Zcash Mining Pools and Centralization Risk What’s the Issue?

Zcash is a cryptocurrency that prioritizes anonymity and use the proof-of-work (PoW) consensus algorithm. PoW demands that in order to verify transactions and add new blocks to the blockchain, miners compete to solve challenging mathematical puzzles.

To improve their chances of mining a block, miners form mining pools to pool their resources. Both centralized and decentralized mining pools are possible. Decentralized mining pools are managed by their members as opposed to centralized mining pools, which are managed by a single organization.

One mining pool, ViaBTC, presently controls the majority of the Zcash mining pools. ViaBTC has the ability to influence the Zcash network in a variety of ways, such as by double-spending coins or filtering transactions, since it controls over 51% of the Zcash hashrate.

Centralization's dangers

The Zcash network is at danger from many factors as a result of the concentration of mining power in the hands of one organization.

• Increased risk of attack: A network assault by double spending coins or transaction censorship is possible if one entity controls the majority of the hashrate.
• Reduced decentralization: As mining power becomes more concentrated, the decentralization of the Zcash network is reduced. As a result, the network is less trustworthy and less fair to all users.
• Reduced security: The Zcash network may become less secure as mining power becomes more concentrated. This is so that a network with concentrated mining power may be more easily manipulated by a single party.

What is possible?

The concerns of centralization in the Zcash mining pool ecosystem may be addressed in a variety of ways.

Encourage decentralization: The Zcash community may fund decentralized mining pools to promote decentralization. Decentralized mining pools like F2Pool and Luxor Mining are among the options.
Create fresh mining algorithms: The Zcash community can create new, centralization-resistant mining techniques. To make it harder for mining pools to employ specialized gear, for instance, the Equihash 210 algorithm was created.

• Fund science and technology projects: The Zcash community may provide funding for innovative technology research and development that will aid in decentralizing the Zcash network. For instance, the Zcash Foundation is financing studies into novel mining techniques and other technological advancements that may assist to increase the network's scalability and security.

Conclusion

The Zcash network is at danger from many factors as a result of the concentration of mining power in the hands of one organization. To address these hazards, there are a variety of things that may be done.

By supporting decentralized mining pools, creating new mining algorithms, and supporting R&D, the Zcash community can promote decentralization. The Zcash community may contribute to making the network more secure, decentralized, and equitable by doing these actions.