencies have faced in the past year with regards to 51% and double spend attacks and the damage that they have done to the image of the coins. As we mentioned above, having an ASIC developed shows that Groestlcoin has been successful thus far, and now Groestlcoin can be protected by hardware from these catastrophic attacks. The value of a cryptocurrency can only truly be quantified by how secure the network of that cryptocurrency is.

With more security comes with it the reduced risk of 51% attacks where a single centralised entity can change the history of the blockchain, or exclusively mine all empty blocks and claim the block rewards for themselves — Grinding transactions to a halt and effectively killing the chain. Additionally, an attacker would be able to double-spend coins which we’ll not go into detail but has been discussed in great depth elsewhere. For coins with ASICs, the incentives to protect the network against this manipulation protect against this type of user manipulation, due to the costs associated with ASICs.

The decentralisation gained with a fairly distributed hash-rate of GPU-miners is overshadowed by the fact the currency is considerably more vulnerable to 51% attacks by centralised parties.We hope you’ll agree that the advantage that ASIC-mining have in the longer term over GPU-mining are plentiful.

So… Embracing ASICs

With all things considered, we believe embracing ASICs is more viable than trying to fight them off to the detriment of the coins security and the risks that come with that. However, we do not believe that any cryptocurrency should embrace an abusive ASIC monopoly. ASIC manufacturers have a vested interest to protect the network from attack in order to protect their long-term investment of the manufacturing and maintaining of their developed hardware. We feel we should all accept ASICs as a sign of coin maturity.

For those community members screaming that ASICs are a disaster, please know that ASICs will not kill Groestlcoin. ASICs were first seen on Bitcoin and Litecoin, and they have helped secure the growing network from attacks ever since. Many other non-dominant coins were forced to merge-mine with Bitcoin and Litecoin in order to remain secure from attacks. Groestlcoin is the most dominant cryptocurrency using the Groestl512 PoW algorithm. Due to this; if we forked from this algorithm, another ‘less dominant’ cryptocurrency using Groestl would receive this security and become more secure than Groestlcoin — Effectively conceding its place as a dominant blockchain and a dominant cryptocurrency in the mining space.

In Closing…

In summary, the decision to not hard-fork to a new algorithm at this time has not been made lightly. We hope that you recognise the indirect benefits outweigh the smaller but more visible detriments of ASICs running on our network. Ultimately, we feel there is a greater chance of the coin dying from chasing an ASIC-Resistant PoW algorithm than from the introduction of ASICs on to our network.As the core developers, we MUST consider the coin security above all else.

We recognise that ASICs are not an ideal solution for a globally recognised decentralised cryptocurrency. We feel that neither are GPU-Only mining; currently the security offered from GPU-Only mining is not secure enough to be considered a safe, globally recognised currency. We feel that sacrificing the increased network security and risking chain forks back to another imperfect solution is not the right answer. This doesn’t mean we will never fork away from ASICs, but we need a suitable solution that both ensures the security of the network and ensures the network is suitably more decentralised.

What’s next for Groestlcoin?

From Groestlcoin inception until now, the coin’s development never stopped, and will never stop no matter what challenges we might face in the future.

We will continue to work hard so we can give to our community the best tech there is for Peer-to-Peer Electronic Cash System.

Below you’ll find our next developments and here you can see all our development progress: https://www.groestlcoin.org/development-progress/.