user11737: I've heard P2P mining pools are the answer to the current threat of mining pools controlling 51% of Bitcoin's hashing power.  Is this true or not true?  Does anyone have a supporting or critical assessment of P2P mining pools? What are the trade offs? Thanks in advance.

user9301: P2Pool allows individual miners to band together and find blocks with the reward being shared directly with the miners who participated in finding the block.  If you didn't contribute a pool share during a round, you wouldn't receive a payment for a block found by the round.  The pool has a lower difficulty than the network but greater than an individual miner.  That is, your miner can be submitting shares to the pool but you won't get a pool share unless one of your shares has a difficulty greater than the pool difficulty.  When somebody submits a share with a difficulty greater than the network difficulty, a block is found and everybody who contributed at least one pool share gets part of the reward.
So the trade-off is a high variance since you only get paid if you were participating at the time a block is found and you contributed a pool share.  And finding a block itself is highly variable since it depends on the total hash power of the pool (luck also plays a large role).
Depending on your hash power, you could run your own p2pool or join a p2pool set up by somebody else.  The advantage of joining a common p2pool is it increases your chance to contribute a pool share and thus share in the block reward.

11737: <p>I've heard P2P mining pools are the answer to the current threat of mining pools controlling 51% of Bitcoin's hashing power.  Is this true or not true?  Does anyone have a supporting or critical assessment of P2P mining pools? What are the trade offs? Thanks in advance.</p>
 9301: <p>P2Pool allows individual miners to band together and find blocks with the reward being shared directly with the miners who participated in finding the block.  If you didn't contribute a pool share during a round, you wouldn't receive a payment for a block found by the round.  The pool has a lower difficulty than the network but greater than an individual miner.  That is, your miner can be submitting shares to the pool but you won't get a pool share unless one of your shares has a difficulty greater than the pool difficulty.  When somebody submits a share with a difficulty greater than the network difficulty, a block is found and everybody who contributed at least one pool share gets part of the reward.</p>

<p>So the trade-off is a high variance since you only get paid if you were participating at the time a block is found and you contributed a pool share.  And finding a block itself is highly variable since it depends on the total hash power of the pool (luck also plays a large role).</p>

<p>Depending on your hash power, you could run your own p2pool or join a p2pool set up by somebody else.  The advantage of joining a common p2pool is it increases your chance to contribute a pool share and thus share in the block reward.</p>
