Quote from: dinofelis on March 25, 2017, 06:51:14 PM

No, this is unavoidable for ANY form of PoW system in the long run. It IS already the case BTW: 14 miner pools have essentially all the hash rate.

The reason is not "block size" or whatever. The reason is the lottery of PoW, and the economies of scale.

Solo mining is not done much any more, because with solo mining, you win ONE BLOCK every two years or so. That's too much of a lottery.

If you don't want more than 10% income fluctuation (RMS value) in 1 week of your income, it means that you must be part of a team that "wins 100 times" during a week. As there are 1000 blocks in 1 week, you must hence be part of a pool that has 10% of the total hash rate. --> there can be only 10 such pools !

Even if you accept larger fluctuations of income, there will at most be a few tens of mining pools.

Now, these mining pools need good network connections, to their miners, and to other mining pools, because every second lost is a second of hash rate lost. As mining pools don't trust one another, they want to get good links to SEVERAL of their competitors, to avoid the possibility of "selfish mining" which needs variable network delays to get your private block in front of the public block.

So, AUTOMATICALLY, this ecosystem will evolve towards "a few tens of pools with very good data connections and big data centres".

As an owner of mining gear, you have all interest to be in a big pool ; but you don't want pools the become monopolies, because then they will start eating off your fees. So as an owner of mining gear, you are going to be such that you want to have "a few big pools". In order for your mining gear to be efficiently used, you want to be able to have a good data connection to your host pool --> they need good data centres with good connections to all of their miners.

Once that is the case, automatically the above topology follows. Has not much to do with block size. Is intrinsic to the PoW system with specialized hardware (ASICS). It was built into bitcoin from the start.

Automatically, if nothing else is done on top of this system, and if blocks are allowed to grow freely: this system will consolidate on one node-miner and will make zero sense. It won't be a censorship-resistance transaction system and it will be COMPLETELY POINTLESS.

That is why Bitcoin, right now, is a work in progress. Allowed to concentrate to 1, it's a convoluted, slow data-structure that makes no sense whatsoever. It's like downloading files from a standalone Bit-Torrent server running on your own computer.