The power of the pool.

[DeathAndTaxes]

Blocking possible client changes because you disagree with them and have a large percentage of the networks hashing power.

Is this OK for the Bitcoin network? Allowing one person's vote to influence the entire network?

The real problem here is that miners are being assigned to vote on protocol changes in the first place. This I think is not how Bitcoin was designed to work, and sets a very dangerous precedent. Decisions should be made by majority of users weighted by their economic power. If you break compatibility and convince the typical users, the exchanges and other big players to switch, then it doesn't matter what the majority of miners have to say, they'll have to switch if they don't want their mined coins to be worthless.

This is a special case of the more general problem that someone with a certain share of the hashrate doesn't have his incentives as strongly aligned with the well-being of Bitcoin as someone who has a similar share in the entire economy, simply because going forward mining is supposed to be only a small part of the economy.

I agree although I think it may simply be the immaturity of Bitcoin "system" (the larger ecosystem around the core protocol).  If Bitcoin continues to grow I would expect to see a "Bitcoin Business Owner's Council" or "Bitcoin Chamber of Commerce" to emerge which would influence the direction of the network in ways that large business owners feel beneficial via "lobbying" and financial consideration to developers that share their vision.   I would imagine someday you could even see full time salaried open source developers paid for by business entities to ensure the network remains vibrant and adaptive.

Maybe Bitcoin is getting big enough for some of the larger Bitcoin ventures to "band together" in some informal organization?

[Technomage]

I think it's fine that there are pools and the pool operators make decisions on what they vote, not everyone needs to use p2pool. But we definitely should have a lot of pools and more than anything, aware miners who do change their pool if the pool operator of their current pool is making a bad decision regarding his vote on Bitcoin development.

The current situation is very unhealthy where the top 3 pools have over 50% of hashing power and most of their users are totally ignorant and unaware of the major developments that are being proposed to Bitcoin right now. They should be more aware and understand that they have voting power that matters.

[disclaimer201]

I think it's fine that there are pools and the pool operators make decisions on what they vote, not everyone needs to use p2pool. But we definitely should have a lot of pools and more than anything, aware miners who do change their pool if the pool operator of their current pool is making a bad decision regarding his vote on Bitcoin development.

The current situation is very unhealthy where the top 3 pools have over 50% of hashing power and most of their users are totally ignorant and unaware of the major developments that are being proposed to Bitcoin right now. They should be more aware and understand that they have voting power that matters.

So, what exactly is one of those 'major developments' that is threatening to bitcoin right now? Why are you spreading such fears? Oh, I see .... hmmm who is winning other than the network which seems to be so insecure at the moment? I get the feeling though there are valid concerns about the risk, the story isn't new at all. What's different now to put it on the agenda compared to one year ago? P2pool wants capitalize out of those fear. That's what's new. People could simply switch to smaller pools if they saw necessary. Honestly, it looks like spam to me. Or do you want to tell me p2pool has 0% fees?

Let me guess, p2pool is so altruistic it uses the fees to make the network securer. I'm not going to switch to anywhere unless to some TOR pool service that is DDOSing proof in the future. And I'm not buying into the guilty conscience you want to give people who are not switching. Also, it's not gonna work anyway. Fear has never been a sound long term business strategy.

[DeathAndTaxes]

So, what exactly is one of those 'major developments' that is threatening to bitcoin right now? Why are you spreading such fears? Oh, I see .... hmmm who is winning other than the network which seems to be so insecure at the moment? I get the feeling though there are valid concerns about the risk, the story isn't new at all. What's different now to put it on the agenda compared to one year ago? P2pool wants capitalize out of those fear. That's what's new. People could simply switch to smaller pools if they saw necessary. Honestly, it looks like spam to me. Or do you want to tell me p2pool has 0% fees?

Let me guess, p2pool is so altruistic it uses the fees to make the network securer. I'm not going to switch to anywhere unless to some TOR pool service that is DDOSing proof in the future. And I'm not buying into the guilty conscience you want to give people who are not switching. Also, it's not gonna work anyway. Fear has never been a sound long term business strategy.

A couple of misconceptions:

1) Smaller pools are less desirable than larger pools due to variance.  This results in largest 3 or 4 pools always having 50%, 60%, 70% of hashing power.  For every person who moves to a small pool another person moves back to large pool because the variance can be brutal.  BTW I have been at a small pool for months now.

2) Technology like p2pool and hybrid pools (imagine deepbit but the miners generate their own block header) are secure.  It doesn't matter if someday p2pool was 100% of hashing power there is nothing to control, attack, or manipulate.

