All You Need To Know About Mining Pools

Definition A mining pool is a group of miners who have decided to combine their computing power to increase the amount of cryptocurrency mined. With a successful completion of the mining process, the reward...

Definition

A mining pool is a group of miners who have decided to combine their computing power to increase the amount of cryptocurrency mined. With a successful completion of the mining process, the reward is usually distributed among them on pre-agreed terms and depending on each miner’s contribution based on the Proof of Work protocol.

Anyone seeking to make a profit through cryprocurrency mining has two options: either to mine it on his own or join a pull set up by other people to increase the hash rate. For example, six 335 megahash devices combined together can generate as many as 2 gigahashes per second. The difference is obvious, isn’t it?

Why join the pool?

The major part of almost any network’s computing resources is presently achieved by pooling. The need for pooling is driven by the constantly growing system demands making it very difficult for an individual miner to cover the cost of expensive equipment. While it may theoretically (and at early blockchain development stages) be possible to make money by mining alone, the chances of creating a block in practice are very slim. With a joint effort, this probability increases dramatically, although the profits have to be divided among all team members, which is still better than not getting anything at all. Therefore, by joining a pool you can count on getting a regular, albeit small, profit, which will still be enough to cover all the costs and create a certain safety net with your passive income.

Attack 51%

A 51% attack is a situation where more than half of the computing power of a network is concentrated in the hands of a single miner (or a group of miners) giving them full control over the chain of blocks. It can bring chaos to the blockchain attacked. In large systems like bitcoin, the probability of a 51% attack is low, but things are not quite as straightforward for smaller blockchains. One example is Ghash.io network that suffered a 51% attack in 2014. A certain pool became a single operator of the major part of mining resources enabling it to transform its private blockchain into a main one. After the litigation, the pool was disbanded. Working with new cryptocurrencies, your should focus on preventing your pool from becoming a hegemon, otherwise you will destroy both yourself and the hen that is laying golden eggs for you.

How to start mining

Joining a pool is not difficult. First of all, you have to choose the coin you want to work with. The next step would be to select a suitable pool and register on its page. It is not much different from standard authorization on a common web resource and it should not give a user any problem. Then, you need to open a wallet (it you don’t have one yet), choose the coin miner and once it is installed, you are all set to start mining.