How Ethereum Smart Contracts Could Replace Mining Pool Managers.

At this moment there is a whole debate which is important to elucidate, in this article, we will try to analyze, to understand the concern of the people who make life in the bitcoin ecosystem and it concerns users and fans of the cryptocurrencies.

That is why ethereum smart contracts could be used one day to fight one of the cryptocurrencies biggest problems in general, if you manage to launch a new project called SmartPool. As is known, today nine mining pools represent approximately 75% of the bitcoin hashrate and the situation is similar for ethereum and other ecosystems.

In this sense, such “mining centralization” is seen as a potential problem for all cryptocurrencies. The problem is that large mining groups have the potential to exert their power in a way that can adversely affect users.

There is no doubt that some bitcoin developers even think the threat is so serious that they have discussed the development of a hard fork emergency to change the mining algorithm. The alternative code, if implemented, would make current mining pools useless.

While many are careful to use the hard fork upgrade mechanism, in certain circumstances, if all concerned disagree, the strength of this idea could be used to make miners take care not to abuse of their power.

In this sense, what prevails is to counter the risk, until now the risk seems to be hypothetical, since centralization has not necessarily affected the network in a negative or obvious way.

But the PhD specialist Loi Luu believes there is concern. He states, the reason mining has remained so centralized, is that it attempts to decentralize the system has not yet been decided.

That is why him and a group of researchers designed SmartPool, a new decentralized mining fund, which they believe could solve some of the shortcomings that have led to the slow adoption of the changes.

It is acknowledged that although SmartPool includes only some improvements proposed in the past about decentralized mining methods, the author, Luu and the team believe that the project could bring about major changes. Luu also reported, “The main goal is to improve the decentralization of all the existing cryptocurrencies.” And what is more intriguing in their approach is that they will try to solve the problem with the help of Ethereum Smart contracts, they say they can be used to deploy decentralized mining deposits from any cryptocurrency.

From what has been explained above, a question arises: Is there a problem for the transition? In this sense the expert, Luu, believes that the problem of centralization of mining is that most mining Pools currently have a visible head And that it is necessary to eradicate. What can be perceived is that under the rules that most of the groups follow, the operators of the mining pool, are currently the ones who choose which transactions make it a block. In this sense this action is potentially a problem, if a group of computation obtains a sufficiently large portion of the power of hashing of bitcoins, to be able to stop certain transactions.

According to Luu, “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 another thing that can be detailed, is that there are other ways that miners could potentially influence the network, if they accumulate enough hashing power. This explains in part the response times “Delays” for transactions that do not pay a “fee to the miners”, the microtransactions practically disappear, because sometimes their share in the transaction is free.

Therefore, mining pools decentralization is urgent, this action could offer a more democratic process, where each miner that makes up the mining pool, can create its own set of transactions, this is very important for the expert Luu, means that there is less likelihood that an entity will dictate which transactions are passed and which are not.

Do not forget that right now, the reason why miners join in mining pools, the first place is to make sure they have a paycheck at the end of the month insurance, on the contrary for the miner is only very risky Doing the activity individually, the large mining pools are devoured by their computing power, ie without a lot of hashing, miners are less likely to find blocks and get paid for their work.

Given the explanations shown, for the expert Luu, he hopes that SmartPool will make all the difference and that at least it offers a decentralized mining option on bitcoin, Ethereum and other cryptocurrencies, to this it is added, the miners need to execute their Own complete nodes in any blockchain, which is not necessary in centralized clusters.

However, the question of the centralization of mining is complicated. Accurate data or exact composition of each miner is not available, making it difficult to analyze the size of the problem. Centralization could be happening in other ways. At bitcoin for example, the manufacture of mining hardware has been concentrated in the hands of very few companies.

To the above said, it can be said that decentralized mining protocols are not currently in use.

Therefore, Getblocktemplate (GBT), proposed for bitcoin in 2012, the miners performed a voting system and they said and were allowed to propose their own set of transactions for each block within the mining pool, but not many pool are using it right now

Equally, Luu asserts that it is counterproductive that miners do not worry about being able to propose their own transactions, and in turn want to transmit or process their blocks as fast, so as not to risk losing payment with another pool. Another drawback, at least with GBT, is that miners must rely on pool operators for payments, unlike P2Pool or SmartPool where each miner can individually choose their transactions.

In summary; The SmartPool project team has already developed a proof of concept and the next step is to deploy a live mining pool on the ethereum network. New events are expected.


Disclaimer: InfoCoin is not affiliated with any of the companies mentioned in this article and is not responsible for their products and/or services. This press release is for informational purposes only. Information does not constitute an investment advice or an offer to invest.

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