2.1 What are Mining Pools? - Makh1/italcoin GitHub Wiki

As we've seen, finding a block is getting harder with time. Even with powerful hardware, it could end up getting a solo miner months, or even years!

This is why mining pools were invented: by sharing their processing power, miners can find blocks much faster. Pool users earn shares by submitting valid proofs of work, and are then rewarded according to the amount of work they contributed to solving a block.

The reward systems used by mining pools can be roughly subdivided into two categories: proportional systems and pay-per-share systems.

Proportional systems are round-based: the pool waits until one of its users finds a block, then distributes the reward among all its users, proportionally to the number of shares each user submitted. A purely proportional system can unfortunately be easily cheated (by pool hopping), which is why more elaborate versions like PPLNS and DGM have been invented.

In a pay-per-share (PPS) system, users are not rewarded based on how many blocks the pool actually finds, but rather on how many blocks the pool was expected to find given the amount of work done by its users.

The pool pays a fixed amount of ITAL coins for each valid shares its users submit, based on the mathematical laws of probability. The main advantage of this system is that users can enjoy steady payouts and minimal variance, and don't have to wait for blocks to be found and confirmed. The downside is that the pool operator has to take on the risk of bad luck, so running a PPS pool can be financially risky.

Choosing a mining pool can be a very personal decision, and several factors should be taken into consideration, including features, reliability, reputability, and user support.