Bitcoin Mining Pool Icon
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This collapsed the key value proposition of Bitcoin, namely, its decentralization. In turn, there has been considerable criticism and backlash. Many people in the community, including us, have noted that etiquette or the good will of miners are not sufficient to keep monopolies at bay, and called for technical measures to disincentivize large mining pools.
We first describe the problem, outline the requirements for a good solution, and then present the simplest solution that we know of that meets those requirements. The critical property of our solution that sets it apart from previous ideas is that it preserves the current investment in Bitcoin by both existing users and by existing miners. It provides a seamless, smooth transition from the current PoW to the modified, large-miner-deterring 2P-PoW. Yet it enables the existing miners to continue to use their mining hardware; in fact, it extends the lifetime of this hardware.
Overall, it provides a gentle fix to the recent GHash fiasco and makes it highly unlikely that we'll find ourselves at the mercy of a single entity, without perturbing the existing economies and investments in place. Today, large pools are built out of independent entities that bitcoin pool graphic design their hashing power under the control of a pool manager that coordinates their efforts, collects rewards, and redistributes those rewards to the participants in proportion to their effort.
When pools grow to be large, they pose a risk: Such majority miners are toxic: In order to disincentivize large pools, we propose a small, backwards-compatible change to Bitcoin's Proof of Work PoW mechanism that retains both the current bitcoin pool graphic design and miners' current investments in mining hardware.
Bitcoin's puzzles are sometimes compared to scratch-off lottery tickets [ permacoin ], with bitcoin pool graphic design miner's name at the top. A miner scratches one ticket after another until he finds a winning ticket and publishes it to receive its rewards. But a lone miner working alone can be scratching for months before he finds a winning ticket.
That's a long time to wait in between bitcoin pool graphic design tickets. To reduce this variance, people form pools. With pools, the pool manager takes a stack of tickets and distributes it among a set of pool members in such a way that the winnings can only be deposited to the pool operator's address. Together they have a lot of scratching power aka mining power.
Whenever one of the members gets a winning ticket, it publishes it, awarding the pool manager with the reward. There is no opportunity for the finder to say "finders bitcoin pool graphic design The pool manager then distributes the winnings among all members of the pool, in accordance with how much they contributed to the pool.
This kind of proof of work is inherently distributable. We need a slightly different proof of work that cannot be easily outsourced to others. What does such a PoW look like? Before we go on to answer that question, let's discuss some must-have features of any good solution. The first requirement is a must have, and bitcoin pool graphic design reasons for it should be self-evident. The third one is the cherry on top. But the second requirement is absolutely critical. Bitcoin's security relies on the size of the mining infrastructure.
The massive amounts of specialized hardware wielded by miners makes it difficult for all but a state-power to obtain a majority all by itself. The miners have made extensive investments in this infrastructure, and they play a critical role in the Bitcoin ecosystem by maintaining the Bitcoin blockchain.
A pool-prevention mechanism should therefore maintain this existing power and knowledge. It would be a huge mistake to propose a new crypto-mechanism e. In fact, the political resistance would be so great that no one would implement it.
We believe it is possible to retain the existing infrastructure and layer the protection on top, and describe it below. As an aside, the overall network hash rate has been doubling every weeks, and therefore, mining equipment has been losing half its production capability within the same time frame. After weeks 7 halvingsmining rigs lose So there is very high equipment turnover in the mining industry.
This helps us greatly in two ways: At the same time, our proposal actually extends the life of the existing rigs by shifting work around, and therefore should provide a boost to existing miners.
It disincentivizes large pools, retains the current investment in mining infrastructure and allows for a smooth transition. It's technical, so if you're not familiar with how the current cryptopuzzles work, you may want to bitcoin pool graphic design to the next section. A two-phase PoW consists of a block that has two separate cryptopuzzles in it.
Under a two-phase PoW:. The first phase i. Our solution retains that mechanism in its entirety. The existing mining rigs are all geared to solve the first puzzle, which they can do very efficiently. X is the value of the current variable known as "difficulty" in the Bitcoin software. So we change absolutely nothing that already exists.
