SharedWealth: Disincentivizing Mining Pools Through Burning and Minting

Bitcoin has provided a framework for a decentralized currency system. However, the irregular payouts of its winner-takes-all reward strategy have proven to be unacceptable for the miners who are responsible for verifying transactions. To address this problem, miners have formed mining pools to ensure more regular rewards, but these mining pools undermine the decentralization that is one of Bitcoin’s key benefits. Previous work has sought to make it impossible for mining pools to form, but it is not clear that the situation would improve without addressing the economic incentives that lead to the formation of mining pools in the first place.