Bitcoin just keeps getting more efficient and secure.
Individual bitcoin miners commonly pool their mining resources with other miners to earn a more stable stream of income. Instead of mining a block infrequently on their own, they instead earn a pro rata share of the mining revenue of the entire mining pool that they contribute their hash power to. The protocol used to coordinate between the disparate individual miners making up a mining pool, called the Stratum protocol, has not been upgraded or improved upon since its inception seven years ago. Although it has worked well and helped the Bitcoin network hash rate increase to become the most powerful computer network ever, Stratum has several known weaknesses and vulnerabilities that need to be fixed.
A year ago, a Bitcoin developer, Matt Corallo, released BetterHash a proposed upgrade and rearchitecting of the mining pool protocol. It solved many of the problems with Stratum, but unfortunately did not catch on.
Enter Stratum V2, released by the same team that built Stratum V1 seven years ago. Stratum v2 is based on and even improves upon BetterHash. The result is a protocol for pooled bitcoin mining with greater security, decentralization, efficiency, and flexibility. It is being reviewed and tested by the bitcoin mining community right now.
I’ll let you read about the details, but suffice to say I believe this is a big deal. I think this upgrade to the Stratum protocol will catch on quickly. First off, Stratum V2 represents an immediate and substantial democratization of the mining industry by taking control from mining pool operators and giving it to individual miners. Even though a pool operator is based in China, they are no longer in control of block templates and what transactions are included (or NOT included) in a block. Plus, I think Stratum V2 could restructure the mining pool hash rate distribution significantly. The first mining pool operators to implement Stratum V2 may attract a lot of miners who would defect from other pools. Why would you continue mining for a pool using the old protocol versus one that provides more control, security, and efficiency to each individual miner? Efficiency is the name of the game in this business. We know this protocol was developed by Braiins and Slush pool, who I’m sure will implement it as soon as testing is completed. So I wouldn’t be surprised to see Slush Pool’s share of the hash rate distribution grow as well as other pools who adopt early.
In the fullness of time, if all or nearly all pools implement Stratum V2, the hash rate distribution won’t even matter any more. The power would now be in the hands of the disparate, individual miners the world over no matter where there mining pool operator was located. And that’s a beautiful thing.