3) p2pool has no fee, they also pay out all transactions fees so it is impossible in the long run to earn more anywhere else.  Right now some members who believe in decentralization are paying a bonus (think reverse fee) so the total reward (block reward + transaction fees + bonus) is more like 105% of solo. 

4) p2pool can't be DDOS because it isn't a single server.  One would need to DDOS every single node.  In this respect p2pool is no more DDOS able than solo miners.

[disclaimer201]

So, what exactly is one of those 'major developments' that is threatening to bitcoin right now? Why are you spreading such fears? Oh, I see .... hmmm who is winning other than the network which seems to be so insecure at the moment? I get the feeling though there are valid concerns about the risk, the story isn't new at all. What's different now to put it on the agenda compared to one year ago? P2pool wants capitalize out of those fear. That's what's new. People could simply switch to smaller pools if they saw necessary. Honestly, it looks like spam to me. Or do you want to tell me p2pool has 0% fees?

Let me guess, p2pool is so altruistic it uses the fees to make the network securer. I'm not going to switch to anywhere unless to some TOR pool service that is DDOSing proof in the future. And I'm not buying into the guilty conscience you want to give people who are not switching. Also, it's not gonna work anyway. Fear has never been a sound long term business strategy.

A couple of misconceptions:

1) Smaller pools are less desirable than larger pools due to variance.  This results in largest 3 or 4 pools always having 50%, 60%, 70% of hashing power.  For every person who moves to a small pool another person moves back to large pool because the variance can be brutal.  BTW I have been at a small pool for months now.

2) Technology like p2pool and hybrid pools (imagine deepbit but the miners generate their own block header) are secure.  It doesn't matter if someday p2pool was 100% of hashing power there is nothing to control, attack, or manipulate.

3) p2pool has no fee, they also pay out all transactions fees so it is impossible in the long run to earn more anywhere else.  Right now some members who believe in decentralization are paying a bonus (think reverse fee) so the total reward (block reward + transaction fees + bonus) is more like 105% of solo. 

4) p2pool can't be DDOS because it isn't a single server.  One would need to DDOS every single node.  In this respect p2pool is no more DDOS able than solo miners.

Thank you for clearing that up. I'm just very sceptical if people are trying to push me to do anything. So, no fee? Why isn't everyone doing it? Will it work with Windows and a gui/aoclbf? Honestly, I think it'd still be better if pool owners decide on technical stuff, they probably have far better judgment than the average Joe.

[DeathAndTaxes]

Thank you for clearing that up. I'm just very sceptical if people are trying to push me to do anything. So, no fee? Why isn't everyone doing it? Will it work with Windows and a gui/aoclbf? Honestly, I think it'd still be better if pool owners decide on technical stuff, they probably have far better judgment than the average Joe.

Change is "hard" and people get comfortable with what they are already using.  p2pool take a little more effort to setup than a "traditional pool" and is "different" which likely has slowed adoption.   It is also very difficult for small pools to gain and RETAIN hashing power.  Hence they tend to remain small (or grow painfully slow) and it is hard to gain and retain hashing power.  A very bad self fulfilling prophecy.  The good news is p2pool has grown from 10GH to 120GH in about a month.  While 120GH is still small it is starting to get a critical mass (120GH is avg of 2 blocks per day)and p2pool unique nature has caused it to grow much faster than other small pools.

It does work w/ windows but I am not sure if it works w/ GUI miner.   There is info on miner compatibility on the first page of p2pool thread.  

[Meni Rosenfeld]

I think it's fine that there are pools and the pool operators make decisions on what they vote, not everyone needs to use p2pool. But we definitely should have a lot of pools and more than anything, aware miners who do change their pool if the pool operator of their current pool is making a bad decision regarding his vote on Bitcoin development.

The current situation is very unhealthy where the top 3 pools have over 50% of hashing power and most of their users are totally ignorant and unaware of the major developments that are being proposed to Bitcoin right now. They should be more aware and understand that they have voting power that matters.

So, what exactly is one of those 'major developments' that is threatening to bitcoin right now? Why are you spreading such fears? Oh, I see .... hmmm who is winning other than the network which seems to be so insecure at the moment? I get the feeling though there are valid concerns about the risk, the story isn't new at all. What's different now to put it on the agenda compared to one year ago? P2pool wants capitalize out of those fear. That's what's new. People could simply switch to smaller pools if they saw necessary. Honestly, it looks like spam to me. Or do you want to tell me p2pool has 0% fees?

