How Effective Is Changing the PoW Algorithm as a Long-Term Defense Strategy?
Changing the PoW algorithm (a hard fork) can be highly effective in the short term, especially against ASIC-based attacks, as it immediately invalidates the specialized hardware used by the attacker. However, it is a costly and disruptive process.
In the long term, new specialized hardware for the new algorithm may be developed, or the coin might switch to an algorithm with low hashrate diversity, making it vulnerable again. It is a temporary fix, not a permanent solution.
Glossar
Defense
Mitigation ⎊ Defense within cryptocurrency, options, and derivatives centers on strategies to curtail potential losses stemming from adverse price movements or systemic risk.
PoW Algorithm
Algorithm ⎊ PoW Algorithm refers to the specific cryptographic hashing function (e.g., SHA-256, Scrypt) chosen for a Proof-of-Work blockchain, which dictates the type of hardware optimized for securing the network.
Algorithm
Framework ⎊ Within cryptocurrency derivatives and options trading, a framework denotes a structured computational process designed to model, predict, or automate trading strategies, often incorporating elements of quantitative finance and market microstructure.