What Is the CryptoNight Algorithm?
CryptoNight is a hashing algorithm designed specifically for CPU and GPU mining. The main purpose of the CryptoNight algorithm is to discourage mining with Application-Specific Integrated Circuits (ASIC) hardware. In other words, the algorithm is ASIC-resistant.
Like Bitcoin’s SHA-256 algorithm, CryptoNight works via proof-of-work. This means that miners must solve complex mathematical functions to verify transactions and earn mining rewards.
A Deeper Look at CryptoNight
In the early days of cryptocurrency, persons could mine Bitcoin using the CPU on their home computer. However, people soon realized that GPUs were capable of faster computations and, therefore, could produce better mining results and earn more rewards.
The competitive nature of mining meant that miners were constantly looking for hardware capable of producing higher hash rates. Today, powerful ASICs, which are machines designed specifically for mining, rule the Bitcoin network, making CPU and GPU mining obsolete.
However, while ASIC machines are extremely powerful, they are also expensive and require a lot of power to run. As a result, Bitcoin mining is now reserved for corporations with capital to invest in hundreds (even thousands) of ASIC machines.
The problem with this is that ASICs skew the power distribution of the network. As you can imagine, if mining is only limited to a few corporations, the network risks becoming centralized – something that is not desirable for cryptocurrencies.
CryptoNight avoids possible centralization by favoring CPUs and GPUs over ASICs. This feature encourages fairer mining by giving all participants on the network a chance to earn rewards.
Some of the most popular coins to use the CryptoNight algorithm include Monero (XMR), ByteCoin (BCN), and Dero (DERO).
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