What is mining pool? Advantages and disadvantages of joining mining pool

What is mining pool? In the cryptocurrency market, you’ve probably heard of the term coin mining. However, not everyone understands this term, there are still many people who do not understand what the term it means.

What is mining pool

1 – What is mining pool?

You can understand this is a group of miners who contribute power to mine coins together, together sharing profits divided according to the original contribution rate.

2 – Advantages

When joining coin mining, you will have the opportunity to receive rewards equally shared by other members of the mining pool.

3 – Disadvantages

Single coin mining is getting more and more competitive and difficult. Therefore, each individual must join a mining pool to gather power to mine coins together. However, the reward will be divided among each person based on each person’s contribution rate, you cannot enjoy the reward alone.

4 – How does mining pool work?

Each it will have a coordinator in charge of organizing miners. They have to make sure miners are using different “nonce” values in order not to waste hash power trying to generate the same blocks.

These coordinators are responsible for dividing the rewards and paying the rewards to the miners participating in the pool.

There are 2 methods PPS (pay-per-share) and PPLNS (Pay-Per-Last-N-Shares) used for calculating the work of each miner. Based on that to pay miners appropriately and accurately. Just like the timekeeping for employees in the company to pay wages according to the prescribed number of working hours.

5 – Conclude

The cryptocurrency mining landscape has changed forever with the introduction of the first mining pool. They can be highly beneficial for miners who want to receive more stable payouts. With so many different options available, they are forced to find the one that best suits their needs.

In an ideal world, Bitcoin mining would be much more decentralized. For now, however, we can call it “decentralized enough”. In any case, no one benefits if any single mining pool gets the majority of the hash rate in the long run. Participants prevent that from happening – after all, Bitcoin is not run by miners, but by users.

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