Let me guess, p2pool is so altruistic it uses the fees to make the network securer. I'm not going to switch to anywhere unless to some TOR pool service that is DDOSing proof in the future. And I'm not buying into the guilty conscience you want to give people who are not switching. Also, it's not gonna work anyway. Fear has never been a sound long term business strategy.

The major development is the vote on P2SH, and the threat is that  many miners are abstaining from it rather than supporting it.

p2pool isn't just a name, it really is a p2p pool (to some degree, I think it makes use of a centralized service for some of its functions). Technomage isn't its inventor or operator. If you understand why Bitcoin is better than banks you should understand the advantages of p2pool over traditional pools.

The claims that p2pool is healthy for the network definitely have a legitimate basis, even though most people are missing out on some of the subtleties. Split pools with smart miners are as valid a solution to the block construction centralization problem as p2pool is, and going forward p2pool will be used directly mostly by large miners and small PPS proxy pools.

Some of the factors in the way of p2pool adoption are its greater technical difficulty, and its relatively small size (and harder shares) which leads to higher variance.

[Technomage]

I don't even use p2pool so the claims that I'm somehow trying to get users there to benefit myself are ridiculous. I don't know if that was the meaning exactly but anyway. I just want less centralization for the mining network, it is healthier for Bitcoin in so many ways.

[disclaimer201]

I'm just very sceptical if people are trying to push me to do anything.

Some people are genuinely concerned about the health of the network. That's why people like forrestv made the effort to code P2Pool! Usually if you are sceptical, the best solution is to inform yourself about the situation so you can make a proper judgement! It seems you didn't bother to check what P2Pool is at all before making your decision. 

True. But all these aggressive sounding and unusually vehement "Fight for your rights to party" calls all over the forum, it now makes me want to less inform myself about it. So whoever thought it was an awesome idea to take up arms and go to revolution mode and spam the entire forum (with something they are not even using theirselves yet!) will just likely cause the opposite of what is intended. A simple fail. Actually, I am more certain to stick to my pool now than ever. Cheers.

[bronan]

I really do not understand why you think p2pool is the solution
This idea not really made for huge mining power or at least as far as i know long from ready for handle such a thing
For the miners who switch between pools its absolute a fail because it does not keep your mined shares....
My experience with this so called p2pool has been not very good and costly.
The only solution is spread mining power over more pools, but as you can see people like the huge pools more then the smaller ones
Smaller pools hardly get more hash power because people want a steady income.
But its the chicken and the egg problem small pools can not produce steady income unless they get more miners todo so.

[DeathAndTaxes]

I really do not understand why you think p2pool is the solution
This idea not really made for huge mining power or at least as far as i know long from ready for handle such a thing.

Of course it can and if it ever got too large it could be split into multiple p2pools.  There is no reason that 100% of network "coudn't" run off p2pool.

For the miners who switch between pools its absolute a fail because it does not keep your mined shares....

This is false.  The p2pool client doesn't remember shares between restarts but you get paid off SUBMITTED shares.  Once submitted you could stop mining and destroy your rig you will still get paid when next block is found (on any shares still in share chain).  It is actually impossible to prevent payment for valid shares.

My experience with this so called p2pool has been not very good and costly.

Well based on the numerous false claims you made I think the issue lies with you and not p2pool.

The only solution is spread mining power over more pools, but as you can see people like the huge pools more then the smaller ones
Smaller pools hardly get more hash power because people want a steady income.
But its the chicken and the egg problem small pools can not produce steady income unless they get more miners todo so.

So the solution is small pools but as you pointed out that won't happen so the solution is something which won't happen.

[ThiagoCMC]

I really do not understand why you think p2pool is the solution
This idea not really made for huge mining power or at least as far as i know long from ready for handle such a thing.

Of course it can and if it ever got too large it could be split into multiple p2pools.  There is no reason that 100% of network "coudn't" run off p2pool.

For the miners who switch between pools its absolute a fail because it does not keep your mined shares....

This is false.  The p2pool client doesn't remember shares between restarts but you get paid off SUBMITTED shares.  Once submitted you could stop mining and destroy your rig you will still get paid when next block is found (on any shares still in share chain).  It is actually impossible to prevent payment for valid shares.

My experience with this so called p2pool has been not very good and costly.

Well based on the numerous false claims you made I think the issue lies with you and not p2pool.

The only solution is spread mining power over more pools, but as you can see people like the huge pools more then the smaller ones
Smaller pools hardly get more hash power because people want a steady income.
But its the chicken and the egg problem small pools can not produce steady income unless they get more miners todo so.

So the solution is small pools but as you pointed out that won't happen so the solution is something which won't happen.

+1

Everybody should move to P2Pool now.

It is more than ready!

