1/ Thread on variance. PoW mining is critical to Bitcoin network security. Mining, in turn, is subject to 3 major sources of variance, from (roughly) easiest to tame to hardest: i/ Finding blocks via SHA256 hashing ii/ Market demand (for BTC & transactions) iii/ Tech innovation
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It's true that pooling as they exist today (Stratum) causes centralization. But that's precisely what Matt's BetterHash is designed to fix, AFAIU.
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When pooling using BetterHash protocol, individual miners get to propose blocks & choose which txs to include themselves - which significantly reduces the chance of a 51% attack.
End of conversation
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I know it's not possible with Bitcoin now, but is it possible under some other protocol that might at some point be incorporated into Bitcoin? E.g., if you contribute 0.1% of hash power you get 0.1% of the reward, per block without requiring pooling?
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That's an interesting idea... In theory you can argue that the failed hashes contribute to overall network security so they should get a piece of the pie. So in theory yes it does make economic sense.
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However, implementing something like that might be hard, if not impossible. The problem here is block rewards are issued by *a single winner*. What incentive does the winner have to share his rewards with others? Can you embed that "sharing" behavior into the code?
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Yes that exactly is the issue. I'd love to hear an argument for why it's not workable. If you could bake it into the protocol the issues of miner centralization essentially disappear.
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By "protocol level" do you mean the Bitcoin protocol? I don't think that's possible
It's binary: either you successfully mine a block, or you don't.
Pool protocols are different though, since they work on top of Bitcoin, they can assign rewards proportionally.