Stratum Protocol

💡 The Plain-English Definition

Stratum is the communication protocol between mining pools and individual miners — the language they use to coordinate work. Under Stratum, pool operators choose which transactions go into each block candidate and send miners only the hashing work, concentrating transaction selection power in a handful of pool operators worldwide.

🤔 But Why Though?

When solo mining became impractical due to increasing difficulty, miners began aggregating into pools. The pools needed a protocol to communicate work to thousands of individual miners simultaneously. Stratum (created by Marek Palatinus, known as Slush, in 2012) replaced an earlier approach and became the universal standard — chosen for its efficiency and simplicity. Under Stratum, the pool operator assembles a complete block template: they select which unconfirmed transactions from the mempool (Bitcoin’s waiting room for unconfirmed transactions) to include, in what order, and package them into a candidate block. They send miners only the block header (an 80-byte summary) and ask them to find a valid hash (the output of a mathematical function that falls below the difficulty target). Miners do the computational work but have zero input into transaction selection.

This architecture creates a significant centralisation risk. The world’s Bitcoin transaction selection is effectively controlled by five to ten pool operators. A government that wanted to censor certain transactions — sanctioned addresses, politically undesirable payments, privacy tool outputs — could achieve substantial network-level censorship simply by compelling those pool operators. The 2021 China mining ban demonstrated both the vulnerability and the resilience of this system: when Chinese pools lost their miners, global hash rate dropped 50% before recovering — showing both concentration and adaptability.

🌍 The Real-World Analogy

Stratum is like a factory assembly line where a single foreman decides what products to build and hands individual workers only their specific tasks. The workers drill, weld, and assemble with complete efficiency — but they have no input into which products get made. If the foreman decided to stop producing a certain item, the workers would simply stop producing it without knowing or being able to override the decision.