The Dangers of Mining Pools: Centralization and Security Issues – Cointelegraph

The Dangers of Mining Pools: Centralization and Security Issues – Cointelegraph

The larger percentage of cryptocurrency enthusiasts that turn to mining pools, all the more dangerous this kind of mining is likely to become. The reason is simple: The potential rewards grow in correspondence with the number of participants and their hash power, and so too does the incentive to profit from it in less-than-legal or acceptable ways for some parties.

Why mine together?

In cryptocurrency mining — just like with real-life gold mining — the days of lone-wolf gold diggers drifting from place to place with their trusty tools in tow, following the trail of the elusive gold seams are long gone. While it is true that some of us can still afford to mine solo, it’s not a viable option for most people, as they do not have enough hashing power on their own to mine blocks consistently.

The infrequency of actually finding a block these days when mining individually is what makes mining pools so tempting for many people. In sharing their resources with other miners, they are able to make the returns steadier and more predictable.

The mining difficulty is only going to increase in the future if more people get into crypto — and they most likely will.

Of course, the utility of entering a mining pool is somewhat undermined (see what I did there?) by several factors. First of all, due to the fact that mining resources and power are shared, so too must be the rewards. Every member of the
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