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‘BetterHash’: Bitcoin Core Dev. Proposes New Protocols to Decentralize Bitcoin Mining

Last Updated March 4, 2021 5:08 PM
Josiah Wilmoth
Last Updated March 4, 2021 5:08 PM

Bitcoin Core developer Matt Corallo has published a draft of a Bitcoin Improvement Proposal (BIP) that aims to further decentralize bitcoin mining through the adoption of a new mining protocol.

Published by Corallo — perhaps better known by his social media handle TheBlueMatt — on his personal GitHub repository this week, the “BetterHash Mining Protocol(s) ” seeks to address one of the many “pressures” in bitcoin mining that push the ecosystem toward centralization: Stratum , the most widely-used mining protocol.

As Corallo explains, deficiencies in the design of Stratum, combined with the fact that most bitcoin miners point their hashpower toward mining pools, limit the diversity of block templates used across the network. This, he claims, gives pool operators undue influence over network upgrades and reduces Bitcoin’s censorship resistance.

“Difficult to implement and poorly documented, the design of the Stratum protocol requires pool operators to build and distribute block templates to their clients. Without a diverse body of miners constructing block templates, the network’s censorship resistance is jeopardized (e.g. pool operators may use their position of power to restrict the flow of protocol upgrades).”

Corallo seeks to replace the Stratum protocol with a new system that divides block construction and payouts into two protocols — Work and Pool — collectively known as BetterHash. This will allow individual miners to select the transactions they include in blocks, rather than letting mining pool operators make that choice for them, while still benefiting from the stable payouts that connecting to a pool provides.

At present, miners who want to use their own block templates must either solo mine or connect to small decentralized mining pool p2pool, which increases their autonomy at the cost of being unable to receive stable payouts.

Under BetterHash, pool operators would not be able to use their position to tell miners whether to adopt particular network upgrades. Moreover, giving miners more control over block templates also helps mitigate the risk of a government ordering a locally-operated mining pool to censor particular types of transactions.

Notably, BetterHash does not force miners to construct their own block templates if they do not want to, but it does give them the option to utilize the Work protocol to connect to another pool’s block template — even if they want to direct their hashpower somewhere else.

In addition to decreasing centralization within the bitcoin mining ecosystem, BetterHash also introduces some performance improvements over Stratum.

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