If you are someone that has an interest in cryptocurrency you have probably heard about Scrypt. Beyond knowing the name more than a few people are unaware of what Scrypt is or what it does. The protocol is used with numerous cryptocurrencies as a proof-of-work algorithm. It was first made available in 2009 as a password-based key derivation function. It has since evolved into the preferred method of encryption for many digital tokens such as Litecoin.
About Scrypt
The origins of Scrypt have little to do with cryptocurrency. The protocol was developed in 2009 by Colin Percival. It was originally meant to be used with the Tarsnap online backup service. Scrypt functioned in that regard as a algorithm that prevented the distribution of large-scale hardware attacks. The manner in which it accomplishes this is by requiring large blocks of memory to carry out such attacks.
Following the launch of Bitcoin in 2009 there emerged a simplified version of Scrypt which was found to be useful as a proof-of-work algorithm for cryptocurrencies such as Litecoin, Tenebrix, and Fairbrix. Today the algorithm is more closely associated with cryptocurrency than it is with its original intended uses.
Scrypt and Cryptocurrency
Scrypt may be most famous in the cryptocurrency community as the basis for Litecoin and Dogecoin. Those cryptocurrencies that use Scrypt for mining are often mined on GPUs, or Graphics Processing Units. These types of units have more processing power when compared to a regular CPU.
The first ASIC mining hardware that could be used on Scrypt-based cryptocurrencies was made available in May of 2014, and this is now preferred by those who continue to mine cryptocurrencies. It is widely regarded as a more efficient way to mine digital tokens.
As a cryptocurrency application Scrypt is what enables proof-of-work to occur. In a proof-of-work system, nodes are operated by miners. A node is simply any computer that is connected to the token’s network. Before blocks can be added to the blockchain of a digital token, the blocks must be verified through a process which involves solving complex mathematical equations. Those who are the first to perform the work receive a reward of newly-created digital tokens.
Scrypt in Layman’s Terms
Those who are looking for a simplified explanation of what Scrypt is and what it accomplishes may be disappointed at the information they find online. The jargon used to describe the protocol is generally technical in nature. We’re going to attempt to break it down so that anyone can have a general idea of what Scrypt is meant to do in terms of cryptocurrency.
A memory hard function, or the complex equation that needs to be solved before a block can be added to a blockchain, requires a large amount of RAM. The SHA-256 protocol which is used with Bitcoin’s proof-of-work system has to reserve chip space for RAM as opposed to pure hashing power. What Scrypt does is adjust the number of random variables that have to be stored so that less must be stored in RAM when compared to SHA-256.
The primary benefit of using Scrypt is that the advantage of ASIC Bitcoin miners on a network is reduced. This makes it possible for more miners to join the network and potentially reap rewards. The overall power requirements of can also be less resulting in less energy usage.
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