However, end users must wait for full round confirmations long after the blocks are processed.
The Pay-per-Share PPS approach offers an instant, guaranteed payout for each share that is solved by a miner. Miners are paid out from the pools existing balance and can withdraw their payout immediately. This model allows for the least possible variance in payment for miners while also transferring much of the risk to the pool’s operator. The Proportional approach offers a proportional distribution of the reward when a block is found amongst all workers, based off of the number of shares they have each found.
The Pay Per Last N Shares PPLN approach is similar to the proportional method, but instead of counting the number of shares in the round, it instead looks at the last N shares, no matter the boundaries of the round. The operator receives a portion of payouts during short rounds and returns it during longer rounds to normalize payments.
Bitcoin Pooled mining BPMalso known as “Slush’s pool”, uses a system where older shares from the beginning of a block round are given less weight than more recent shares. This reduces the ability to cheat the mining pool system by switching pools during a round. The Pay on Target POT approach is a high variance PPS that pays out in accordance with the difficulty of work returned to the pool by a miner, rather than the difficulty of work done by the pool itself.
The SCORE based approach uses a system whereby a proportional reward is distributed and weighed by the time the work was submitted. This process makes later shares worth more than earlier shares and scored by time, thus rewards are calculated in proportion to the scores and not shares submitted. Eligius was designed by Luke Jr. When the block rewards are distributed, they are divided equally among all shares since the last valid block and the shares contributed to stale blocks are cycled into the next block’s shares.
Rewards are only paid out if a miner earns at least. However, if a Bitcoin miner does not submit a share for over a period of a week, then the pool will send any remaining balance, regardless of its size.
The administrators of these Bitcoin mining pools use some of the Bitcoins generated when a block is found to add to a jackpot that is triggered and paid out to the member of the pool who found the block. In this way, everyone in the pool has a better chance to make additional Bitcoins, regardless of their processing power.
This method keeps advantages of PPS and pay more to miners by sharing some of the transaction fees.
BREAKING DOWN ‘Bitcoin Mining’
Luke-Jr’s approach ” Eligius ” Luke came up with a third approach borrowing strengths from the earlier two. Like slush’s approach, miners submit proofs-of-work to earn shares. Like puddinpop’s approach, the pool pays out immediately via block generation.