BlockchainLabs/SpreadCoin

SpreadCoin October 5, 2014 Introduction In proof-of-work cryptocurrencies new coins are generated by the network through the process of mining. One of the purposes of mining is to protect network from double spending attacks and history rewriting. Miners generate new blocks and check contents of the blocks generated by other peers for conformation to the network rules. However, many miners now delegate all the checking work crucial to cryptocurrency security to pools. This means that pool operat

# SpreadCoin SpreadCoin October 5, 2014 Introduction In proof-of-work cryptocurrencies new coins are generated by the network through the process of mining. One of the purposes of mining is to protect network from double spending attacks and history rewriting. Miners generate new blocks and check contents of the blocks generated by other peers for conformation to the network rules. However, many miners now delegate all the checking work crucial to cryptocurrency security to pools. This means that pool operators do not have any large hashing power but have control over generation of new blocks. This brings unnecessary centralization to otherwise decentralized system. Controlling more than 50% of mining power allows to perform double-spending attacks with 100% chance of success but even with less than 50% control it is possible to perform attacks which have chances to succeed1 . The core idea of SpreadCoin is to prevent creation of pools and thus make mining more decentralized and the whole system more secure. Pool Prevention In pooled mining miners perform only the work which is necessary to fulfill the proof-of-work requirements and pools take care of block generation and broadcasting and distribute reward among miners according to the shares they submit. In this scheme miner has two alternatives: 1. Solo mining. In this case miner cannot send shares to the pool because they will not be accepted. 2. Pooled mining. Miner’s shares will be accepted by the pool but in the case miner will actually generate a new block its reward will go to the pool which will redistribute it to all miners. This allows organization of pools because miners has no way to cheat and steal generated money. To prevent creation of pools we must remove this possibility so that if pool will be created