I just point all my miners to my own P2Pool node... I am VERY happy with it.

I am my pool operator.

P2Pool is the BEST pool, for both Bitcoin and Litecoin.

EclipseMC is the SECOND best pool...  ^_^

[ThiagoCMC]

I really do not understand why you think p2pool is the solution
This idea not really made for huge mining power or at least as far as i know long from ready for handle such a thing
For the miners who switch between pools its absolute a fail because it does not keep your mined shares....
My experience with this so called p2pool has been not very good and costly.
The only solution is spread mining power over more pools, but as you can see people like the huge pools more then the smaller ones
Smaller pools hardly get more hash power because people want a steady income.
But its the chicken and the egg problem small pools can not produce steady income unless they get more miners todo so.

You don't understand why I choose to mine at a pool where I keep my vote, pay no fee, and do not have to trust in any individual other than myself? Plus it helps decentralization of the network! I doubt there is much I can say to convince you then, but here I go anyway.

P2Pool can scale just fine. Once it gets to a point where the variance for P2Pool shares are too high for small miners, we can start a second P2Pool. There is also talk of small P2Pools that connect to larger P2Pools to address this, although I don't know how viable this is.

You had a bad experience mining at P2Pool partially because it was still maturing, and partially due to a misunderstanding of how the shares work. Forrestv has been improving the software constantly since then, and the time frame for share decay has been increased. It's silly to blame the pool when you failed to read the manual. It was obvious from the first few pages of the thread that shares decayed.

Why would one switch between pools? If all pools were hop proof, there would be no reason for anyone to switch. Your argument also applies to any pool that has share decay. Slush for example. You do understand these rules are put in place to deter hopping, which is harmful to the constant miners?

PPS is great if you want to mine a few hours, but it doesn't make sense for continuous miners because of how much you less you earn over time. Unless you like earning less for your work.

What you consider the "only solution" is a non-solution. People do not spread their mining power voluntarily.

P2Pool isn't the "only" solution, but it is part of the solution. P2Pool has been growing steadily and I've been more than profitable there, earning more in the month after I joined than I did in the month previous at a traditional pool, even considering a few slight increases in difficulty. Of course, the extra subsidies that have been rolling in for over a month now have been a fantastic boost!

You talk great Holliday!

Plus, with P2Pool subsidy and its PPLNS scheme, maybe, the P2Pool can be as profitable as some 120% PPS schemes popping around...

BTW, how much needs to be donated to P2Pool subsidy to make it a "+120% like"?

Cheers!
Thiago

[DeathAndTaxes]

You talk great Holliday!

Plus, with P2Pool subsidy and its PPLNS scheme, maybe, the P2Pool can be as profitable as some 120% PPS schemes popping around...

BTW, how much needs to be donated to P2Pool subsidy to make it a "+120% like"?

Cheers!
Thiago

Well block is 50 BTC so 0.2*50 = 10 BTC.  10 BTC per block.

[Meni Rosenfeld]

P2Pool can scale just fine. Once it gets to a point where the variance for P2Pool shares are too high for small miners, we can start a second P2Pool. There is also talk of small P2Pools that connect to larger P2Pools to address this, although I don't know how viable this is.

But if you start a second p2pool, each instance will have a low hashrate and thus higher variance than a large centralized pool. The solution could be small centralized PPS proxy pools which connect to a large p2pool.

Why would one switch between pools? If all pools were hop proof, there would be no reason for anyone to switch. Your argument also applies to any pool that has share decay. Slush for example. You do understand these rules are put in place to deter hopping, which is harmful to the constant miners?

No, his argument doesn't apply to either. There is no penalty for switching pools when using a hopping-proof method.

[ThiagoCMC]

You talk great Holliday!

Plus, with P2Pool subsidy and its PPLNS scheme, maybe, the P2Pool can be as profitable as some 120% PPS schemes popping around...

BTW, how much needs to be donated to P2Pool subsidy to make it a "+120% like"?

Cheers!
Thiago

Well block is 50 BTC so 0.2*50 = 10 BTC.  10 BTC per block.

Simple account and, there's a lot!!
105% to P2Pool miners seems more feasible...

[Meni Rosenfeld]

Why would one switch between pools? If all pools were hop proof, there would be no reason for anyone to switch. Your argument also applies to any pool that has share decay. Slush for example. You do understand these rules are put in place to deter hopping, which is harmful to the constant miners?

No, his argument doesn't apply to either. There is no penalty for switching pools when using a hopping-proof method.

