The company that’s behind one of the largest mining pools for Bitcoin (BTC), Braiins, has recently presented a code that looks promising when it comes to decentralized mining.
The specification is called Stratum V2 and can greatly improve the way in which Bitcoin mining works. More than this, it can bring more security to mining pools and have them function more efficiently, especially for entities organizing miners all over the world. While its aim is to improve Bitcoin mining pools differently, the main benefit that it brings is that it reduces mining pool centralization, which is the most pressing problem with the Bitcoin.
Many People Are Supportive of the Plan
Jimmy Song, the Bitcoin developer, and influencer had this to say about Braiins’ plan:
More comprehensive than BetterHash, individual job selection, zero time backend switching. If this protocol does everything it promises, “mining centralization” as an argument will be completely dead. https://t.co/yoMLdWlv4E
— Jimmy Song (송재준) (@jimmysong) November 13, 2019
At the same time, the Bitcoin developer for Square, Matt Corallo, who’s also a designer for the protocol, has recently written in a Reddit AMA that:
“This is huge for mining centralization. Instead of being focused on the centralization of pools (which is the world we’re in today), we can focus on the centralization of actual miners [and] farm owners!”
Corallo revealed the BetterHash project last year, a project that is planning to combat centralization in mining pools. Today, Braiins together with Corallo are working together to create the ultimate protocol to fix the issues with mining pools.
How the Mining Power Is Being Distributed and Why It Is Problematic
Mining can be very difficult for those who are doing it individually. When the Bitcoin had just appeared, those who were mining for it all over the world were connecting to mining pools in order to make more money. After long hours of mining, if one of them was getting lucky, the entire pool was benefiting. With time, mining pools that are weighted turned into a safer and more profitable method as far as earning and redistributing the profits based on the contributory mining power goes.
However, recent data revealed by Blockchain.info is indicating that just 3 mining pools are controlling more than 50% of the Bitcoin’s mining power, centralizing it for just a few people. This is a serious problem, as when a miner from a mining pool wins a block and the 12.5 Bitcoin reward, the mining pool is deciding which transactions to go into that block. Experts worry that centralized entities may be tempted to use all this power in order to censor the transaction they’re not found of.
Stratum V2 is Modeled of Corallo’s Better Hash
Stratum V2 is trying to support the “job negotiation” model of BetterHash, changing the connection between the mining pool and the miner. This means that miners and not mining pools decide which transactions to go into blocks. More than this, miners would also be allowed to vote for protocol updates. This wouldn’t necessarily be a silver bullet when it comes to mining centralization, but at least mining pools censoring Bitcoin transactions would simply be opted out.
Luke Dashjr, the veteran Bitcoin coder, has said on Twitter,
No, it won’t.
Mining centralisation is no longer about pools. It’s about hardware.
Very few are able to mine themselves anymore.
— Luke Dashjr (@LukeDashjr) November 14, 2019
Stratum V2 Is Not Only Fighting Decentralization
Decentralization is not the only problem Stratum V2 is addressing. Mining pools would also be provided an incentive to adopt the protocol because this would save more money and prevent the attacks aimed at causing them to no longer get rewards. What Stratum V2 does is transferring data in a more efficient manner and making it more difficult for the mining pool hash power to be stolen. This is what Braiins’ co-CEO Jan Capek had to say about this:
“Last but not least, we have addressed the security aspects by allowing fully encrypted and authenticated communication using the current state of the art technology called ‘Noise Protocol Framework’.”
Braiins is still in the finalizing phase for some features. For example, it’s trying to decide what algorithm should be used when hiding the data. The Stratum V2 is going to be available for tests soon, whereas its specification draft is now under review. Capek said it may take up to 12 months or more for the mining pools to start working with the protocol.