2/ Quick note: contrary to popular belief that miners are bad & evil, they are vital to Bitcoin’s survival. So it’s imperative to foster a healthy mining industry.
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3/ The best miners would be the ones who understand the nature of these variances & know how to handle them most effectively.
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4/ For variance in finding blocks: For small solo-miners, the variance in finding blocks (& consequently, the variance in payouts) is too great to make mining practical.
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5/ Fortunately, hashing is a Poisson process. This means that on average there are 10 mins between blocks. The larger your hash rate, the closer you’ll get to this ~10 min/block average, and the more stable your payout curve.
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Hugo Nguyen Retweeted Hugo Nguyen
6/ Solution for variance in finding blocks: join a pool. Currently, Stratum pools are popular. The downside of Stratum pools is that miners give up the right to propose blocks & harm decentralization. With BetterHash proposal, this will hopefully change.https://twitter.com/hugohanoi/status/1004455570953330689 …
Hugo Nguyen added,
Hugo Nguyen @hugohanoi@TheBlueMatt's brilliant proposal that separates 1/ block construction process from 2/ payout process. You'll still get the benefit of connecting to a pool (stable payouts) while not conceding the right to propose a block. Best of both worlds solution that will help d14n.
https://twitter.com/TheBlueMatt/status/1004106026721972224 …2 replies 0 retweets 9 likesShow this thread -
Replying to @hugohanoi
Great thread, Hugo. I haven't read Matt's proposal yet, so forgive my ignorance but I'm very curious whether it's possible, even theoretically, for block rewards to be assigned proportionally based on hash contribution *at the protocol level*? Or is that completely bonkers?
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Replying to @real_vijay @hugohanoi
If it were possible it would completely obviate the need for pooling which is one of the most powerful causes of centralization in mining.
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Replying to @real_vijay
Thanks!
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.2 replies 0 retweets 2 likes -
Replying to @hugohanoi
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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Replying to @real_vijay
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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Replying to @hugohanoi
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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