Foundations of Blockchain

Centralization in mining pools

Mining is crucial for any Proof of Work (PoW)-based blockchain platform. There has been significant growth in the mining ecosystem due to the incentive mechanism. Nodes with the mining functionality in a network have different capabilities to regular nodes. Some have high computing power, and others have limited computing power. The mining nodes with higher computing power contribute more to the block creation process, thus earn more incentives. This often discourages nodes with lower computing power from participating in mining operations. A special technique called a mining pool was created to solve this. Everyone can contribute their computational resources.

All the participants in the pool were rewarded ...