The pool pays a fixed amount of litecoins for each valid shares its users submit, based on the mathematical laws of probability.
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. 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. 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. The reward systems used by mining pools can be roughly subdivided into two categories: proportional systems and pay-per-share systems. 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. Even with powerful hardware, it could take 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. This network difficulty, so called because it is the same for all miners, can be quantified by a number right now, it is 9006199.5262201Īs we've seen above, finding a block is very hard. Every few days, the difficulty of the criteria for the hash is adjusted based on how frequently blocks are appearing, so more competition between miners equals more work needed to find a block. The miner that successfully creates a block is rewarded with 25 freshly minted litecoins. So instead of just being able to make blocks at will, miners have to produce a cryptographic hash of the block that meets certain criteria, and the only way to find one is to try computing many of them until you get lucky and find one that works. The way Litecoin makes sure there is only one blockchain is by making blocks really hard to produce. Miners assemble all new transactions appearing on the Litecoin network into large bundles called blocks, which collectively constitute an authoritative record of all transactions ever made, the blockchain. Instead of having one central authority that secures and controls the money supply (like most governments do for their national currencies), Litecoin spreads this work across a network of 'miners'.