Is SHA-3 Beneficial to Cryptocurrencies Such as Bitcoin?

Is SHA-3 Beneficial to Cryptocurrencies Such as Bitcoin?

Different consensus mechanisms and algorithms have their own benefits and drawbacks. In the cryptocurrency world, it seems to be a matter of time until more projects switch to SHA-3. What is this algorithm exactly, and what makes it so worthwhile? 

Digital Hashes With SHA-3

In terms of overall encryption standards, the switch to SHA-3 makes a lot of sense. It is a vast improvement compared to the new nearly defunct SHA-1, and offers multiple benefits over SHA-2 as well. Migrating to this new algorithm may not be as straightforward, however. It requires some sort of implementation that can potentially break smaller ecosystems. 

Looking back in history, it took a while for the world to ditch SHA-1. Even an increasing amount of network attacks did not speed things up directly. This move initially began in 2015, yet it took over two years to see any meaningful results. Today, in 2020, there are still people who use SHA-1 to encrypt data, which baffles the security community.

Switching the SHA-3 will, for obvious reasons, require a good reason. It is the first SHA protocol to be created through open source efforts, rather than relying on the NSA. Given how the number of SHA-2 attacks is on the rise – as well as their success rate – it is often best to prepare for the future.

Finding Proper Support

A move to SHA-3 will not occur automatically. Doing so requires compatible hardware and software to be created. Solving this latter part of the puzzle is not that difficult, as it can be done through open source efforts. The hardware side of the equation, however, is a different matter. Without the proper hardware and associated firmware, it will not be possible to leverage this new standard.

There is also a drawback to implementing this new option as well. On paper, SHA-3 is slower in software, although its hardware performance is much better. Considering how these cryptographic routines mostly rely on hardware “acceleration”, it is not a big issue. It can have an impact on the speed with which hash verification can occur, though.

SHA-3 Impact on Cryptocurrency

Judging by the history books, and ongoing developments in the space, switching to SHA-3 is a matter of time.  This will, in turn, have an impact on several cryptocurrency algorithms. Bitcoin, for example, uses SHA-256, which is derived from SHA-2. Upgrading that algorithm will not be straightforward in the slightest.

The first “major” cryptocurrency to take plunge could be Ethereum Classic. It is up to the community to determine if this switch is worthwhile. Considering how the network recently suffered another 51% attack, such a switch is worth exploring. For now, the ECIP-1049/96 proposal is still in the “Last Call” stage. If nothing occurs, it will be accepted automatically in the next six weeks. 

Depending on the implementation by Ethereum Classic, it may yield for Bitcoin in the future. Altcoins often try different things that get ported to Bitcoin eventually. While it is too early to determine if SHA-3 will meet a similar fate, the algorithm certainly triggers excitement. 

AO/X Staff