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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Replying to @hugohanoi
And you could prove failed hashes, I think, with a shorter string of zeros in the proof of work, to show you did some amount of work.
@TheBlueMatt@peterktodd is there a good argument for why what I'm suggesting is not workable?1 reply 0 retweets 2 likes -
My take: the reason "sharing model" works with existing pools is because pooling is inherently a *centralized* solution. Pool members have to agree on the coinbase transaction: the rewards go to a common pot which is owned by the pool operator.
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But it might not be possible to implement this in a *decentralized* way at Bitcoin protocol level. In a decentralized network, who would be the owner of this common pot?
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