P2pool is a decentralized, peer-to-peer mining network for bitcoin, and litecoin.
It has been around for sometime now; however, it hasn't gained much popularity. There are several reasons why p2pool hasn't gained traction in the mining world. The most prevalent being, that it's more difficult to initially setup. The other factors are a higher variance (slower payouts), and regular pools are basically point-and-go.
Mining on a centralized pool, is done through a single connection. For example, your miners connect to: thebestcryptominingpoolever:3333. Upon doing so, you've given your hashing power to a single point of failure. Not only does that affect the bitcoin/litecoin network. It affects your mining earnings as well.
From its inception. The bitcoin and litecoin networks have been vulnerable to attacks. One of the most common, and potentially devastating is the 51% attack. What this means when an attacker, (or group of attackers) gains more than 50% of the hashing (mining) power on the network. The results can be very problematic to the community. Some of the consequences can be:
- Reverse transactions that he sends while he's in control. This has the potential to double-spend transactions that previously had already been seen in the block chain.
- Prevent some or all transactions from gaining any confirmations
- Prevent some or all other miners from mining any valid blocks ~ bitcoin wiki
One of the most concerning factors is if, the attacker can sustain his hashing power to such a degree, that he ends up mining all of the blocks, and essentially creating a new block chain. Whereas, the rest of the miners will be creating orphan blocks. These attacks generally don't go on for long periods of time, but long enough to cause damage to the network.
Earlier this year, Feathercoin sustained a 51% attack, where approximately 16,000 feathercoins were mined to the attacker. It was a well coordinated attack, where the attacker increased the hash rate by 7X, far more than 50%. At the same time, a DDoS attack was being carried out on the feather coin centralized pools. Once the centralized pools were offline, it made the attack much more effective.
The feathercoin example is an extreme one, and may never happen to the bitcoin, and litecoin networks (again). However, this is where p2pool mining comes into play. The most immediate benefit, is keeping the mining network decentralized. If one p2pool node gets attacked, there are 1000's more nodes keeping the network healthy.
This does not take away the need for centralized mining pools, but it does offer some great advantages.
- Less prone to attack
- DDoS resistant
- Hop proof
- Zero pool fees
- Control over your earnings
- No counter party risk (If pool shutdown, or stole coins)
- Healthier for the bitcoin & litecoin network
- Can invite friends to join your pool
- Difficult to setup
- Higher variance
- Not asic friendly (this is getting better)
Central pool pros:
- Easy to configure
- Save mining earnings for higher lump sum payouts
- Asic friendly
Central pool cons:
- Prone to DDoS attack
- Counter party risk - Pool may shutdown, get hacked, or steal your coins
I think it's pretty clear why p2pool is a good choice for your mining pool. It's also important to support it's future development. As the technology grows, and the hashing power increases, this only solidifies the need for distributed hashing power. Just as the bitcoin and litecoin network is distributed. It increases the security, viability, and freedom of these networks. Mining is an important part in that network, and needs to be proactively supported.
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