Bitcoin mining today is dominated by mining pools. These mining pools arguably have a strong hold on the Bitcoin network, but also on their own participants. Since mining pools typically operate with little transparency, participants must issue a lot of trust in pool operators not to cheat them out of Bitcoin.
Czech Republic-basedSlush Pool – accounting for some4 percent of total hash power on the Bitcoin network – now believes it has solved this problem. Its “provably fair” mining should take away any mistrust – plus introduce some added benefits.
A Quick Recap on Mining
Miners are the entities on the Bitcoin network that confirm transactions and secure the network with hash power by finding Bitcoin blocks. These blocks include several types of data, most importantly transactions, but also the previous block header (linking blocks together), a timestamp and a random number called a “nonce.”
Using a mathematical trick called hashing, miners combine and scramble all of this data into an unpredictable random number called a hash, which is the “block header,” identifying the block. The same data will always result in the exact same block header, but if even a tiny alteration is made to any of the data, it