A proposal for stemming the tide of mining centralisation -- Requiring a

miner's signature in the block header (the whole of which is hashed), and

paying out coinbase to the miner's public key.

Please comment on whether this idea is feasible, has been thought of before,

etc., etc. Thank you.

Motivation

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Mining is centralising to a handful of pool operators. This is bad for a

number of political reasons, which we won't go into right now. But I have

always believed that some years down the line, they could hold the users

hostage and change the rules to suit themselves. For instance by eliminating

the halving of the block reward.

Solution

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Currently the block header is formed by the pool operator and distributed for

hashing by the pooled miners. It is possible to divide the work among the

miners as the only thing that is used to search the hash space is by changing

a nonce or two.

I propose that we require each miner to sign the block header prior to

hashing. The signature will be included in the data that is hashed. Further,

the coinbase for the block must only pay out to the public key counterpart of

the private key used to sign the block header.

A valid block will therefore have a signature in the block header that is

verified by the public key being paid by the coinbase transaction.

Ramifications

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Work can no longer be divided among the pooled miners as before, without

sharing the pool's private key amongst all of them. If the pool does try to

take this route, then any of the miners may redeem the coinbase when it

matures. Therefore, all miners will use their own key pair.

This will make it difficult to form a cooperating pool of miners who may not

trust each other, as the block rewards will be controlled by disparate parties

and not by the pool operator. Only a tight clique of trusted miners would be

able to form their own private pool in such an environment.

Attacks

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Pooled hashpower, instead of earning bitcoins legitimately may try to break

the system instead. They may try a double-spending attack, but in order to

leverage the pool to its full potential the pool operator would again have to

share their private key with the whole pool. Due to the increased cooperation

and coordination required for an attack, the probability of a 51% attack is

much reduced.