I'm not sure I understand. If you mine at a pool that has decaying shares, and you stop, there is a chance you will not be paid for those shares at all. Which is the point. I would say that is a penalty. I believe at slush's pool it happens very fast (maybe they don't decay, but become worthless, and perhaps this has changed, I haven't mined at slush's in quite some time). With P2Pool it can take 24 hours, I think.

If you stay in the pool there is the same chance that you will not get paid for the past shares.

If there are several hopping-proof pools, and you roam between them freely, your average reward, and accordingly the reward over a long period of time, will be the same as if you have mined for a single pool.

[DeathAndTaxes]

Now I see. Does that hold true if one of the pools you are hopping between has a greater chance of decaying your shares before finding a block? For example, if the shares decay in 12 hours and the average time to find a block is over a day? (I believe this was the case when he was mining at P2Pool.)

No.  It may increase variance but expected return is exactly the same.

Look at it this way.  Imagine you made a pool which all shares decayed after 1 share.  You just reinvented solo mining.  The expected reward is still 50 BTC / (# of shares per block).  Granted your only payment options are 50 BTC or 0 BTC so variance is huge but expected reward is the same.

His argument, as posted in this thread, wouldn't apply. In the original P2Pool thread though, he was complaining about being a part time miner, which is a different scenario altogether.

Argument is still false.  If the "decay window" is shorter the variance is potentially higher BUT expected reward is EXACTLY the same.

If you mine part time you may earn LESS but you also have an absolutely equal chance of earning MORE.

Imagine a very short decay window of only 100 shares.  You have 1% of the pool hashing power.  Your fair reward is 0.5 BTC per block.  Due to part time mining and "good luck" you put 2 shares into the 100 share window before a block is found.  You are paid out 1.0 BTC.  A 200% return.  Someone who mined 24/7 may have submitted 10 million shares (on a very long block) and they all decayed and by bad timing his most recent share was 101 shares old.  His return is 0 BTC.

People often look at ONLY the potential negative variance for part time mining while forgetting that variance swings both ways.

It is MATHEMATICALLY IMPOSSIBLE for variance to affect your EXPECTED RETURN over the long run.  Increased variance simply makes payment more "lumpy" but expected return remains the same.

[DeathAndTaxes]

Now I don't understand why pools have score based or pplns systems if they don't change anything, ...

They do change "something".  They make it impossible to pool hop.  Yes they still have variance (just like Prop pool) but that variance can no longer be "gamed".  Payouts are based on future events and don't change based of prior events.  Since hoppers can't predict the future they can't predict when to hop in or out.  Yes people can randomly leave and they may get paid more or less depending on when they leave BUT they can't do it with any predictability.

nor do I understand how pool hopping could be profitable. You don't need to respond, this is something I should research myself if I truly want to understand.

A simple thought exercise:
1) Imagine you have the wining hash.  The next hash you generate will solve a block any block.   You have two options apply that hash to a prop pool w/ 1000 hashes or apply that hash to a prop pool w/ 1 million hashes.  Which do you pick?  Obviously one pays out 1000x more than the other so there is no reason to pick the larger pool.

2) Now you may say "but we don't know if the next hash is a winner or not".  While that is true the chance of each hash being a winner is the same.  Thus the same logic applies.   If you apply a share to a prop pool of 1000 shares you have a greater expected payout then if you apply a share to one with 1 mil shares.   Same amount of work = 1 share is worth more or less depending on how many shares are in the round.  Your EXPECTED VALUE is larger on shorter rounds than longer rounds.  Now if there was only 1 pool in the world this would be of only academic value as you would participate in an equal number of long and short rounds.

3) Given that there are 2 or more pools if you can compute expected value of each share then you can simply put shares into the pool with highest expected value.  Right?

That is pool hopping.


If you want it more abstracted:
Image a casino had a game where they put up $50 USD.  Players get wage $1 USD to roll 3 dice and if they are all sixes the pot of $50 USD is awareded.  However to make it interesting the $50 USD is split among all players with a token for the round.   If you roll 1 or 2 or 3 sixes you get a token.  When you or anyone else rolls 3 sixes then pot is split among all tokens.

Given the choice would you rather play in a round with 0 issues tokens, 10 issued tokens, or 100,000 issued tokens?  Why?  How does that related to pool hopping?

[Meni Rosenfeld]

OK, I think it's a bit more clear. Variance is insane if you delve this deep. My brain doesn't enjoy comprehending this stuff. Now I don't understand why pools have score based or pplns systems if they don't change anything, nor do I understand how pool hopping could be profitable. You don't need to respond, this is something I should research myself if I truly want to understand.

Maybe you will be interested in Analysis of Bitcoin Pooled Mining Reward Systems.