The twist here is that we introduce a second cryptopuzzle. In effect, phase 1 requires our miners to do the work that miners have always been doing. But then, when they think they have a viable solution, we now ask them to sign the block with the private key that controls the payment addressand see if bitcoin pool graphic design result, when hashed, is below a second difficulty parameter Y.
This mechanism allows miners to use existing rigs, albeit with a lower difficulty value X than the difficulty value currently in effect. This would enable miners to produce a lot more potential solutions; that is, headers that pass phase 1, which we call half-solutions. For each such half-solution, miners use a second device, perhaps a CPU or a specialized card, to perform the second check until a full solution is found. Note that, if Y is sufficiently small i. The second stage requires performing a sign and hash, which is comparable in cost to the first stage's double-hash, and therefore needs to be distributed just as widely.
The key insight that makes this work is that the second phase is not outsourceable to untrustworthy third parties. It requires a pool participant to be in possession of the private key, which, in turn, would enable the participant to immediately usurp all the newly minted coins from the pool operator.
Pool operators, being so vulnerable to being robbed, would not be able to admit untrusted individuals into their pools. A pool that wants to keep the secret to itself would need to receive all the partial solutions. Making the first phase easier and the second phase more difficult would make this infeasible. Outsourcing the key to the pool participants would enable a participant to steal the newly minted bitcoins.
Retains Existing Mining Infrastructure: Existing hardware would greatly speed up finding a solution. The current miners would start out from their current position. The solution is highly tunable: If we increase X thus making first phase cryptopuzzles less difficult to solve and reduce Y thus make the second stage more selectivework can be smoothly shifted between the two phases, from Bitcoin as bitcoin pool graphic design know it to Bitcoin with the new measure in place.
In particular, it would work well with GetBlockTemplate, and it would work just as well without. We suspect that implementing this change would require just a few hundreds of lines of code to the Bitcoin reference client.
The self-adjustment algorithms would take off from there at that block number, much in the same bitcoin pool graphic design that the difficulty parameter is bitcoin pool graphic design today. This would build on the existing blockchain, retain all balances until that time, and enable a seamless switchover to the new world. This is indeed a hard fork, where Bitcoin users must switch to the new 2P-PoW on the agreed-upon date. This is not very different from the day in March when a hard fork unintentionally appeared in the blockchain, and majority consensus had to be achieved on the fly on which fork to follow.
Except this particular roll out would be planned months in advance, and on the date of the rollout, none of the mining economics would be affected. As with all things Bitcoin, this rests on a community decision. If the community does not accept it, and no one upgrades, nothing would happen. But it is possible to bitcoin pool graphic design the change, and by carefully selecting X and Y, to retain exactly the same system dynamics as we have now.
We could then tweak the parameters to deter large pools. Will bitcoin pool graphic design fix the GHash problem? Yes, we expect so. We are making this proposal public in the hope of stirring some much needed discussion. The Bitcoin value proposition, the promise offered by the currency, is too precious to lose to the greed of the masses or the ambitions of a single mining operator. The strength of Bitcoin stemmed from its revolutionary use of crypto, and just a simple modification can render the "too big for comfort" miners infeasible through the power of slightly enhanced crypto.
Some people seem to misunderstand our proposal by thinking that it will eliminate all pools. Perhaps the biggest strength of this proposal is the bitcoin pool graphic design tradeoff it provides between the first and second phases of proof-of-work.
Unless we were to choose extreme values for X and Y, this proposal does not prevent all pools! My Research Interests are distributed systems bitcoin pool graphic design algorithms, specifically distributed storage algorithms, the distributed aspects of Bitcoin, and reliable aggregation in distributed sensor networks.
Hacker and professor at Cornell, with interests that span distributed systems, OSes and networking. The Problem and Background. Issues There are some known issues with this proposal, none of which are really significant: This bitcoin pool graphic design does not address the case of a single large miner who owns all of his own equipment.
In such a case, he can simply trust all of his machines to not bitcoin pool graphic design the secret, and amass power. We not only have never heard of any technique that can address this issue, but we do not believe it needs to be addressed. The problem at hand stems from open, public pools. The adjustment of X and Y is a delicate issue that requires some simulation.
We have deliberately bitcoin pool graphic design not to be overly prescriptive in this post. The X adjustment would need to be gradual to rule out graphics cards for the first phase.
