To a newcomer, the cryptocurrency market might seem like any other industry and some might even be intimidated by it. Scarcely would anyone believe that it is only 10 years old. In 2008, it was just a hobby for some scholarly enthusiasts motivated probably by ideals like breaking free from centralized fiat currency, the power to the people, one world one currency and so on.
The earliest movement towards bringing cryptocurrency to the masses came on October 23, 2008, when Satoshi Nakamoto published a paper titled Bitcoin: A Peer-to-Peer Electronic Cash System. Interestingly, it is unclear till date, whether Satoshi Nakamoto was a real person or someone else, was writing under that name or even whether it was a single person or a group.
On January 3, 2009, Nakamoto launched the cryptocurrency network. He named his digital coin “Bitcoin” and mined 50 Bitcoins. Bitcoin mining difficulty is a function of a number of miners on the network. Due to low network penetration, Satoshi needed only a standard multi-core CPU to mine Bitcoins.
The low computer power needed for mining Bitcoins attracted more enthusiasts to participate in the cryptocurrency market. As the number of participants increased, the computing power required for mining also increased.
In those days, there were no takers for Bitcoins. But things were changing as within a year, by March 17, 2010, Bitcoinmarket.com was launched as the world’s first Bitcoin exchange.
The first-ever real-world Bitcoin transaction was recorded in May 2010. When Laszlo Hanyecz bought 2 pizzas for 10,000 Bitcoins, he could not have imagined that after nine years his meals worth would increase to $8.6 million.
After standard multiple-core CPUs, GPUs began to be used for mining Bitcoins.
GPU (Graphics Processing Unit):
GPUs are better at doing repetitive tasks compared to CPU, which are equipped for multi-tasking. Mining Bitcoins also requires decoding hashes repeatedly by changing only one digit in each attempt. Thus, GPUs were more suited than CPUs for usage in cryptocurrency mining.
In October 2010, code for mining Bitcoins using Graphics Processing Unit (GPUs) was made public. Mining was still affordable at an individual level as it needed very less investment as well as low technical skills. Thus, even after shifting from multi-core CPUs to GPUs individuals could participate in the mining of Bitcoins.
In a bid to increase the hash rate, Bitcoin enthusiasts got together, and a crowdsourced standard evolved in which 5 GPUs were suspended over an AMD motherboard with minimum DRAM.
Connecting multiple GPUs in tandem to create custom rigs also had the advantage of undervolting the GPUs thus, using less electricity.
For a small-time, everyone thought they could put their legs up for the rest of their lives and just keep mining Bitcoins. All this was soon going to change.
FPGAs (Field-Programmable-Gate Arrays):
As mining difficulty increased, by June 2011, GPUs were replaced by field-programmable-gate arrays (FPGAs) which are semiconductor devices. FPGAs are integrated circuits, which need to be programmed for specific applications. FPGAs consumed 3 times less power than GPUs to perform the same task. hardware design language also used to program FPGAs. Low power consumption offered advantages in cooling and in connecting an array of FPGAs.
FPGAs also became redundant as the cryptocurrency market continued to grow. In 2013; the miners adopted a new standard, the Application-Specific Integrated Circuit (ASIC).
Application-Specific Integrated Circuit (ASIC):
While devices like CPU, GPU and FPGA could multi-task, ASIC is used for the sole purpose of cryptocurrency mining. At present even a single ASIC miner has been superseded by an ASIC rig, which would include multiple ASIC miners connected together along with fans and processors.
Thus, as the complexity of cryptocurrency networks increased more powerful devices were used; each device first used alone than in a group until the time that even a group could not handle the complexity of the network. Then a new device was used and the same cycle was repeated.
To think that we have reached the stage of using ASIC rigs for data mining even before cryptocurrencies have been adequately mainstreamed, that means even more innovations will be needed to meet the future challenges of data mining.