P2share: how to turn any network (or testnet!) into a bitcoin miner

P2Share represents an innovative leap in the realm of Bitcoin mining, extending the pioneering work of P2Pool into a decentralized mining framework that allows both miners and non-miners to participate in symbiotic networks known as sharechains. These sharechains contribute to the security of the Bitcoin network by operating as valid mining pools while introducing a unique internal currency in the form of transferable "shares." This model maintains strict alignment with Bitcoin's consensus mechanism, ensuring that all mining efforts enhance the mainnet's security without necessitating any modifications to Bitcoin's core protocol.

The fundamental concept behind sharechains revolves around a separate blockchain system where miners collectively engage in the mining of Bitcoin blocks. Within this system, miners submit shares of low difficulty to the sharechain, which independently adjusts its difficulty level. The inclusion of the sharechain blockheader within the Bitcoin block template links the two systems, allowing for seamless operation under both Bitcoin and sharechain consensus rules. Notably, the design permits sharechain miners to select bitcoin transactions for inclusion in blocks, provided they adhere to Bitcoin's consensus rules, thereby integrating sharechain operations within the broader Bitcoin ecosystem.

A key innovation of the P2Share system is its approach to share issuance, designed to ensure incentive compatibility across the network. By issuing a constant number of shares relative to the work contributed, rather than adhering to a fixed schedule, the system aligns the distribution of rewards with the amount of work performed. This method ensures fairness and preserves the value of early contributions even as the network scales. The mechanism for selecting shareholders to receive Bitcoin rewards—a pseudorandom process based on the most recently mined sharechain block—further supports this equitable approach, mimicking the Pay-Per-Last-N-Shares model used in traditional mining pools.

Beyond enhancing fairness and incentive compatibility, P2Share introduces several benefits to the Bitcoin ecosystem. It serves as a platform for experimentation with new features and consensus changes that, while not directly applicable to the mainnet, can provide valuable insights and signal miner preferences for Bitcoin's evolution. The creation of multiple sharechains with distinct rules could offer insights into market demands through their relative share prices, achieved via atomic swaps. Furthermore, the structure of sharechains inherently deters attacks, such as 51% attacks or grinding attacks, by making them economically unfeasible, thus bolstering the overall security of the Bitcoin network.

In summary, P2Share proposes a sophisticated framework that not only furthers decentralization in Bitcoin mining but also channels experimental efforts into constructive enhancements for the Bitcoin ecosystem. Through its innovative sharechain mechanism, it offers a path to integrate novel features and incentivize participation while ensuring compatibility and alignment with Bitcoin's core values and security imperatives. This approach has the potential to empower the Bitcoin community, enabling innovation and resilience without compromising the principles that underpin the network.