Technical solution to deter pool mining?

[Hopkins]

I've spent the last year becoming comfortable with Bitcoin and associated technical and economic issues.  The greatest flaw in the system seems to be that it aims to be decentralised, and yet the incentive to mine encourages pooling.  The only reason I have not personally invested money into Bitcoin is because this incentive to pool mining resources seems to be a catastrophe waiting to happen.

I have been surprised not to find any discussions specifically about finding an alternative system which would not encourage pooling.  It's having to solve the problem of a decentralised ledger all over again but, never-the-less, it would be the most important advancement to make.  I suspect it is the only possible way an altcoin could steal Bitcoin's thunder.

[adamstgBit]

pools allow for further decentralization of bitcoin mining by allowing small miners to continue to mine at such a high difficulty.

pools need to operate properly or else its users will leave and go to a pool that operate in the way they want.

there is nothing wrong with pools, pools are good.

[achow101]

I don't think pools cause centralization. They help to prevent large mining farms from becoming the only miners, and that would actually be centralization. The pool operators only set the software which determines what blocks to mine. Small miners mine in the pools so that they can still compete. And if the miners don't like what their pool is doing, they can just switch to another one.

Can you explain how you think pools cause centralization?

[Za1n]

I agree that pools are OK in of themselves in that it allows small miners to still be competitive. As others have pointed out, without pools, only the large mining farms would be able to compete and would lead to greater centralization. Pools have been with bitcoin from the early days, it's actually the big farms that were new and came on the scene once the price exploded back in 2013.

[Hopkins]

Sorry for the delayed reply.

Ultimately, with a pool, he who controls the pool controls the processing power.  Yes, people can leave and join freely, but the incentive for people to group together and hand over control of their processing power to a trusted third party is a threat which is at odds with the idea of decentralisation.  It would be far better if anyone could plug into the network and retain full control of their mining activities, receiving a constant trickle of income directly.

And this is what I mean: what I have described defeats the whole genius solution to the decentralised ledger; it requires something totally different.

PS: I agree that massive farms are an even bigger threat.

[Kprawn]

I'd rather have mining pools than massive single Bitcoin data centers running a centralized operation with full control. In a sense you are correct with what you are saying.. but

it's a choice between two evils. I think Satoshi did not bargain on mining pools becoming this strong or even ASIC's dominating the mining scene.

It's not perfect, but it's working... and that should be the only thing that matter.