How Ethereum Brainy Contracts Could Substitute Mining Pool Managers

How Ethereum Smart Contracts Could Replace Mining Pool Managers

Ethereum brainy contracts might one day be used to combat one of the fattest problems with cryptocurrencies at large, if a fresh project called SmartPool comes to fruition.

Today, nine mining pools make up harshly 75% of the bitcoin hashrate, and the situation is similar for ethereum and the surplus.

Such “mining centralization” is seen spil a potential down-the-road punt for all cryptocurrencies. The problem is that large mining pools have the potential to exert their power ter ways that influence users ter a negative way.

Some bitcoin developers even think that the threat is so severe that they have discussed developing an emergency hard fork to switch the mining algorithm. The alternative code, if deployed, would render current mining pools futile.

While many are wary of using the hard fork upgrading mechanism ter other circumstances if all stakeholders don’t agree, the strength of this idea is that it could be used to make miners wary of manhandling their power.

Countering the risk

So far, the risks seem to be hypothetical, spil centralization hasn’t necessarily impacted the network negatively ter a conspicuous way.

But researchers like laptop science PhD student Loi Luu worry that it could.

The reason mining has remained so centralized, ter Luu’s eyes, is that attempts to decentralize the system have yet to take off.

That’s why he and a group of researchers designed SmartPool – a fresh decentralized mining pool that they believe could address some of the flaws that have led to slow adoption of the switches.

Albeit SmartPool comprises just a few proposed improvements on past decentralized mining methods, Luu and the team believe the project could bring big switches.

Luu told CoinDesk:

“The main objective is to improve the decentralization of all the existing cryptocurrencies.”

And what is most intriguing about their treatment, is that they will attempt to solve the problem with the help of ethereum clever contracts, which they say can be used to deploy decentralized mining pools on any cryptocurrency.

Transaction problem

Luu expanded on the kwestie of mining centralization, arguing that one problem is that most mining pools presently have a head to cut off.

Under the rules that most pools go after, mining pool operators are presently the ones who choose which transactions make it into a block, Luu explained. This is potentially a problem if a pool gets a big enough portion of bitcoin’s hashing power to be able to zekering certain transactions (possibly diminishing one of cryptocurrency’s main value propositions).

“That’s why, when mining is centralized the transaction censorship threat is rather serious,” said Luu. “If the mining pools don’t like transactions, they can just exclude them from the blocks.”

And, beyond that, there are other ways miners could potentially influence the network, if they rack up enough of hashing power.

Decentralized mining pools could opoffering a more democratic process, where each miner ter the mining pool creates their own set of transactions, according to Luu. This means there’s less likelihood that one entity will dictate which transactions go through.

Now, the reason that miners join mining pools ter the very first place is to ensure that they have a reliable paycheck, but mining solo is more risky te that. Without a loterijlot of hashing power, it’s less likely that miners will find blocks and reap the prizes.

Existing decentralized mining protocols along the lines of P2Pool attempt to merge the best feature of solo mining (that each individual miners chooses their own transactions) with the benefits of pooled mining (that miners can proceed to pool resources).

Unpopular alternative

But even with those benefits, miners are overwhelmingly choosing centralized pools. (P2Pool is the best-known decentralized option, but it’s still not exactly a popular alternative).

Even with harshly 1,008 blocks mined vanaf week, Luu pointed out that the last block P2Pool mined wasgoed a few weeks ago.

Tho’ other decentralized mining alternatives exist, Luu argues that it’s not viable for many miners to organize ter a single mining pool using P2Pool’s monster. The more miners that join up, the greater the “variance” – the length of time it takes to get a prize.

“Reducing variance is, you know, the purpose of joining the pool ter the very first place. That’s why P2Pool is not scalable and it’s very inefficient,” Luu said.

His hope is that SmartPool will make all the difference. And, at least, it offers another decentralized mining option on bitcoin, ethereum, and other cryptocurrencies.

He further contends that there aren’t many disadvantages to SmartPool’s proefje. Miners need to run their own utter knots on any blockchain, however, which they don’t need to do te centralized pools.

Potential roadblocks

The mining centralization punt is complicated, however. Precise gegevens isn’t available, strafgevangenis is the precise makeup of each mining pool, making it difficult to analyze the size of the problem.

Centralization may also be occurring ter other ways. Ter bitcoin, for example, mining hardware manufacturing has concentrated into the mitts of fewer companies.

And, it could be telling that decentralized mining protocols toevluchthaven’t seen more use.

Getblocktemplate (GBT), very first proposed for bitcoin ter 2012, also gives miners a vote, so to speak, by permitting them to propose their own set of transactions for each block te a mining pool. But, not many pools are using it right now, either.

Luu guessed that one setback is that miners don’t care about being able to propose their own transactions, and they want to be able to broadcast their blocks quicker, so that they don’t risk losing prizes to another pool. Another drawback, of GBT at least, is that miners voorwaarde trust the pool operators for payouts, unlike te P2Pool or SmartPool.

That said, Luu wasgoed astonished that so few mining pools use it.

It’s hard to say whether SmartPool will be similarly left te the dust, but Luu plans to proefneming further and has big hopes for the project.

The SmartPool team already developed a proof-of-concept and the next step is to deploy a live mining pool on the ethereum network.

From there, the hope is that it will spread to others.

Pool pic via Shutterstock

The leader ter blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a stringent set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests ter cryptocurrencies and blockchain startups.

Related movie: How To Buy Bitcoin: The Safe And Effortless Way


You may also like...

Leave a Reply

Your email address will not be published. Required fields are marked *